MCF prices

[Putncalls]

If IOC sold Triceratops gas for 1.65$/MCF; why should another buyer pay less?

[ArtM72]

$1.65/mcf? What don't I understand in the Morgan Stanley report when they say:

"Successful appraisal [of Triceratops] could provide additional value under the terms of the farm-in agreement with Pacific Rubiales whereby IOC would be owed $3.85/Mcfe for 1C resource and $2.85/Mcfe for 2C resource,based upon final resource assessment."

I must be missing something. What?

[Putncalls]

My memory is that PR paid 1.65$/MCF for 10% of what was found in Tricerotops.

[TxPm]

This is something most ppl missed in the farm in agreement with PRE....depending upon the size of Triceratops IOC is owed a final resource payment. I dont recall now the exact details of the payment but I do remember when I did the calculations it was quite a large amount

[Putncalls]

It was more than 1.2$/MCF!

[TxPm]

Put,

It was quite more actually which is why I dont understand the reasoning behind MS & RJ using these low MCF numbers for their analysis. The only thing I can think of is that they think a SM will be able to negotiate a much better price than PRE was....We shall see soon enough

[cybersssss]

Underpromise- Overdeliever???!

[ArtM72]

Put, It was quite more actually which is why I dont understand the reasoning behind MS & RJ using these low MCF numbers for their analysis. The only thing I can think of is that they think a SM will be able to negotiate a much better price than PRE was....We shall see soon enough

Without going into the details of the PRE agreement I'll just assume Morgan Stanley had some basis for the numbers they quoted.  At the VERY least those numbers could have been PRE's cost for incremental gas over and above a base volume...but that's a stretch.

One rational explanation for the $1.25 is, even with that number, IOC becomes a screaming buy regardless of condensate, regardless of T-3 results or anything else identified in the three million acres of aero magneto gravimetric (and seismic) surveys.  Pushing the figure to $2.50/mcf (my uniformed guess of years back) would have little value in a binary decision to buy or not.  On the other hand, just maybe undershooting the $/mcf number allows more clients the ability to enter at a lower cost, at little if any risk to the analyst.

Flush.

[Getitrt2]

My memory is that PR paid 1.65$/MCF for 10% of what was found in Tricerotops.

You don't have to depend on your memory.  See the detailed Westlake Securities report as well as MS 's.