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Oil Search reported earnings this evening. Here's their presentation - http://www.oilsearch.com/Media/docs/130820%202013%20Interim%20Results%20Final-1b1b9f4c-3293-4700-9708-f55fdf780d59-0.pdf
See page 27 on P'nyang - the company writes, "Development work expected to continue through 2013 and into 2014, to support submission of production development licence application in 2015”
In other words, P’nyang is still speculative and a long way from development. It’s evident from this presentation that Exxon needs InterOil’s gas to attain certainty in underpinning train 3 at PNG LNG in 2016.
In fact, on page 28 of Oil Search’s presentation, the company states that:
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InterOil (IOC) and Pacific LNG Group in exclusive negotiations with ExxonMobil on development of PRL 15, containing Elk and Antelope gas fields
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Publicly stated that discussions are focused on developing an additional LNG train at PNG LNG Project site
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If transaction proceeds, OSH could potentially participate, either through use of PNG LNG infrastructure or integration into PNG LNG
Very interestingly, in the comparable slide on OSH’s last presentation, it wrote “Any agreement is subject to Government approval”. This statement was left out of the current presentation, which makes one wonder how positive the political developments referred to in today’s IOC press release really could be!
Maybe most importantly, THIS IS NEW: “If transaction proceeds, OSH could potentially participate, either through use of PNG LNG infrastructure or integration into PNG LNG”. This implies that the Exxon deal is far enough along that Exxon has already informed Oil Search of the relevant terms and decision tree. Also, it implies that InterOil may in fact end up with an equity stake in PNG LNG.
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“If transaction proceeds, OSH could potentially participate, either through use of PNG LNG infrastructure or integration into PNG LNG”.
The more I consider this statement, the more positive it makes me on the near-term timing and certainty of InterOil's transaction with Exxon. Exxon must think a deal is finally close enough to completion to have filled OSH in on the relevant terms and upcoming decisions to be made by the PNG LNG partners upon deal closure. Whatever the final contract provisions Exxon and InterOil are now working through, there's ample evidence that both sides want and need a transaction done as soon as possible and that the contracts are finally far enough along for imminent closure. I think the lapse of exclusivity will now get the deal over the hump. Things are better and sooner than they were when the stock was almost 50% higher a few weeks ago, so prepare for the big move we've all been awaiting. It's about to come in the context of maximum fear and skepticism.
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"Also, it implies that InterOil may in fact end up with an equity stake in PNG LNG."
Agree once again based on the last point:
"If transaction proceeds, OSH could potentially participate, either through use of PNG LNG infrastructure or integration into PNG LNG"
That is a reference to their understanding of how IOC might be integrated into PNG LNG; either though buying into the common infrastructure and just being part of any trains it participates in or becoming part of whole project IMHO.
If anything this could be what IOC is driving a very hard bargain on. They may be saying that they don't want to just sell gas; they want to participate in "non-operated LNG" with their gas. Getting that worked out is probably not the easiest thing, but anything is doable. If not IOC may be saying that they will work with someone who shares their goals and take all of their gas and do a separate LNG project. Exxon has every reason to make a deal happen at least for train 3 at PNG LNG.
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Very interesting, Resourcearb, thanks for that.
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'Resourcearb' pid='27600' datel Wrote:
“If transaction proceeds, OSH could potentially participate, either through use of PNG LNG infrastructure or integration into PNG LNG”.
This is the first public bit of information where I would agree that IOC may actually have prospect of joining PNG LNG.
Guess we will have to wait a bit longer to see what the proposed terms happen to be.
It will also be interesting to see if IOC share price will finally move upwards again when the market opens.
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Actually the 2nd at least. On July 25 as pointed out before:
"Botten also said he was ’watching’ talks between InterOil and ExxonMobil to supply additional gas from the onshore Elk and Antelope gasfields to the Port Moresby LNG plant. Should this happen, he said, it was likely that Oil Search could participate in this expansion."
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Agree with you there. This is the second mention about the gas.
What I meant is the part about " that IOC may actually have prospect of joining PNG LNG" ie: being a partner of the PNG LNG group, rather than just a supply source for the gas.
Let us hope things come to fruition. 
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'sydbod' pid='27606' dateline='<a href="tel:1376970 Wrote:Agree with you there. This is the second mention about the gas. What I meant is the part about " that IOC may actually have prospect of joining PNG LNG" ie: being a partner of the PNG LNG group, rather than just a supply source for the gas. Let us hope things come to fruition.
For the record a most Senior IOC exec has stated multiple times to multiple persons
-This is more than a NG sales deal
-IOC will have LNG participation and bet on it!,
Those are direct quotes, not good for the short story
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'Resourcearb' pid='27600' datel Wrote:
“If transaction proceeds, OSH could potentially participate, either through use of PNG LNG infrastructure or integration into PNG LNG”.
The more I consider this statement, the more positive it makes me on the near-term timing and certainty of InterOil's transaction with Exxon. Exxon must think a deal is finally close enough to completion to have filled OSH in on the relevant terms and upcoming decisions to be made by the PNG LNG partners upon deal closure. Whatever the final contract provisions Exxon and InterOil are now working through, there's ample evidence that both sides want and need a transaction done as soon as possible and that the contracts are finally far enough along for imminent closure. I think the lapse of exclusivity will now get the deal over the hump. Things are better and sooner than they were when the stock was almost 50% higher a few weeks ago, so prepare for the big move we've all been awaiting. It's about to come in the context of maximum fear and skepticism.
I have a confirmation from a large Oil Search shareholder that Botten and the OSH management team have been preparing large shareholders and analysts for a PNG LNG expansion underpinned by InterOil's PRL 15. Exxon has been preparing its PNG LNG partners for closure, and this presentation excerpt is one of the best confirmations yet that Exxon sees the transaction with InterOil being finalized soon.
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08-20-2013, 11:02 PM
(This post was last modified: 08-20-2013, 11:09 PM by Petrovale.)
/quote]
I have a confirmation from a large Oil Search shareholder that Botten and the OSH management team have been preparing large shareholders and analysts for a PNG LNG expansion underpinned by InterOil's PRL 15. Exxon has been preparing its PNG LNG partners for closure, and this presentation excerpt is one of the best confirmations yet that Exxon sees the transaction with InterOil being finalized soon.
[/quote]
CSFB reporting after OSH CC today.
The "preparation" looks as follows:
PNG T3 still uncertain
At the results presentation, CEO Peter Botten was unwilling to speculate as to the outcome of XOM and Interoil discussions over Elk-Antelope gas except to note that in relation to a possible unitisation of this gas, it would have to be a case of “no one wins, no one loses”. No partner can have a solution forced upon it.
OSH has no intention of forfeiting its P'nyang license (which expires early 2015 if no development plan is ready) but naturally prefers the gas to be directed towards the existing PNG LNG facility option. P'nyang exploration and development will continue in order to have a better defined resource by the end of next year.
The expectation is that a unitisation discussion between all JV partners is likely to take place later next year, and OSH would naturally like to have its equity assets considered as part of any expansion (Gulf of Papua could also be a prospect).
We are unlikely to have much clarity on the T3 development in the near term, unless XOM walks away from the Interoil agreements.
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