Who is 19.3% strategic partner?

[ltinvest]

Is it XOM?  The attractive return metrics for additional trains at PNG LNG have not changed.  Other gas is not available.

Is it an offtaker? Is an Asian entity buying into the resource to guarantee supply?

[Palm]

That's the next shoe (not SHU) to drop. Based on the way it is stated in the Total PR I think that full 19.3% will come out of Totals 61%. IOC will keep its 30% throughout the PRL15 project(s). As Hession said, "Our deal is with one party, Total. That's it". So any selldown of the 19.3% is being handled by Total. That negotiation might well be going on right now, especially since Total quoted net numbers being paid to IOC sometime in Q1.

XOM probably is a leading candidate. But others big enough to take on 19.3% and interested in PNG are obviously Shell, Pertamina, Petronas and we can't rule out either KOGAS or a Japanese interest.

Still a bit to play out in this thing I think.

[ltinvest]

Completey agree Palm. I have to think its Exxon with how important the gas is to them. Whoever it is....things have to be pretty far along for them to use the 19.3 number and quote net numbers.

[Optionray]

That's the next shoe (not SHU) to drop. Based on the way it is stated in the Total PR I think that full 19.3% will come out of Totals 61%. IOC will keep its 30% throughout the PRL15 project(s). As Hession said, "Our deal is with one party, Total. That's it". So any selldown of the 19.3% is being handled by Total. That negotiation might well be going on right now, especially since Total quoted net numbers being paid to IOC sometime in Q1. XOM probably is a leading candidate. But others big enough to take on 19.3% and interested in PNG are obviously Shell, Pertamina, Petronas and we can't rule out either KOGAS or a Japanese interest. Still a bit to play out in this thing I think.

Curious, are you suggesting the 30% is being held onto by IOC for the future Total lng plant?  Meaning, in order for IOC to have an ownership interest in the plant, not only does IOC have to pay 30% of the cost of the plant but they also have to supply 30% of the gas?

[Petro2458]

Didn't the PR say that IOC and Total could sell down an additional 9.65% each for an aggregate 19.3%?? Or do I have this wrong?

Agree...Total made it sound like this would be done before they make the first cash payment.

[Thylacine-2]

[quote='Palm' pid='33430' dateline='1386450180'] That's the next shoe (not SHU) to drop. Based on the way it is stated in the Total PR I think that full 19.3% will come out of Totals 61%. IOC will keep its 30% throughout the PRL15 project(s). As Hession said, "Our deal is with one party, Total. That's it". So any selldown of the 19.3% is being handled by Total. That negotiation might well be going on right now, especially since Total quoted net numbers being paid to IOC sometime in Q1. XOM probably is a leading candidate. But others big enough to take on 19.3% and interested in PNG are obviously Shell, Pertamina, Petronas and we can't rule out either KOGAS or a Japanese interest. Still a bit to play out in this thing I think.

Curious, are you suggesting the 30% is being held onto by IOC for the future Total lng plant?  Meaning, in order for IOC to have an ownership interest in the plant, not only does IOC have to pay 30% of the cost of the plant but they also have to supply 30% of the gas?

[/quote

Yeah, Ray, that's the arrangement we are being paid around five billion dollars for.  That will go a long way towards paying our share of the LNG project.  If our exploration program is reasonably sucessful we will be rolling in money by then.

[Palm]

Option,
The PR stated "InterOil to maintain a material 30% interest in integrated LNG development", so yes they will be 30% of PRL15, the CSPs, the LNG plant and get 30% interest in offtakes. All the way through. Also they will have to fund 30% of costs. But that should not be a problem as stated by Hession. If you assume they get the $5.3 billion (assuming they prove up 11.8 Ts in EA) they get $3.8 billion upon certification (the first $1.5 billion they get at FID for the LNG plant). Then at FID they book reserves and can borrow against that.

[Optionray]

Option, The PR stated "InterOil to maintain a material 30% interest in integrated LNG development", so yes they will be 30% of PRL15, the CSPs, the LNG plant and get 30% interest in offtakes. All the way through. Also they will have to fund 30% of costs. But that should not be a problem as stated by Hession. If you assume they get the $5.3 billion (assuming they prove up 11.8 Ts in EA) they get $3.8 billion upon certification (the first $1.5 billion they get at FID for the LNG plant). Then at FID they book reserves and can borrow against that.

Got it, thanks.

So,if there is a sale down to XOM of the 19%, it will be Total that conducts the sale and there wil not be anything additional going to IOC because it is already factored into the equation regarding what IOC will see over the next few years.

[Palm]

Didn't the PR say that IOC and Total could sell down an additional 9.65% each for an aggregate 19.3%?? Or do I have this wrong? Agree...Total made it sound like this would be done before they make the first cash payment.

If you look at Total's PR, they say that they start with 61.3%. They then say there is allowance for a 19.3% strategic partner buy in. Later they say:

"Total will pay $470 million for a 42% interest (32.5% if the government executes its option to join the project) with a contingent payment estimated by Total at approximately $590 million. The transaction remains subject to the approval of the Papua New Guinea government."

61.3% less 19.3% gets them to the 42%. The interesting thing is that they say after gov buy in they would be at the 32.5% which means they sell 9.5%, leaving 13% from IOC and/or PacLNG Ltd (?). Been working on this math some but a little unsure of who is still assumed in when Total buys in.

For instance, both PRs say Total will buy 61.3% and IOC ends up with 30%. Obviously that adds up to 91.3%, leaving 8.7% (assume that's PacLNG Ltd?).

Am pretty sure based on above Total sells the 19.3% in whole. Anyone fill in the 8.7%?

[Petro2458]

Your mixing the gross take for total of 61% with net take after govt buy in of 47%. See the table in IOC first PR.