12-20-2012, 01:18 AM
pickboone
Government Stake in Gulf Project
by pickboone.Dec 18, 2012 7:57 AM.Permalink
.
Fwiw, my belief is that the government's stake is unlikely to change much from its current 22.5% and that virtually all of the sell-down will be to the commercial partner. If I'm correct, it totally obliterates the basis for which the stock has declined 30 points in a straight line. If the government does put forth the funds for a small increased stake, it will be on commercial terms as specified in the NEC submission (leaked in the NYT article, and no contradictory evidence of this commercial terms agreement being breached). I suspect that the greater optionality of up to 50% was something that appealed to some NEC members to help push through the approval, but the reality is that the evidence indicates the government's stake will only increase in conjunction with the small amount of gas that it requires from the Project's second train.
If this is the case, a very large sell-down to a commercial partner is likely close to being consummated, and the seemingly unfathomable upside scenarios of $200+ etc.. on a blockbuster sell-down announcement to a major are very much on the table. The government does have the funding to substantially increase its stake in the Project on commercial terms through the China loan, but the scutiny on budgetary imbalances makes this unlikely. Either way, the stock is heading much higher.
Government Stake in Gulf Project
by pickboone.Dec 18, 2012 7:57 AM.Permalink
.
Fwiw, my belief is that the government's stake is unlikely to change much from its current 22.5% and that virtually all of the sell-down will be to the commercial partner. If I'm correct, it totally obliterates the basis for which the stock has declined 30 points in a straight line. If the government does put forth the funds for a small increased stake, it will be on commercial terms as specified in the NEC submission (leaked in the NYT article, and no contradictory evidence of this commercial terms agreement being breached). I suspect that the greater optionality of up to 50% was something that appealed to some NEC members to help push through the approval, but the reality is that the evidence indicates the government's stake will only increase in conjunction with the small amount of gas that it requires from the Project's second train.
If this is the case, a very large sell-down to a commercial partner is likely close to being consummated, and the seemingly unfathomable upside scenarios of $200+ etc.. on a blockbuster sell-down announcement to a major are very much on the table. The government does have the funding to substantially increase its stake in the Project on commercial terms through the China loan, but the scutiny on budgetary imbalances makes this unlikely. Either way, the stock is heading much higher.
