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$M Comps - PNG LNG/Gulf LNG
01-26-2013, 01:42 AM
Post: #1
$M Comps - PNG LNG/Gulf LNG

LNG plants all cost about the same, $450-$850/Tpa.    Project cost variables and blowouts are mostly found in upstream costs.

Gulf LNG upstream costs, all costs finding, gathering, conditioning and delivering to LNG facilityt, are $1.5-$2 bn.

PNG LNG upstream costs are $10-$14bn.  Their estimates alone vary twice the high estimate for Gulf LNG.

Would seem to me that since IOC's gas cost is negative and PNG LNGs is above $6/M, one of the 6 bidders would be willing to pay more than the price XOM got a few yrs ago for PNG LNG stakes.  Mitsui CSP deal valued E/A at $20-$22 bn.

I forget the PNG LNG $/M, maybe someone has it and can do a quick comp between PNG LNG and Mitsui $/M in these 2 projects.

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01-26-2013, 02:07 AM
Post: #2
RE: $M Comps - PNG LNG/Gulf LNG
"The most relevant recent LNG transaction was arguably Marubeni’s acquisition of a 1% stake in the PNG LNG project through its purchase of a 20% stake in Merlin Petroleum in November of 2011. The stake equates to ~$3 per mcf of reserves"
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01-26-2013, 02:12 AM
Post: #3
RE: $M Comps - PNG LNG/Gulf LNG
Did we ever get the "full" details of the Mitsui option? From memory alone, it seemed they would finance the Condensate stripping plant (est to cost $500 Million) and own 1/2 of it with the right to buy all the condensate at $30 (?) per barrel.
In this scenario, they would have paid $250 Million (InterOil's half) for the privilege of getting inexpensive condensate.

The option to buy 5% is unclear to me. Would they be paying $250 Million for this 5% (effectively their 1/2 of the CSP would now be owned by IOC) or some other amount !?!? As I say, this is very fuzzy in my mind. I'm not sure if I have all facts right - nor am I sure if the Mitsui option has been fully explained by InterOil...
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01-26-2013, 04:20 AM
Post: #4
RE: $M Comps - PNG LNG/Gulf LNG
Mitsui CSP placed a value of $550 mn on a stake of 2.5% of E/A and LNG Plant.
That places a $22 bn value on Gulf LNG as fed by E/A.
Mitsui had option for additional 2.5% based on third party buy-in. IOC assuming that buy-in value at least $550 mn/2.5% stake. This likely based on the 2009 PA start up of 7.5 Mtpa plant.
To make a PNG LNG comparison of start-up size Gulf LNG would cost a total $7.6 bn. And this is using highest estimated upstream costs of $2 bn and highest estimate of $850/tonne for liquefaction (that is higher than PNG LNG liquefaction cost of $650/ tonne.
PNG LNG costs 21 billion almost 3 times Gulf LNG.
Per Marubeni PNG LNG transaction they paid about $3/M.
Marubeni could pay $9/M for same Gulf LNG stake to receive same value.
Yeah, I think bids will be higher than $2/Mcf.

**********

August 4, 2010
Cairns, Australia and Houston, TX — InterOil Corporation (NYSE: IOC) (POMSoX: IOC) (“InterOil” or the “Company”) today announced that a Joint Venture Operating Agreement (“JVOA”) for the Company’s proposed Condensate Stripping Plant (“CSP”) has been finalized with Mitsui & Co., Ltd. (“Mitsui”). The JVOA sets out the rights and obligations of the participants of the joint venture to develop a CSP at InterOil’s Elk and Antelope field site in Gulf Province, Papua New Guinea. The JVOA replaces the preliminary joint venture works agreement announced in April 2010.

InterOil and Mitsui also executed an Option Deed. After reaching final investment decision on the CSP, Mitsui has options to acquire interests of up to a 5% in the Elk and Antelope fields and in the liquified natural gas (LNG) Project on equal terms, yet to be determined, to those agreed with a future industry partner, as follows:

After mechanical completion of the CSP, Mitsui has a right to convert its contributed investment in the CSP into a 2.5% interest in the Elk and Antelope fields and the proposed LNG Plant.
Mitsui also has conditional rights under a separate call option to purchase an additional 2.5% interest in the Elk and Antelope fields and the proposed LNG Plant. Certain regulatory approvals will be required from the Papua New Guinea State for the options to be effective.
Certain regulatory approvals will be required from the Papua New Guinea State for the options to be effective.

Joint Venture Operating Agreement
Under the JVOA, InterOil and Mitsui will each have a 50% ownership stake, before the State of Papua New Guinea’s statutory right to acquire up to 22.5% in the CSP. An InterOil subsidiary is the operator under the joint venture. InterOil expects that the CSP will be designed to process approximately 400 million standard cubic feet per day (mmscf/day) of wellhead gas with an anticipated yield of InterOil News Release Page 2 of 3 approximately 9,000 barrels (bbls) of condensate per day. Dry gas may be reinjected into the reservoir for storage depending on the timing of the development of the proposed LNG Plant. The condensate is expected to be barged to the InterOil refinery in Port Moresby for processing and sale.

The wells and condensate transport from the CSP (located approximately 30 km southwest of the fields adjacent to the Purari River) will be the responsibility of the owners of the Elk and Antelope fields, including InterOil and its upstream partners. The capital cost for the CSP is currently estimated at $550 million, with approximately $32 million of this being expended for front end engineering design. Mitsui will be responsible for arranging or providing financing for the capital costs of the plant.

Final Investment Decision by the JVOA partners is expected by the end of March 2011, following completion of engineering and design work, financing agreements and further regulatory approvals. The CSP facilities are projected to be operational no later than mid-2013. In the event that a positive Final Investment Decision is not reached or made, InterOil will be required to refund Mitsui’s capital expenditure incurred within a specified period and the option and conversion deeds will be terminated.

Phil E. Mulacek, InterOil Corporation Chief Executive Officer, commented,
“Since April, front end engineering and design studies have been ongoing and we have now concluded certain definitive agreements with Mitsui for the CSP and Mitsui’s right to acquire up to 5% in the Elk and Antelope fields and the proposed LNG project. We welcome Mitsui as our partner, and are very pleased with the progress made in the development of our CSP, which we expect will enable us to monetize our Elk and Antelope liquid resources. This is a key step in the monetization of our natural gas resources through LNG.”
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01-30-2013, 06:47 AM
Post: #5
RE: $M Comps - PNG LNG/Gulf LNG
What matters is this: How much does your dried gas cost delivered to the LNG plant?

IOC's delivered gas cost, and enough of it for the life of the project, is NEGATIVE as condensates pay for the $2 bn high estimate of all upstream work to locate, condition and deliver to Gulf LNG.
Ping Ling's delivered gas cost, and they need 9 Ts more for life of project, is $7/Mcf. It costs XOM up to $14 bn to locate, condition and deliver their gas to PNG LNG.
If XOM can sell their initial stakes at $2.2/Mcf, don't you think IOC, cowboy CEO or not, can sell their stakes for substantially more $/Mcf?
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