PetrEngr: PRL 237 Work Program

[petrengr1]

http://www.ogj.com/articles/print/vol-11...-eyes.html

If I am reading the above article correctly it appears that we will be getting 250 km of seismic in and around Triceratops and another 250 km of seismic in the rest of PPL 237 over the next 2 ½ years (2012-2014). A total of 500 km of seismic. I hope I am reading this correctly.

I would not have thought we needed that much more seismic at Triceratops. I expect some of the seismic work will be close up to the Elk/Antelope infrastructure. Phil mentioned at the AGM that they would concentrate on those prospects close to the planned infrastructure so that the new discoveries can be put on production with a minimum of pipeline etc. He specifically mentioned Mule Deer.  I would also expect to see some seismic lines across the Raptor/Duckbill prospect. Hopefully we will also see some seismic lines on all of the other prospects in PPL 237 i.e. T-Rex, Seismosaurus, Brontosaurus, Allosaurus and Pteranodon.

In addition to the seismic lines the work program will consist of six more exploration and appraisal wells on the Triceratops structure and the drilling, testing and completion of up to four exploration wells in other parts of PPL 237.

The additional resource payment will come from Pacific Rubiales’ share of production so it will be a while before we see that money.

[sageo]

PET-Thanks again for your splendid ,honorable work. I truly believe all of us on this site owe you our deepest gratitude.I know I,as a fair geoligist,certainly do.Out of all our granchildren,two of our oldest have become very interested in my"ramblings" about IOC. As you state in your post"two years plus", I tell them that this is not a"get rich quick" scheme,but a long term building process. For almost 4 years now,I have been accumulating a"fat" file on this company and, I am well aware of our total great prospects, I still think that ppl 237 has awesome potential.My main concern right now Pet, is that IOC might sell "all" of prl 15 which would probably affect our decisions on Mule Deer and Raptor/Duckbill. Are my concerns "ill-placed"? ( I sure like all the planned seismic work!!)

[admin]

Yes Sageo, to some extent I share that concern. Prefer to sell part, or even the whole of EA (the'gambit' option), get funds that enable a serious ramp-up in exploration, rather than lose any of these leads and prospects.

Or if the price is right, sell the whole company

[petrengr1]

PET-Thanks again for your splendid ,honorable work. I truly believe all of us on this site owe you our deepest gratitude.I know I,as a fair geoligist,certainly do.Out of all our granchildren,two of our oldest have become very interested in my"ramblings" about IOC. As you state in your post"two years plus", I tell them that this is not a"get rich quick" scheme,but a long term building process. For almost 4 years now,I have been accumulating a"fat" file on this company and, I am well aware of our total great prospects, I still think that ppl 237 has awesome potential.My main concern right now Pet, is that IOC might sell "all" of prl 15 which would probably affect our decisions on Mule Deer and Raptor/Duckbill. Are my concerns "ill-placed"? ( I sure like all the planned seismic work!!)

Sageo- I do not think you need to worry about IOC selling all of PRL 15. They told us at the AGM http://www.interoil.com/presentation/201...inal-1.pdf charts 5 and 35 that the best outcome for shareholders would be a sale of between 25% and 32.5%. So that is what they are trying to do. Bids that are in that range apparently  “conform” to what IOC wanted prospective partners to bid on and are, therefore, known as “conforming bids”. Of course prospective bidders can bid for a higher percentage and these bids would be known as non-conforming bids. I suppose there could be a circumstance where a nonconforming bid could be better than a conforming bid if the nonconforming bid was for a higher price/MCF but I doubt that we will see that.  Duma once said he wanted IOC to sell at least 51%. I asked Phil if the Government was going to force them to sell 51% and he said NO!.

I believe the only way IOC sells all of PRL 15 is if someone buys IOC.

You didn’t ask about this but here is a brief comment on the value of gas which has some bearing on the sell down process.

There has been a lot of talk about what the gas is worth. Of course the value of the gas changes with its location, stage of processing and time of sale to a consumer market. As the field is developed, the gas is produced, liquid removed, transported to the LNG Plant, impurities removed, liquefied and transported to market there is a value added at each step. In order to proceed through all of the steps of the process a great deal of money must be spent. Gas in the ground which will be produced over a 20+ year period of time has less value than a ship load of LNG in the harbor at Japan due to the time value of money plus all of the processing steps. Gas in the ground in PNG that will be produced over the next 20+ years may be worth $2 - $4/MCF whereas LNG in a ship in the harbor in Japan and for sale today may be worth as much as $17 - $20/MCF.

So it is a matter of determining :

1. What must be done to get the LNG Plant built and in operation as soon as possible?

2. What is the most economical percentage to retain in view of the cost of the LNG plant, field development and other infrastructure and the value added by the processing steps listed above?

The answer to question 1 is apparently to bring in a Major internationally recognized LNG Company (Operator?) and comply with the agreement with the Government. The sell down process to be announced shortly (August?) should accomplish that.

The answer to question 2, according to IOC, is to sell 25% -32.5% of PRL -15.