Think we have the 'OMG post'.

[Justin94360]

Gulf LNG announcement looms: source

Blair Price Wednesday, 19 September 2012 INTEROIL is gearing up for an important announcement this Thursday according to an industry source. PNGIndustryNews.net receives contrasting views from the source and from InterOil chief financial officer Collin Visaggio. The source is well connected in Papua New Guinea and has provided some concrete leads before. Most recently it resulted in our story on Friday in which Visaggio confirmed that more than one supermajor was involved in the bidding process for an operating stake of the Gulf LNG project and its Elk-Antelope field in PNG. Yesterday the source told PNGIndustryNews.net that InterOil was attempting to sell half of the project to the PNG government at what it deemed to be a “commercial price”. He then expects the government to try and market the stake, especially to get its share of development costs carried by another party. The source further expects the deal with the government to be on similar terms as InterOil’s complex joint venture agreement with Pacific Rubiales Energy – the Colombian oil producer which agreed to buy a 10% stake of InterOil’s licence that hosts its Triceratops discovery for up to $US345 million. “They are gearing up for some big announcement on Thursday which they will clearly try to dress up and say that the state will buy the gas at the same terms PRE paid, which the state may well try and hawk around for a carry on those terms but it will never get it,” the source said. He also believed InterOil was most concerned about carrying out the modular LNG plans to monetise half of the EA field resources through Energy World Corporation. He even said InterOil struck a deal to sell this modular LNG project to China National Offshore Oil Company three years ago. InterOil responds Visaggio is legally restricted on what he can say but told PNGIndustryNews.net that InterOil aimed to sell 25% of the Gulf LNG project as its optimal target for an operating stake. “We always said we would sell more if it was hugely accretive to shareholders,” Visaggio said. Based on a deal that a 25% stake is sold to a new partner, Visaggio said InterOil would have 40%, its long-time partner Liquid Niugini Gas would own 12.5% while the PNG government and landowners would collectively own 22.5%. While his comments are at odds with what the source said, Visaggio could not comment on what was raised about CNOOC for legal reasons. It should be noted that Prime Minister Peter O’Neill has recently returned from a trip to China. In regards to the resources on offer, the source claims that five significant players have calculated estimates that vary from 4.8 to 5.5 trillion cubic feet of gas. Visaggio said the certified resources were 9.4Tcf equivalent.

http://www.pngindustrynews.net/storyview.asp?storyid=9637699&sectionsource=s0

[sltibbs]

This article has me scratching my head. "Yesterday the source told PNGIndustryNews.net that InterOil was attempting to sell half of the project to the PNG government at what it deemed to be a “commercial price”." How can PNG ever afford to pay a "commercial price" for half of E/A, especially since they can't even carry the portion they currently have the right to own? If they have a deep pocketed backer that will fund that purchase, then ok, maybe in exchange for a sweetheart offtake deal or something, but if you have such a backer why would the source say "which the state may well try and hawk around for a carry on those terms but it will never get it". So the PNG would then try and sell it our from under the backer that just helped them buy it? Also, who would be the operator?

Hopefully someone can clear this up for me. From what I have read it makes no sense.

[Bincbanker]

Justin this is a truly OMG post , thank you for posting this

I like the style , pre news announcement that fits with the pumping of the PPS by IOC and partners to combat a hostile take over IMO

More happening here then meets the eye

[Justin94360]

Sam, I found it very confusing as well and thought it had a negative slant to it.
Either way the most promising aspect is that IOC is gearing up for an announcement tomorow. Let's face it after the last year they will not annouce anything that has not been ok'd with the govt.

A sale to the govt at commercial price would be unbelievable. I agree the only way this could happen would be if the govt had a back to back deal (let's say with Japan or China - could that present from China swung a deal).

To me this source must be in the govt or someone working for one of the bidders. However it is unlikely that they know the full details of everything going on and between them and the journalist they have had to make some assumptions.

Should be a fun couple of days either way. Imagine being short at this point?

[Bincbanker]

Gov't working for RDS , RDS buys Gov't share and a share from IOC , they become operator

IOC makes huge progress with drilling exploration fields and make up for any discount they give away now

[kerekesc]

I, too, found this article to be difficult to understand.  Two things, however, popped into my mind after reading it several times.  The first was that Shell, as a partner of Petromin, is in this deal somehow.  And, they are stirring up the pot with some negative slant.  The second was even more concerning when at the end of the article this "source" says that the bidders are calculating the total resources to be about one half of what CV claims.  I think we will get alot of "disinformation" until IOC comes out officially with the terms of the agreement.

[Bincbanker]

I hear magic words :
O'Neill back from China trip
CNOOC
Deals
announcement Thursday

Of course the specifics are a bit silly and ad hoc , but like every announcement you hear only the important words like ; "Fire" in a crowded theater or "Emergency" in flight .

I see this as pumping with a NEC approval as outcome

[Justin94360]

Kerekesc, this could easily be a mis quote if they are trying to put a negative slant.

From latest IOC presentation:

IOC ownership of Elk and Antelope = 58.6% of ~9.4 Tcfe* or ~5.6 Tcfe*


So they ask the question "How much gas does IOC have at E/A?"

Answer 5.6Tcf

They then just quote that as total resource.

Certainly all has a smell of Shell about it.

[Tree]

Take away looks to be
1) some kind of announcement in NT
2) bidders low balling based on their lower resource estimate as this is 2nd mention

I call hooey on selling to PNG 50% and CNOOC.

As usual the author gets info and doesn't know how to digest it.

Me thinks the lower the price bid, the more likely IOC sells a minor stake only and moves on with EWC/FLEX in Gulf as the royalty deals are rich. PNG may be 'hawking' half or all their stake as they have liquidity problems.

[jft310]

I see a lot of mis information here. I will check on what's right or wrong.