Wayne Andrews:
Thank you, Roxanne, and hello everyone. This is Wayne Andrews, VP of Capital
Markets for InterOil Corporation. Before we start, I want to briefly remind
everyone that some of the statements made during this conference call
constitute forward-looking statements within the meaning of the U.S.
Securities laws, including such statements as those regarding expectations of
future results, general financial performance, future business prospects, and
strategies.
These statements are based on management's current expectations and are
subject to a number of risks and uncertainties which could cause actual
results to differ materially from those described in the forward-looking
statements. Investors are cautioned not to place undue reliance on these
statements.
Additional information about factors that could cause our results to differ
materially from those in the forward-looking statements can be found in the
company's filings with the U.S. Securities and Exchange Commission and SEDAR.
The speakers from management on the call today are Gaylen Byker, our
Chairman; Bill Jasper, President; Collin Visaggio, CFO; and Dave Holland.
Upstream Manager.
We have a presentation to accompany our comments today. The presentation can
be accessed on our website at www.interoil.com. You can find the link under
the Investor Relations section on the homepage.
At this time, I'd like to turn the call over to Dr. Gaylen Byker. Please go
ahead, Gayle.
Gaylen Byker:
Thank you, Wayne, and thank you, all for participating in today's First
Quarter Results Conference Call. Please forgive the sound of my voice as I'm
having some problems with allergies today but let's try to be as articulate
as possible. I'd like to start with a brief summary of our first quarter
context and results, and Collin Visaggio, our CFO, will provide additional
financial details.
We are pleased to announce that our operating businesses in refining and
downstream continue to generate profits that support the investment
expenditures and our development segments have upstream and midstream
liquefaction. Our first quarter profit was $4 million compared to $9.4
million in the same period a year ago. The variance is largely driven by
weakening of the PNG Kina during the quarter compared to the strengthening of
the Kina a year ago.
Despite a slightly weakening in the first quarter, the continuing strength of
the PNG economy was affected from the profitability of our operating
businesses. Bill Jasper will review our operating business over on the call.
Additionally, we are approaching to have the developing segments of upstream
and midstream liquefaction where our investments today are being leased to
create value for the future.
Directly addressing our partner selection process, we are well aware that our
shareholders are eager for us to conclude the long running sell-down and LNG
partnering process. I assure you that we too are eager to complete this
process as our potential partners and the PNG government. And all parties
remain hard at work and moving the process forward.
On today's call, we will detail a number of changes in PNG, the LNG industry
and at NOL that create a favorable environment in which to complete our
partner in process. First, PNG, following the election last year, the
parliament has formed the strongest coalition government in the country's
history. The current prime minister has been given an unprecedented 30 months
before a vote of no confidence can be taken, underscoring a stability of the
current administration.
A major objective of the O'Neill administration is to build critical
infrastructure in the country including railways and power generation. In
line with this goal, the PNG state has reorganized the entities that managed
the government's interest in petroleum projects and the current and former
prime ministers of PNG will act as voting members of the new entity.
Next in the LNG industry, the forecasted growth in demand for LNG and the
natural depletion of existing reserves means that there's a constant need to
bring on new LNG projects. At the same time, one Australian project has been
canceled and two others are significantly delayed. Cost overruns on other
projects already under construction had caused the dominant LNG players to
reevaluate their portfolios. The tension between these two trends has
resulted in an ever greater interest in new LNG projects with attractive
economics.
And finally at InterOil, we too have been positioning for the next phase of
growth. Our progress in defining our resource, particularly at the Antelope
field has demonstrated a high quality reservoir capable of supporting live
scale LNG development. The Triceratops discovery were on early delineation
stage, provides an opportunity for further upside to our resource estimates.
On the corporate governance front, our company's board and senior management
have begun positioning the company for the next phase of its development.
InterOil's founding CEO, Phil Mulacek, an accomplished entrepreneur, has
retired after building the multi-billion dollar New York Stock Exchange
listed trading company from scratch. We are thankful for Phil's many years of
dedication and hard work and pleased that he will advise the company as we
continue our very successful exploration program and finalize our LNG
partnering arrangements.
We have engaged Spencer Stuart to conduct a global search for a new CEO to
lead the company to its next stage of development. Discussions with a number
of candidates, several with project management experience are underway and we
look forward to introducing the next leader of InterOil. Our eight members of
the Board of Directors will make the decision on our LNG partnering process
independent of our CEO search.
The company and its investment banking advisers are in final discussions with
multiple partners, including major oil companies and a national oil company,
each of whom we believe if chosen would satisfy the PNG Government's
objectives. This is an advantageous position for us to be in and we believe
that it is best to allow our advisers and our board the time they need to
finalize the most beneficial transaction for our stakeholders.
The PNG government has been kept apprised of our discussions and
[indiscernible] (07:22) to support our plans to partner with a qualified
operator. This will be a multi-billion dollar transaction and we are
fortunate to be on a competitive process. We appreciate your patience and
support and are confident of a successful outcome.
On the upstream businesses, I'm glad to report that the Department of
Petroleum and Energy has approved well commitment variations on PPL 236 and
PPL 238. This allows us to focus on further delineating our existing
resources at Elk, Antelope, and Triceratops.
All of our licenses are in good standing. As we have previously announced,
the joint venture operating agreement relating to the operations in Petroleum
Retention License 15 and Petroleum Prospecting License 237 have been approved
by the Ministry of Petroleum and Energy and registered under the Oil and Gas
Act.
With the incoming partners, the joint venture intends to finalize the
development plan for the LNG project and complete the proper documentations
to move the LNG project forward.
A gas agreement with the PNG state, which is currently being drafted by the
government, we should receive our 2009 project agreement and control the
project development. It will be finalized with the government and the LNG
partner we select.
Dave Holland will comment on our current upstream operations and future
drilling, and plans a little bit later in the call. I'd now like to turn the
call over to CFO, Mr. Collin Visaggio, to cover the financials in more
detail.
Collin F. Visaggio:
Thanks, Gaylen, and welcome to everyone listening to today's presentation. As
Gaylen stated, our net profit for the quarter ended March 31, 2013, was $4
million. The operating segments of corporate, midstream, refining, and
downstream, collectively derived a net profit for the quarter of $18.5
million, mainly due to an increase in gross margins attributable to the
positive crude and product price movements and higher margins from export
cargos.
Our balance sheet remains robust with our debt to capital ratio at 19%. As of
the 31st of March 2013, our total book assets amounted to $1.4 billion and
our total liabilities amounted to $589 million. Our current ratio and quick
ratio were 1.5 times and 0.8 times respectively. The quick ratio was below
our internal target of 1. However, the closing of the selldown transaction
whereby party will participate in the development of the LNG project and
acquire an interest in the Elk and Antelope fields will bring this ratio well
below our internal target.
The farm-in agreement with Pacific Rubiales Energy was completed during the
quarter and we received a completion settlement from Pacific Rubiales of $56
million on Marcy 24, 2013.
Firstly, summarizing our results of the group. As mentioned, our operating
business segments had a combined net profit of $18.5 million and the
investments in our developing business segments resulted in a net loss of
$14.5 million for a consolidated profit of $4 million. Our EBITDA for the
quarter was $18 million.
The decrease in net profit after tax for the quarter compared to $5.4 million
in the same period of 2012 was mainly the result of a $15.6 million increase
in foreign exchange losses due to the weakening of the PNG Kina against the
U.S. dollar. The foreign exchange rate decreased from 0.4755 to 0.4675.
Compared to the first quarter of 2012, the foreign exchange rate had
increased during that period from 0.4665 to 0.4820 and the one-off transfer
of $7.8 million in foreign exchange gains previously included in other
comprehensive income to the profit and loss upon repayment of certain
intercompany loans during the prior quarter ended March 31, 2012, and a $1.7
million increase in other income primarily attributable to the lower covering
of expenses related to upstream construction and drilling-related activities.
These decreases in profit had been partially offset by a $6.9 million
reduction in exploration cost incurred primarily for the seismic activity on
PPL 236 in the prior period, and a $4.7 million decrease in income tax
expenses resulting mainly from the lower downstream current quarter profit
earned and the impact of unfavorable foreign exchange movements impacting
temporary differences and translation of the non-monetary assets of the
midstream refinery operation using period in-rates.
The total volume of all product sold by us was 2.4 million barrels for the
quarter ended March 31, 2013 compared with 2.2 million barrels in the same
period of 2012. A full detailed analysis for your review is available in the
press release and in the filed financials and Management Discussion and
Analysis document.
Analyzing the cash position of the group, as of the 31st of March, 2013, we
had cash, cash equivalents and cash restricted of $107 million. Since the
start of 2013, we have spent $7 million on Antelope-3 drilling and testing
rigs, $4 million on Elk-3 site preparation pre-spud, drilling and standby
works, $3 million on the Gulf LNG project, $20 million on other upstream
infrastructure works and $4 million on the operating business maintenance
upgrades.
As of the 31st of March 2013, the company has capacity to increase debt
levels. Based on existing book values, a gearing of 50% allows open debt of
some $600 million, more than sufficient available cash as we continue
progress towards achieving our near-term strategic objectives.
During the quarter ended March 31, 2013, we filed a new shelf of $1 billion,
which will add to our financial flexibility. We had focused on our strategic
plan to monetize the Elk and Antelope fields through an integrated
development project.
As of March 31, 2013, $384 million has been spent on the Elk and Antelope
fields. $52 million on the LNG joint venture, $141 million on construction
equipment, roads, logistics and site works associated with the upstream
development sites. And $53 million has been spent on the condensate
stripping, front-end engineering and design. In addition, we have spent $74
million on the Triceratops-2 field.
We're working very closely with the government of PNG to keep them updated on
the strategic partnering process and the licensing applications. We're
certainly very excited about the opportunities ahead of us and we look
forward to maintaining momentum and concluding the strategic partner process
and certifying the requirements of the government and the stakeholders to
proceed to final investment decision on the Gulf LNG project.
With that, I will hand back to Gaylen.
Gaylen J. Byker:
Well, thank you, Collin. I'd like to move on to the refinery and downstream
operations, so I'll pass the call to our president, Mr. Bill Jasper.
William J. Jasper:
Thanks, Gaylen, and good morning, everyone. I'm pleased to report that the
first quarter of this year has produced another quarter of great gross
refining margin for the refinery, and that is at 19.9 million gross refining
margin for the quarter.
This quarter was notable as being the highest ever quarterly run rate for the
refinery at 27,500 barrels a day per calendar day, and the highest level of
sales for any quarter. The main reason for this is our switch to a
naphtha-rich crude diet as the premiums for these crudes are currently much
lower than the higher value middle distillate crudes which we traditionally
prefer. As a result, we are running the refinery at higher rates to meet the
diesel demand and overall gaining a higher grossing margin.
Domestic sales remain very strong with this quarter only marginally lower
than the first quarter of 2012 which was a record quarter for the refinery.
When combined with the increased naphtha exports, this results in a record
total sales level for the quarter. The downstream business has a sales volume
for the first quarter of 2013 were 183.7 million liters which is a 2.8%
decrease on the volume sold in the first quarter of 2012.
The PNG economy has slowed slightly in the first quarter as the construction
phase of the ExxonMobil at the LNG project nears completion and the
construction contractors complete their projects. This trend may continue in
the short term.
Our retail business accounted for approximately 15% of our total downstream
sales in the first quarter and we continued to invest in new fourth quarter
technology and in new retail fuel distribution systems.
During the quarter, we reopened one new retail site after it was purchased
from our previous dealer and completely refurbish. We were also about to
commence operations on two newly constructed truck stop commercial sites. And
our safety record at the end of the first quarter of 2013 has a refinery
achieving a total of 5.2 million man hours without a lost time injury. This
great achievement coupled with our continued focus in the remainder of the
corporation [ph] had us (18:28) with just over 9 million man hours without a
lost time injury.
And with that Gaylen, I'll turn it back to you.
Gaylen Byker:
Thank you, Bill. We'll move on to exploration and production. I'll hand the
call over to General Manager of Exploration, Mr. Dave Holland.
David Holland:
Thanks, Gaylen. Good morning, everyone. [Inaudible] (18:51) in providing an
update on our exploration activities. In the first quarter of 2013, we
completed the Antelope-3 Well and our resources [ph] actually the,
[indiscernible] (19:01) Elk, Antelope and Triceratops fields. As reported in
the last call, the very positive results of Antelope-3 and Triceratops-2,
this quarter took (19:11) net resource base to over 1 billion barrels oil
equivalent on a 2P basis.
During this quarter, we continued work finalizing infrastructure at Hou Creek
(19:21) and Herd base, which will support further appraisal drilling of
Antelope and our new discovery, Triceratops. During this quarter, we also
completed the farm-In with our new partner, Pacific Rubiales Energy into our
PPL 237. And shortly after, as a new joint venture [indiscernible] (19:45)
replication for Petroleum Retention License over the Triceratops gas fields.
The Triceratops gas field discovery has generated significant interest and
InterOil has finalized an agreement to acquire a joint project program
covering the areas of the North Triceratops and the North West Triceratops
prospects which based on the current mapping of the seismic extend from PPL
237 into our neighboring license PPL 338. The PPL 338 joint venture were for
most of this program. We see this as a very positive step and recognition of
the perspective potential of this new discovery.
In other regulatory activity during the quarter, the DPE approved our joint
venture operating agreement riding to operations in PRL 15. Also following
success of the Triceratops gas discovery and the better than expected results
in Elk-3, we have had the said discussions with the DPE and our forward focus
in priorities. We've included our clear mutual objective is to focus on
progressing the Gulf LNG project.
Subsequently, we applied for variations to modify our well commitments for
our licenses PPL 236 and PPL 238. And on March 28 of this year, the DPE
approved the variations and the deferral of the well commitments for both PPL
236 and 238.
So in summary, we look forward to resume in seismic acquisition with PPL 238
early next week and after that, resumption of our drilling program with the
Elk-3 well once our partnering for the LNG project is finalized. We remain
excited by the prospectivity of our licenses and look forward to the
opportunity to make further announcements on our future exploration of
seismic and drilling activity as our plans are finalized.
Now with that, I would like to hand you back to Gaylen.
Gaylen J. Byker:
Well, thank you, Dave. So in closing, I'd like to assure everyone that the
InterOil Management and Board of Directors are firmly committed to our
stakeholders. My mandate as Chairman and Interim CEO is to drive this well
down and partnering process to close in as swiftly as possible while
maximizing the value for all.
We look toward to working with a qualified LNG partner, simultaneously
creating value for our stakeholders, and satisfying the objectives with the
PNG government. We are excited to be in the final stage of our LNG partnering
process. We thank our shareholders, our staff, our co-workers, our partners
in the PNG government for their continued support.
That concludes our prepared remarks and we will now open the call up for
questions.
Q&A
Operator:
Our first question comes from the line of Evan Calio with Morgan Stanley.
Please go ahead.
<Q - Evan Calio>: Yes, good morning, guys, and good evening to some. I just
wanted to congratulate Phil Mulacek who's largely responsible for the vision
and formation of InterOil and wish him the best going forward.
Let me start with a question on his replacement now with Gaylen. You
mentioned that the CEO and sell down process are independent. But just to
clarify, I mean do you intend or does the Board need to announce a new CEO
prior to the finalization of the partnership sell-down process or is the
board going to complete this prior to determining who the next leader is?
<A - Gaylen Byker>: No. We will not have to announce a new CEO before we go
to the next step in the partnering process. Both are quite independent and we
anticipate that we will be announcing the partnering process before we find
the new CEO.
<Q - Evan Calio>: Excellent. And then - I mean generally, there's clearly a
lot of transformative events on the horizon for the company and then maybe
ultimate options - or multiple options today. And the change in the CEO, only
the firms second and first outside the founders one of them. I mean, can you
discuss generally what the board is looking for? Are there particularly
different skill set or a different vision of InterOil going forward or might
this even be a fluid process here?
<A - Gaylen Byker>: I can give you just a brief summary of the board's
perspective is that we'll transition from being a very entrepreneurial
company to being a much more highly-developed and diversified operation. And
we're looking for someone with very extensive management experience, but
also, experience with explorations and production and with LNG project
development. The growth of the company I think has been astonishing and we
need to make sure that we have a sustainable management structure and
processes and procedures and people to carry it to a whole new level.
<Q - Evan Calio>: Got it. Maybe I can shift gears on a question, if I could,
on the seismic joint venture that you announced today. Can you discuss where
oil searches block is relative or how close the border of that block is
relative to the Triceratops discovery? I mean, do you believe that the
structure extends across the lease line into their structure, and obviously,
is there agreement to fund the seismic, indication of some potential for a
unitization or something in that regards?
<A - Collin Visaggio>: Yes, sure. I think it's probably best if people have
access to the presentation or you caught me out, but at least take note of
the map on page 18, and there, you'll see the - outlined in yellow is the
prospective area, the North Triceratops and the Northwest Triceratops. Also
on that map is the PPL 338 license and PPL 237 license down here.
From that, you can see that based on the current mapping of the existing
seismic that both of those prospects extends north into PPL 338 and that in
terms of that, I mean after the acquisition of seismic and mapping, I believe
that the joint venture would be looking to drill a well as part of the
farming process that, although such an undertaking, with the current loss
with all the cleanup petroleum. If that were to be a discovery, then
obviously they're on track in - under the European PNG Oil & Gas Act, we will
be looking at work requirements to form a unit.
<Q - Evan Calio>: Is there any kind of volumetric on the area and their
closure of where that structure is? You care to mention the size of that
structure for us?
<A - Collin F. Visaggio>: Well, except on there I think the total closure we
think [ph] with what we can map (27:47) just in seismic, is at the order of
around 128 square kilometers for the prospective area. However, we believe
that that extends westward our current seismic control and potentially
extends east of our seismic control.
So, we will be looking to reduce seismic after this joint program and we
would definitely be focusing on testing the limits of the closure and also
focusing on significant other potential prospects that we have in PPL 237.
We've - based on the gravity, we believe we have a number of gravity
anomalies which run between Triceratops to the west and Elk and Antelope to
the east. And we think and believe that this is a real - potentially a
significant resource trend that with the addition of seismic in this area
that we would be looking to mature probably at least two more prospects on
that trench between Triceratops and Elk and Antelope.
<Q - Evan Calio>: And in terms of new activity, I mean is it safe to say that
you're not - you won't be drilling or spending additional CapEx until a deal
is signed? Is it like reduced InterOil's financial obligations with regard to
those wells? Is that an accurate statement?
<A - Collin F. Visaggio>: Yes, that's an accurate statement.
<Q - Evan Calio>: Great. I'll leave it there, guys. Thank you.
Operator:
Our next question comes from the line of Pavel Molchanov with Raymond James.
Please go ahead.
<Q - Pavel Molchanov>: Thanks very much. First, just on the timing for
partnership announcement. Correct me if I'm wrong, is there a June 30
deadline under the existing project agreement to reach a partnership deal or
is that not the case?
<A - Gaylen Byker>: No, there is not. There's a number of parts to your
question there that or least implications of your questions. The 2009 project
was entered into the different projects in mind and pre-dates the current
partnering process. It's our expectation that when the partnering process is
completed, we, together with our partners, will negotiate a gas agreement
with the state. And by the way, the state has already started drafting and
that will replace the project agreement.
The gas agreement is the way that PNG state under the Oil & Gas Act usually
controls the development of an LNG project. There may be some changes but we
expect that most of the provisions in the project agreement will be
incorporated into the gas agreement and it is not a deadline for the
partnering process.
Now the partnering process is a multiple negotiations and a major
multi-billion dollar project and it has long-term significance for all of the
InterOil stakeholders. And so that isn't going to be rushed, but those two
are not in the same category in terms of timing.
<Q - Pavel Molchanov>: Okay, understood. Another question on kind of the
regulatory front. Last November when the cabinet approved the revised
project, there was a cabinet committee forum that was supposed to negotiate a
gas purchase from the Antelope field for the purpose of domestic gas
projects, power plants and so on. Has that committee been in discussions with
the company and what is the status of that?
<A - Gaylen Byker>: Yes. State negotiating team has met with the company on a
number of occasions and has basically suspended the process other than the
drafting of the gas agreement until the partner agreement is confirmed.
<Q - Pavel Molchanov>: Okay. And then just last one from me, have you
disclosed the names of the final bidders to the government and has the
government explicitly told you that all of them qualify under the
government's criteria?
<A - Gaylen Byker>: The government is aware of all of the people that we are
negotiating with and they are in the category that the government has said
they would approve.
<Q - Pavel Molchanov>: Okay. Thank you very much.
Operator:
Our next question comes from the line of Chris McDougall with Westlake
Securities. Please go ahead.
<Q - Christopher McDougall>: Good morning, gentlemen. A few questions on the
joint venture operating interim on Triceratops into 37. So now that you've
laid out and gotten agreement approved, could you just share with us a little
bit more on what the plans are there? You've got the seismic as the next step
and then have you identified well locations and kind of the timing of those?
And what level of that work is going to be carried over the next year from
the Rubiales agreement.
<A - Collin F. Visaggio>: Okay, we had an agreed work program between
InterOil and particularly, Rubiales Energy which forms the basis of the
funding of the farming. There's a carry associated with that and we will be
looking to complete a program that's at least 250 kilometers of seismic with
PRE and multiple wells. At this stage, we are completing some of our
technical studies we had - and we will have several technical committee
meetings before we finalize that. But at this stage, mostly we'd be looking
to pick up the seismic...
<Q - Christopher McDougall>: Hello?
<A - Collin F. Visaggio>: Feels like we've lost them.
<Q - Christopher McDougall>: So perhaps we lost part of the group. Who's
still on the call?
Operator:
Your lines all are still connected. This is the operator. All lines are still
connected.
<A - Collin F. Visaggio>: Except for Singapore, you can - just call in and
see if I can find out what's going on. Gaylen, we've just lost the office
there. Okay, okay. Operator, they're about to dial back in.
Operator:
Yes, we'll watch for them.
<A - Collin F. Visaggio>: He was talking about the multi-well program.
Operator:
And your line is back on the conference.
<A - Gaylen Byker>: Sorry about that.
<A - David Holland>: Yes, sorry about that. I think I just got most of the
way through my answer before it cut out. I think just my conclusion I think
to that was that we would be looking to acquire additional seismic after this
joint program with the PPL 238 joint venture and we will be looking to use
that seismic to mature our well locations for Triceratops' appraisal. And
then also, mature well locations for exploration on that new trains that I
identified earlier.
<Q - Christopher McDougall>: Okay, and those wells are planned for 2014
drilling or what do you expect?
<A - Collin F. Visaggio>: We would be looking when you think of this stage to
- as a target to potentially spot a well either at Triceratops or appraisal
well and an exploration well this year. And if the seismic are particularly
well, then we may look at accelerating an exploration well into this year as
well.
<Q - Christopher McDougall>: Great. And while we're talking about seismic, so
oil search working with you guys on their seismic program. How much,
approximately do you think they're spending on this where you're getting the
full benefit of it but not having to spend...
<A - Collin F. Visaggio>: At this stage, I think that's commercially
insensitive. I really can't comment on that.
<Q - Christopher McDougall>: Okay, fair enough. And then let's see, Dr.
Byker, just to clean up the language a little better, make sure our
expectations are aligned. Is there any difference between a super-major and a
major oil company in your communication with the market?
<A - Gaylen Byker>: No.
<Q - Christopher McDougall>: I'm sorry, I think you said no.
<A - Gaylen Byker>: The answer is no, there is not a distinction. How major
is it is a common term and okay.
<Q - Christopher McDougall>: Fair enough. And I guess at higher level, Dr.
Byker, I wanted to give you an opportunity just to talk a little bit more on
your strategy for coming into the Interim CEO role and as you look to select
the CEO will the partnership chosen kind of the winning bidding contingent.
Will that have a bearing on the CEO selection or are those completely
independent?
<A - Gaylen Byker>: Just to comment, I have been involved in the InterOil for
17 years, so I think I understand the trajectory quite well. Secondly, on
choosing the CEO, we really, I think, keep those two things separate. We're
looking at a long-term project to develop multi-billion dollar facility and
we need to be drilling and doing seismic. It's a fairly, I think, extensive
company for its size and we need a CEO who can manage that. And I don't think
that the partnering process will affect what we're looking for or what we
select.
<Q - Christopher McDougall>: Great. And building on that comment about the
kind of long nature of this opportunity, the current expectations are for the
first stage here to be around the 4 million ton a year train, but I would
assume, there is some expectations, and I'd love to get them some more color
around that, that that would be a starting point and what can TCF of gross
gas in the area that you would expect to add a second train in the kind of
coming years. Is that a fair expectation?
<A - Gaylen Byker>: Yes, it is. And I think that with Dave described in
Triceratops and some of other prospects, we anticipate that this will be a
series of opportunities for train to be developed over the coming years.
<Q - Christopher McDougall>: Great. Thanks. And then we've seen in the news
that just - well, I guess my questions would be I'd love to understand the
little difference between Gulf province and the Highlands region as it
relates to population density and potential land owner relationships? And
just to understand how you've advanced along the way of managing all the
stakeholders in the region of potential development.
<A - Gaylen Byker>: The Gulf region is a very lightly populated part of Papua
New Guinea, not merely as dense as the highlands. And the development of the
area is also far less advanced. And my sense is that we have done a lot more
work upfront than it has done in the highlands. And that the number of
landowners and the level of cooperation has been really at a boom for us and
there's no problems to date. And we've done a lot of work in the area and
we're doing a lot in community development and education and healthcare.
Even though we've never taken the renewed sources out of the region yet, we
understand that. And I think that both the number of people and the level of
cooperation are very much in our favor.
<Q - Christopher McDougall>: Great. Thanks. Collin, a couple of last
questions for you on the income statement, there was an uptick in the legal
and professional fees during the quarter. Assuming that relates to the
agreement and I want to get a sense of what we should expect going forward
and if you could provide any color on the split for those expenses between
the bankers and potentially lawyers that might be drafting agreements.
<A - Collin F. Visaggio>: Yes. Sure. In terms of the consent, the uptick is
related to the asset sell down process. And in terms of going forward,
obviously again, it's a commission with sensitive matter between ourselves
and the investment banks so I really don't want to go into the detail of
that.
<Q - Christopher McDougall>: Okay. Fair enough and thank you very much. Look
forward to hearing more results.
Operator:
And at this time, there are no other questions in queue. Please continue.
Wayne Andrews:
And that ends the formal remarks from the call. We'll be available to take
questions and I thank you all for your participation today and look forward
to updating you on our next quarterly briefing. Thank you.
Operator:
And, ladies and gentlemen, that does conclude our conference for today. Thank
you for your participation and for using AT&T executive teleconference
service. You may now disconnect.
This transcript may not be 100 percent accurate and may contain misspellings
and other inaccuracies. This transcript is provided "as is", without express or
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