Beers all around on me and I heard this from the peeps:
1)In order for IOC to drill all these holes in the earth requires PNG govt approvals and lease extensions.
2)Per Hession the minority intersts are being bought out. That means no cash calls to these former drilling partners. IOC needs a new Farm In Partner. Per the December 6th
Presser Total wants to be IOC's Farm In Partner. The boys say its a 60/40 split and just like PRE who paid for that right so will Total. Worth maybe $300 million upfront and the
Total will pick up a larger share of the costs than the former minority interest picked up. Of course they will own more than the bought out group. Or IOC can make their money
for drilling go further.
3)Why is Total willing to put out all this money without buying all of IOC? Because like OSH and Exxon these Super Majors like to spread out risk and spread out the bets.
Remember from Dec 6th Total has a desire to sell 19.3% of its interest to someone else. At the roadshow it was stated part of that additional sell down would most likely be
Japex. Now reading Pavels research one can see that he expects the value of the gas to accrete from 79 cents to $2.00 as the project moves forward. So at FID IOC's NG
can grow in value to $2 per mcf and Japex would be glad to pay that for an FID ready LNG project led by Total. For Total that reduces their risk cause they have to invest less in
the LNG project as their interest drops from the 49.5% to 30.2%. That also allows Total to book a nice profit profit on these payouts to Interoil to buy their interest. Even with a
payment of $1.29 per mcf Total makes a nice profit. Remember IOC still owns 30% of the project so as the price of their NG grows in value from 79 cents to $2 the stock price
at FID should also reflect this increase in value.
4)All this additional drilling in other areas hopes they find more shells and fish bones proving out their theory of a former sea shore with a Great Barrier Reef that Interoil has
then proved out with all these new wells. And what if they connect in places??PET thought we might have 13 reefs at one time and this would go a long way towards proving
out the real value of these 3.9 million acres.
Alas the boys went home to sleep it off.