Begrudging Hession

[Tree]

What is the point?

Phil nearly lost IOC with his unrealistic expectations, plans and opinion of what stranded gas in PNG was worth.   Phil's handpicked BOD had no choice but to force him out.  That same BOD hired Hession and crafted a comp package incentivizing Hession to do what Phil was unable to accomplish:   Cut best available deal with a government required  SM and monetize PRL15.

Hession's comp package is laiden with incentives and future payments as PRL 15 is monetized.

Per employment contract from Phil's BOD, in 2015 Hession received  ~8,000,000 for taking Papua LNG Project to 'Basis of Design'.  Basis of Design is a big deal, something Phil was unable to pull off  and is why Hession, and team, were rewarded.  And many here beyeitch!

We're luck Hession crafted a TOT deal for IOC which is equally laiden with incentives to benefit shareholders.  We await a substantial resource payment lifeline from TOT (not common in industry)

FID and First LNG bonuses.   And many here beyeitch!  Too slow, too rigged, too much conspiracy!  We're doomed!!

Phil's unrealistic expectations that SM's and Gov'ts would take his crap and bow down is what cost us 5 years with us now moving to development in a crap LNG environment.  The Cap Re's and MacQ's of the world understand this.

Beyeitching about Hession earning his incentives is useless and becomes absurd when combined with a new found 'love' for Phil and his self-serving smack talking antics.

[cybersssss]

"Don't follow leaders and watch your parking meters"

Yes hession was able to achieve a deal that Phil could not or would not. However, does this mean he is a good and effective leader of the company? Does this mean he is a champion to shareholders?
The story is always changing with them, they first say that they made this deal that is insulated from the price of oil, yet they blame the price of oil for the Steep pps fall.

Then there is the seeming inefficiency and financial mismanagement of the company's money.

Phil was held responsible and hence lost control of the company he founded. He paid the price and I agree that he seemed to deserve this. He could not make a deal. However, this does not mean that Hession shouldn't be responsible for what he has done wrong.

[Thylacine-2]

Tree, I would put it in less colorful language, but I agree with the gist of your post.

[Thylacine-2]

"Don't follow leaders and watch your parking meters" Yes hession was able to achieve a deal that Phil could not or would not. However, does this mean he is a good and effective leader of the company? Does this mean he is a champion to shareholders? The story is always changing with them, they first say that they made this deal that is insulated from the price of oil, yet they blame the price of oil for the Steep pps fall. Then there is the seeming inefficiency and financial mismanagement of the company's money. Phil was held responsible and hence lost control of the company he founded. He paid the price and I agree that he seemed to deserve this. He could not make a deal. However, this does not mean that Hession shouldn't be responsible for what he has done wrong.

The deal is insulated from the price of oil.  Our resource payment is not dependent on oil or LNG pricing.   The share price of IOC is not insulated from energy stock market movements.

[will2bgreat]

Bull.  Mike got Total signed up all right, but now he either does not have the courage or ability to stand up to Total and say, "we have a signed contract and I am going to hold you to that contract.  We are moving forward with the certification and resource payment.  It's that simple.  Now if Total wants to drill another well; great idea.  But we are going to renegotiate the contract and Total is going to pick up all of IOC's costs for the well.  Otherwise, IOC is being put in a rather weak financial position.

The only thing I expect is clear, open, honest communication and that is not being done by IOC.

Just my thoughts.

[Putncalls]

Total isn't holding up anything. A7 and the certification timeline is up to MH.

[Tree]

Bull.  Mike got Total signed up all right, but now he either does not have the courage or ability to stand up to Total and say, "we have a signed contract and I am going to hold you to that contract.  We are moving forward with the certification and resource payment.  It's that simple.  Now if Total wants to drill another well; great idea.  But we are going to renegotiate the contract and Total is going to pick up all of IOC's costs for the well.  Otherwise, IOC is being put in a rather weak financial position.

The only thing I expect is clear, open, honest communication and that is not being done by IOC.

Just my thoughts.

Bull.  You make my point with your comments.  Your view of reality is counter to that of Pouyanne, Botten and Hession.  But hey, Hession should get in Pouyanne's face regardless!!  Phil would!!!  That would help somehow??

Pouyanne in PNG visit

 22 April 2016 00:00 GMT

Total chief executive Patrick Pouyanne has visited Papua New Guinea to provide assurance to the government of his company’s commitment to the planned Papua LNG project.

Pouyanne met PNG Prime Minister Peter O’Neill and other government officials, and reportedly said the project is on schedule to begin construction in 2018.

The current focus is on the full evaluation of gas reserves, to be followed by front-end engineering design work next year.

“Evaluation of reserves in 2016, engineering studies in 2017 and construction should start in 2018,” he was quoted as saying in The National newspaper.

A final investment decision is expected in late 2017 or early 2018.

[2126]

Bull.  Mike got Total signed up all right, but now he either does not have the courage or ability to stand up to Total and say, "we have a signed contract and I am going to hold you to that contract.  We are moving forward with the certification and resource payment.  It's that simple.  Now if Total wants to drill another well; great idea.  But we are going to renegotiate the contract and Total is going to pick up all of IOC's costs for the well.  Otherwise, IOC is being put in a rather weak financial position.

The only thing I expect is clear, open, honest communication and that is not being done by IOC.

Just my thoughts.

Unfortunately, it is anything but as simple as you contend. Yes, of course we have a signed contract. However, that contract gives the 'operator' which is now Total, the full, unambiguous and unilateral power to declare the 'trigger date' which will begin the appraisal/certification process of PRL 15. IOC has absolutely no power to impact that declaration by Total. Total, under the SPA terms, must notify IOC of the "trigger date" within 5 days after the 'completion and testing of the final appraisal well' under the 'appraisal work program' of the contract. Under the terms of the "appraisal work program" portion of the SPA, the parties must drill 2 appraisal wells (Ant 4 and Ant 5), and may drill 'one or more additional appraisal wells'. They have drilled one additional well (Ant 6) and are now at the stage of determining whether to drill another 'additional' appraisal well: Ant 7. I believe that all 3 parties (Total, IOC, and OSH) are waiting for the OSH appraisal results (which are due within the next 30-45 days) to make that call. IOC can not force the decision on Total or OSH. [It could take the very expensive and extremely counter-productive tactic of suing Total under the terms of the SPA that require that the additional appraisal wells shall not adversely effect the ability to reach FID "in the shortest practicable timeframe." Naturally, Total's argument would be that it cannot reach FID without a full and complete appraisal of the resource, which would, of course in Total's estimation, include Ant 7. And IOCs argument in rebuttal to that would be ....?. None that I can think of, other than that IOC has a few shareholders who are frustrated with the time line of a $10+ billion dollar project taking place in a third-world jungle environment.

Once there is a final decision on whether to drill Ant 7, there are two routes available--one of which must be taken depending on the decision: If the decision to drill is a go; then Total drills the well and completes the well and testing and THEN must declare the 'trigger date' and start the appraisal/certification process. If the decision is no-go on Ant 7; then I believe that under the SPA, Total must declare the 'trigger date' within 5 days of the no-go decision on Ant 7 and the parties (Total and IOC) would move to select their respective appraisal companies under the SPA tems.

All of this is set forth in exquisite detail in the SPA that governs the relationship between Total and IOC in these matters. The situation that we are now in was under considertation when this contract was drafted over 3 years ago and shows the long-term and strategic thinking that went into the contract. The many terms that were negotiated into that contract that benefit IOC and are not 'industry-standard' are, in my opinion, the very reason that the 2013 BOD hired Hession in the first place. And as Tree, points out, that BOD was put in place by Phil, not Dr. Hession.

[will2bgreat]

Total isn't holding up anything. A7 and the certification timeline is up to MH.

Question:  Why would IOC want to delay the certification?  Why wouldn't IOC use GCA for the end of the year certification to expeditie certification.  If the GCA estimate came out low, they could have called A7 their wildcard and started drilling already.

Answer:  Agreed upon delay.  Also says IOC believes the stock will take a serious hit if they were to state such.

[jft310]

Legally IOC can not change appraiser's without cause . There is no cause . The best estimator has been GLJ .