NO Counter Bid from Total

[oliver.gump]

It's right there in black and white, Total never intended IOC to be a partner, the goal from both tot and osh perspective was to remove ioc with low bidding and low certification numbers. First osh bid low, the xom wins be a hair.

IOC was build from the ground up by very talented people who worked both harder and smarter, rather than simply outsourced every job. Ignoring XOM and then rebooting IOC is not a long shot, it is completely within the realm of possibilities. I am sure that many of the original people would be very happy to drop what they are doing and take it on.

From the outset, people said IOC could never build a refinery, well IOC did. from the outset people said IOC could never find hydrocarbons, well IOC did. all of this happened under PM and a unique team of very compentent people. Rebooting IOC is not so hard, the first thing to do is to clean the fouling off the plugs, and that would include ejecting the entire management, every, single, one of them.

[jft310]

There was a way this could have worked with a different CEO . What they wanted was E/A gas why not sell them that and find some competent Pet Engin and drill ahead . Why were some of the locations chosen . ?? If you vote yes you do not collect in any future legal activities . Or voting yes takes potential dollars out of your pocket . Why do that .?? I assume the deal passes . Why because of the Exxon stock receipt . Another  thread details how to vote no dissenting with the Yukon courts . That with what's known today seems a good path forward .

[Thylacine-2]

But dreaming was as easy as believing it was never gonna end...

[Kaliboo]

No $4-$5 Mcf sell downs. No revolutionizing the LNG industry No Short squeeze. No certified 12-15Ts. No Bidding war. We are left with lawsuits and intimidating XOM into 'fair treatment of IOC shareholders'. No way.

Sadly that is where we are.

It is doubtful that Shell or anyone else is going to bid.  So there is no competition for XOM now.  So what happens from here on?   Here are the cases (revised and expanded) that I mentioned in another thread.

1.  If we succeed in killing the XOM deal, then as I noted before, they may just do nothing but wait, and wait and wait.  Time and LNG prices are on their side, while IOC runs out of money.  We'll be stuck with less and less of nothing.

2.  If we kill the first offer, then XOM rebounds with a sweetened offer and we all live happily ever after we approve it.

3.  If the law catches up with MH and the BOD, I suspect those proceedings will prevent the company from being sold for a long, long time while legal costs eat a bigger hole in IOC finances.  As much as we'd like to see these guys get punished, it may be the equivalent of cutting off our own noses.  I.e., unintended consequences on steriods.  However, this could delay things until AFTER A7 is drilled and the appraisals are complete.  I would presume XOM may have some exit clause if that occurs before the sale is closed?

4.  If you vote NO or yes and the deal passes, it's fairly safe but just not up to the right value we want.  If that happened and oil prices as forecasted continue to fall through the Fall, then XOM pps may drop a little and we may get a few more shares for our $45.00 per share part of the payment.

5.   If you vote No with Dissent and the deal passes, then you better have a good lawyer and some good arguments as to what value you should receive.  I would guess that wouldn't be resolved until mid next year at the earliest.  Whatever gain you get will have to pay the lawyer.  Unless you have mega shares, that's a loser IMHO.  Maybe Phil can provide free legal guidance to us all?

6.  If you do number 5 without a good lawyer, then I hope you continue to post so we can read the interesting story that will surely follow.

7.  Wild Card 1 - What is Phil going to do next?  He needs us only for one thing - our vote.  It seem he is going the path of causing legal problems for MH and the BOD.  That path perhaps leads to their removal and reversal of the recent AGM results.  It may also void the sale agreement.  Is Phil hoping to be viewed as the white knight and be voted back in to run the comnpany with his own hand picked BOD?  To what degree can Phil negotiate with XOM for side deals in advance of the vote?  Is that legal?  Effectively it becomes a payoff to buy his votes if the sale goes forward without improving it.

8.  Wild Card 2 - The ICCC disallows parts of this transaction and demands a 2nd LNG plant and operator has to result.  My gut tells me in this price environment, this will kill development of E/A.  I don't think anyone is waiting in the ranks to build another LNG plant in PNG at the present time.  I suspect the recent negative appraisal results obtained by OSH have only cemented that situation.  So the ICCC threat perhaps is just a negotiating tool for PNG to use against XOM for some concession.

9.  Wild Card 3 - If the XOM deal is voted down, might OSH and/or TOT change their minds to offer a different structured offer and make another run at?  This is the happy wild card, but probably not likely.

10.  The IOC Effect - This is another wild card with a special name.  This is something totally out of the blue that none of us can anticipate.

There are many other factors which could bear on this including the world economy and PNG stability, among others.  But I'll stop the list here.  Suffice it to say that there are many possibilities, each with their own risks, uncertainties and time clock.  This may make it hard to vote down the XOM deal.  So somehow voting no with dissent looks like the best way to make more money in a case where the deal goes through, but you have to have really low legal costs and patience to get through it.  How do we do that?  Phil are you reading?  Help us on this please!

Comments, criticisms and most of all advice, are invited.

[jft310]

Kaliboo you are spot on above . Phil needs to lead the effort with the no dissenting voters . I can't imagine sad to say Phil pushing Exxon into changed deal terms . Hope so but doubt it . In a US class action law suit the lawyers collect normally 1/3rd of the winnings plus expenses . Or it's expensive . I am not familiar with Yukon law but if they charge a fee per hour that would in most cases be way less than a US class action law suit . My opinion we wait to vote and see what Phil has up his sleeve .

[ArtM72]

Have been saying this for long time. IOC not seen as necessary and as a very weak contributor. With financing we have been seen as a hindrance. Just a hard to swallow fact.

Weak contributor?  I can see problematic given the corruption of Michael Hession, but IOC has the gas.  Without water the best farmer in the world grows nothing.

"Our main objective was to unblock the project by removing InterOil and now we have Exxon as a partner with the financing power and understanding of LNG." 

I don't understand this indictment of InterOil except from the perspective of a partner that has been frustrated by extremely poor performance in drilling and contractual conflicts leading to delays for Papua LNG. You can take this at face value or you can ascribe a darker conspiracy and underlying message.

For one, I would like to see this project move forward, and IOC move forward in accordance with the Total/IOC SPA. If the company is not sold then the $60million is not paid, nor is the back half of Hession's change of control contract.  In less than a year we will have another opportunity to remove the Board of Directors. Meanwhile the first certification proceeds and Total executes as the Operator, making whatever decisions with respect to PNG LNG facilities are practicable and in the interest of all parties.

And IOC retains the value of hundreds and hundreds of millions of dollars in its investments in this highly prospected hydrocarbon province.

While I've dreamed of quick money for many years with this stock that isn't why I've owned it.  I trust Total to do the right thing.  I trust Exxon to do the right thing.  But most of all, I trust the courts of the Yukon to do the right thing.  Time is money and I've still got the time.

[jft310]

Good post Art . The Yukon courts have ways to deal with problematic valuations . Voting yes defies any type logic . With the understanding the funds will all vote yes . Many retail shareholders never vote so funds will carry the day . The first completed vote had 18 million non voted shares that's why I say with confidence they will not vote again and the deal passes . Some people will vote yes because they are tired of waiting and want Exxon stock . The deal passes now how can I possibly get a few more bucks .
Sounds like we have a chance to peel back at least part of Hession and the BOD ill gotten dollars .

[Palm]

It's no different than someone who owns a valuable piece of development land without the capital or knowledge of how to develop it. You won't get developed, cash flow positive prices for the land.

[jft310]

Palm so the solution should have been to sell it off to those that know how to build LNG plants and use the Total payments plus the other 30 some percent and collect $4.Billion or so over time .
That's a big reason to go the Yukon courts .

[ArtM72]

It's no different than someone who owns a valuable piece of development land without the capital or knowledge of how to develop it. You won't get developed, cash flow positive prices for the land.

Palm - you are projecting IOC's inadequacies on Total, apparently to support a position that can't otherwise be justified.

There was a reason why PNG insisted a super major become the Operator of E/A .  PNG wanted someone with expertise and experience to develope E/A.  While then and now I believe modular development was the right project the benefit of PNG's demand is apparent  today.  Total has the expertise; IOC needs none in PRL15.  Capital can come from many sources and an IOC under effective and honest management has sufficient strength to regrow.

IOC's value in my mind is rooted in the promise of the resources in its licenses and the science underlying its databases.. You can cut a tree off at its base but the tree is not dead.  New, viable shoots will spring forth from the stump and the tree will continue to live.