Sunday musings

[admin]

A little speculative, this post, but we've heard quite some rumors lately that, if true, could greatly impact the dynamics here. Some of these rumors:

• Some element(s) in Petromin had unauthorized contacts with bidding parties and others
• Heads are roling and it looks like some restructuring is on the table
• Shell is not happy and has signed the CA, possibly entering the fray

While these not officially confirmed as of yet (and some are unlikely to be 'officia'lly' confirmed), what if there is truth in them? It's likely the shorts will be rather uncomfortable with the present situation:

• 14M shares short, despite a steep rise lately, the share price is slowly gowing up, not down
• Difficult to find shares to short and at high cost
• 'Deep throat' in Petromin might have been exposed and is no more. If this is true, this would be especially uncomforatable for the shorts. Considering the large amount of shorting and the increase in the numbers, it certainly looks like they felt someone had their backs. If that's no longer the case then it will be interesting to see how they play that weakened hand..
• Some corroboration of this comes from the Shell rumor. If they've now signed the CA and are now very pissed off and frantically doing DD, if true this could be interpreted as that they, until recently, thought someone had their back, and apparently do no longer think that.

You'll notice a lot of 'if's' and 'but's,' and like I said, it's all rather speculative and I would like to have more confirmation of the story, but if these rumors are true than the implications could be rather significant.

[Palm]

This story of Shell just now signing a CA does not make a lot of sense. As Tree posted the other day PM stated last fall that Shell had signed a CA. And if I was a bidder that had complied with the process all along and submitted a "final" bid by the Feb 28 deadline, I would have a real problem with someone else coming along and being allowed to sign a CA at this point. IOC would be open to withdrawn bids and possible lawsuits. Plus with all the other rumors regarding Petromin and Shell, why would IOC allow it as well as Oneill? Doesn't make sense.

[admin]

This story of Shell just now signing a CA does not make a lot of sense. As Tree posted the other day PM stated last fall that Shell had signed a CA. And if I was a bidder that had complied with the process all along and submitted a "final" bid by the Feb 28 deadline, I would have a real problem with someone else coming along and being allowed to sign a CA at this point. IOC would be open to withdrawn bids and possible lawsuits. Plus with all the other rumors regarding Petromin and Shell, why would IOC allow it as well as Oneill? Doesn't make sense.

Well, like I said, lot's of 'if's' and 'but's'..

[ArtM72]

I wonder if Shell had to get into the data room for the A3 DST logs. If that was the case that may have been enough to coax them to sign the CA. In either event I suspect nothing prevented them from putting in their bid without the CA. After all, they had been in discussions with IOC for years and had to know what IOC and the government was looking for, scope and format. I see no way that the bidding process was reopened for RDS.

What would concern me is this. IOC has been under immense pressure to keep Duma's agency informed during this process. Undoubtably that meant confidential information was being given to them concerning the bidders and the nature of the proposals in hand and under discussion. It could very well have been some of those bids were manipulated...er adjusted... to satisfy Duma demands thus making them ultimately less satisfactory. (I say Duma, but he may have been simply a pawn in this mix and not the true puppetmaster). If such malfeasance occurred it seems very possible a subsequent review of the bidding process was necessary leading to a delay.

Another scenario would have the mole feeding shorts over the past few years information concerning activities underway undermining IOC and its efforts to monetize its discoveries. That mole subsequently found itself caught in a circle of bigger and bigger lies after the source of the IOC undermining power was in some way deballed. That event may well have ultimately been the election landslide by ONeil. We now have 14 million shares short with a large number of those shares possibly established according to the bigger fool theory.

Nonetheless, it is still possible there is no accretive bid for E/A, or there is some catastrophe waiting for IOC on the horizon. I doubt though that's the case. The company and its assets have become far too public and PNG's need for investment too large for a government takeover to occur, and that is the only way IOC gas does not get to market. We might never see IOC share prices at 1,000 but it sure seems like $250 this year is a 3 inch putt.

Here's an old Facebook post from last October that suggests what kind of money might be behind the undermining of IOC's interests:

Ministers Duma and Palo visit Hagan with Indonesian fugitive
October 16, 2012 7 comments
Eyewitness account from Facebook

"International Indonesian fugitive Joko Chaundra Soegerto clandestine arrival in Mount Hagen last weekend (Saturday) was witnessed by a few.

"I just drove past the golf course at the back of Mount Hagen Airport and saw a white green stripe private jet parking there.

"I quickly drove into the terminal area of the airport to check who it was and the people advised me that it was our good Minister William Duma with an Iraqi Oil tycoon. The people at Mount Hagen Airport were caught with surprise.

"I waited and saw an Asian man with Hon William Duma and Hon Ano Pala getting onto the jet. It didn’t dawn on me until I checked PNG Exposed blog which shows the same picture.

"Let alone the controversy surrounding the granting of citizenship to this fugitive, he is into many deals including the controversial rice project in the Central Province which is expected to be approved by the NEC some time this week.

"I’m also wondering where the plane came from to land in Hagen. If it was from an overseas port, Mount Hagen Airport is not the port of entry and wondering why it landed there before heading off to Port Moresby."

[Spartina]

Interesting stuff Art - hey what ever became of that post from someone, can't remember the name, but he was getting info on the flight numbers& companies coming in and out of the airport in png?

[admin]

["Another scenario would have the mole feeding shorts over the past few years information concerning activities underway undermining IOC and its efforts to monetize its discoveries. That mole subsequently found itself caught in a circle of bigger and bigger lies after the source of the IOC undermining power was in some way deballed. That event may well have ultimately been the election landslide by ONeil. We now have 14 million shares short with a large number of those shares possibly established according to the bigger fool theory.

Nonetheless, it is still possible there is no accretive bid for E/A, or there is some catastrophe waiting for IOC on the horizon. I doubt though that's the case. The company and its assets have become far too public and PNG's need for investment too large for a government takeover to occur, and that is the only way IOC gas does not get to market. We might never see IOC share prices at 1,000 but it sure seems like $250 this year is a 3 inch putt."]

I doubt it Art. I'm proceeding as if these rumors have merit, then, since I'm certain the doubts about E/A are unfounded, that leaves the shorts almost certainly thought someone had their backs as the only (rational) explanation for their doubling down behavior. If that game has now been exposed and dealt with, they're in an awkward place, at the worst possible moment (having shorted 14m shares with few if any available and at extortionary rates and with deal announcement not far off).

It chimes, as another notable participant in this game of thrones (or thornes, I keep forgetting), had a sudden fit of activity, that is, RDS. If the Petromin game has now been neutralized, that has left them both naked, so to speak. By the way, I'm fairly sure its Petromin and not Duma, the latter wasn't too pleased with these ads.

It's still a very foggy situation though, for instance, what I wonder is how they would ever think they could rely on Petromin for things to go their way. It seems to me, NEC trumps Petromin, but I'm just an amateur outside observer, almost certainly drawing conclusions from incomplete and possibly wrong info. However, that there is something going on at Petromin and Shell seems to be fairly well grounded.

[jft310]

sqeeze finder yahoo
Caught up with a smart hf friend who owns IOC. Thinks there's credibility to these Petromin rumors and isn't surprised that Shell is still interested. Thinks there may be 5 million shares short tied to the Petromin connection, so expects real covering to start. That being said, he already thought Petromin had been losing power and influence in PNG and he doesn't believe that they have even been kept apprised of what's happening with IOC's deal process; so after years of Petromin's shenanigans, he felt comfortable anyway they had become almost irrelevant with O'Neill running the country. BUT, they've continued to have an impact in emboldening shorts and slowing IOC's progress - that may change now! He said the receipt of several bids for E/A was proof that IOC prevailed.

Says PNG is on extended holiday for Easter through Monday so the press may be slow early this week. But the chatter alone will be enough to break the back of the 14 million share short position.

Also thinks if Petromin is being dismantled, it changes the game for timing in selling the gas from Triceratops. Thinks a deal can quickly be inked to feed gas from Triceratops to PNG LNG if XOM doesn't win the E/A bidding war. Also thinks PRE would have no problem going along with this strategy and Duma/O'Neill would love to keep the pipeline and LNG construction workers busy and get more early cash flow from adding trains.

His last thought is that the rumors of Shell signing a CA and engaging in the bidding war for E/A would be a major breakthrough if true. He thinks this would mean that if Shell doesn't win the operatorship for the Gulf Project, they will likely place a friendly bid for all of IOC. IOC would then release other bidders from restrictions to ensure it gets a fair value if it is in play. This is apparently what IOC's CFO said would happen in a PNG Industry News article last year.

This is all one man's opinion (albeit a smart one!). Very positive, but do your own dd

[Tree]

O'Neill has been unwinding Petromin's authority as State's Nominee since elected last August.  We will never hear the details and we hear of developments weeks/months after they occur. DPE has history of being mis-managed and unavailable and was blamed to cost XOM an additional billion $ in PNG LNG through their incompetence.  Petromin may survive as absorbed into NPCP and who knows, Petromin leaders may survive as well.  Duma did after-all.  Apparently he was re-aligned by O'Neill.

It would seem NEC could be bought  then for $100 million.  Maybe that $ is what had the short's back.  Doubtful today at this point.

 PROJECT ZEBRA:

..."The move will also distance the government from the stigma of a potentially corrupt inducement money totaling $US100 million promised by a multi-national company to shaft the second LNG developer.........The $US100 million offer is payable after dilution of Interoil's project equity, cancellations of Interoil's project agreement with the State signed in December, 2009 and the company's present PRL-15 over Elk/Antelope and dispossession of its exploration acres in Gulf Province.

The offer was made in writing April 21  (2011)  this year by Shell Exploration Company BV to investment bankers - Lazard Freres based in Paris and to New York based Ambata Capital Partners - who were appointed by Petromin PNG Holdings Limited to act for them.........Petromin - through Petroleum and Energy Minister William Duma and his department - has been actively lobbying to have Shell Exploration Company BV imposed on Interoil as operator of the Gulf LNG Project. Interoil does not accept the deal...........Petromin has schemed "Project Zebra" under which it has mounted a hostile takeover or dilution bid of Interoil' LNG project equity position as a condition of Shell's engagement as Gulf LNG project operator.

The scheme was hatched by Petromin in March this year (2011)  which Petromin maintains was purportedly at the direction o displaced Prime Minister Grand Chief Sir Michael Somare and Minister Duma.

Persons close to the former Prime Minister say Sir Michael was never consulted by Petromin for authorization to seek an operator for Interoil's LNG project.

*****

Michael Somare in surgery for heart illness

BY:ROWAN CALLICK, ASIA-PACIFIC EDITOR From: The Australian April 12, 2011 12:00AM

PAPUA New Guinea's 75-year-old Prime Minister, Michael Somare, is seriously ill, undergoing surgery in Singapore for what is understood to be a longstanding heart condition.

His family has flown to his bedside, as have PNG Chief Secretary Joshua Kalinoe and other close colleagues. His son Sana works in Singapore.

Sir Michael and his family are Catholics, and they asked congregations to pray at masses on Sunday for the veteran politician, known as "the Chief" and seen as the nation's founding father. He has been in parliament 42 years.

Sir Michael collapsed during a recent court hearing when he was convicted of failing to file annual returns on his assets and business transactions, and suspended from office for two weeks to April 18. (2011)

He took puffs from an inhaler, and resumed his attendance. But he failed to fly to Fiji for the Melanesian Spearhead Group summit 12 days ago, and went to Singapore for medical checks.

It has been unclear whether he would lead his National Alliance Party into the election due mid-next year, after an unprecedented 10 years in power. The state of his health now makes that unlikely.

It had been assumed he would prefer his son Arthur, the Public Enterprise Minister, to succeed him, but the powerful Highlands bloc of MPs would oppose that. Highlander Sam Abal is now Acting Prime Minister.

If Sir Michael were to retire because of ill-health, it would cause an unpredictable parliamentary election. The new prime minister would then hold power for just over a year.

But PNG would be entering uncharted political waters just as the prize is greatest. Billions of dollars of international investment is under way for a liquefied natural gas pipeline and plant, and for massive new mines.

[Movieguy]

Thanks for sharing your friend's insights, JFT. What he says regarding a quicker deal for Triceratops fits in with what I have been hearing.

I hope he is right about this being a major prod toward short covering, as I am frustrated (like everyone else here) at the stalled price of the stock since its move up weeks ago from the 50s to the upper 70s. Is this really what the market thinks is fair value for the stock absent of a "done deal?" I mean the stock spent a lot of time in the 80s and even touched 99, and this was on the "possibility" of a deal. Now we have a likelihood of a deal, a finished deal with PRE and higher Tcf in the ground, yet we sit around 76. Does no one believe we are heading to pps above 100 and maybe above 200?! Where is greed when you need it?!

[jft310]

funk

Well played longs, well played
.

Throughout all the short lies and their 100 million failed gamble (shell like Geffart got hosed on the river card) longs, stutes and HF's have added and totally shrunk the float. The exit for the shorts is certainly tighter than ole Minkys hole ( big bob expanded Minkys horizons amoung other things). This week the fireworks start a big Hedge confided in me. I'm not at liberty to say more.
funkenstein says from yahoo