OSH AGM presentation

[Palm]

Pretty impressive when you see what they have done with returns to shareholders. Also announced increased dividend with PNG LNG early startup. Check out slide 6 showing pps performance since Jan '03. Cash flows make a difference and IOC has potential along these lines.

http://www.asx.com.au/asxpdf/20140516/pd...b3pl69.pdf

[sageo]

Pretty impressive when you see what they have done with returns to shareholders. Also announced increased dividend with PNG LNG early startup. Check out slide 6 showing pps performance since Jan '03. Cash flows make a difference and IOC has potential along these lines.

http://www.asx.com.au/asxpdf/20140516/pd...b3pl69.pdf

Palm- Thanks for posting that pdf. A lot of interesting information. Appreciate all your work in helping "the cause"! Good luck.

[Palm]

Also an interesting read is the Chairman of the Board's address. On pages 4 and 5 he discusses the OSH buy-in to PRL 15, the Dispute and the "logic" of the PNG purchase of OSH shares. His mention of the Dispute is interesting; at the end of the comments on page 4 he states:

"We have also engaged in formal negotiations with the parties in the event a commercial resolution can be reached. Given the potential substantial value of an LNG development, to the Joint Venture participants and to the nation, we support the appraisal and development of PRL 15 as quickly and efficiently as possible."

http://www.asx.com.au/asxpdf/20140516/pd...fn2gdv.pdf

[sageo]

Also an interesting read is the Chairman of the Board's address. On pages 4 and 5 he discusses the OSH buy-in to PRL 15, the Dispute and the "logic" of the PNG purchase of OSH shares. His mention of the Dispute is interesting; at the end of the comments on page 4 he states: "We have also engaged in formal negotiations with the parties in the event a commercial resolution can be reached. Given the potential substantial value of an LNG development, to the Joint Venture participants and to the nation, we support the appraisal and development of PRL 15 as quickly and efficiently as possible." http://www.asx.com.au/asxpdf/20140516/pd...fn2gdv.pdf

Palm- Great read ! Thanks again. I realize there are many"moving parts " to all of this and that these proceedures take years(boy,do they take years).! I don't know how many I have left(???),but I have asked my kids and g-kids to be patient.[ Hope they will be].Palm, at this point in time can you give me your best guess as to your thinking on whether a gulf/lng plant will be built,and if so can it happen in the next two years? ( near Kerema, I believe)......Thanks in advance ! [ p.s.- Could we hear something after the meeting in Paris next week ? ]

[sydbod]

Possibly worth mentioning here:
Oil Search Limited Share Purchase Plan Results
Oil Search Limited (Oil Search) has successfully completed its Share Purchase Plan (SPP).
The SPP closed at 5.00pm (Sydney time) on Friday 9 May 2014 and applications for approximately A$184
million worth of new fully paid ordinary Oil Search shares (New Shares) were received from eligible
shareholders. Successful eligible applicants will be issued the full Australian dollar amount of new Oil Search
shares for which they correctly applied, up to a maximum of A$15,000 or its equivalent in PNG Kina, at an
issue price of A$8.20 for each new share.

Strange that shareholders did not jump into this deal with everything they had. It gave an instant 10% plus capital gains at the time of closing.

So now OSH has a few more millions as well as the new LNG income stream to play with.

[Palm]

Sageo, I do believe PRL 15 partners will build an LNG plant and it will likely be in Gulf Province. It could end up in PM, but that would be a bigger political/social issue and one that could cost O'Neill a bit of support. When you consider what's likely within PRL 15 and then look at the "red circle" that IOC shows as what all can be in a "tieback distance of Antelope" for aggregation it will likely be a no-brainer. Drilling has to all prove out and that's more of a risk than many seem to feel (and Hession tried to bring some reality to that picture during the CC around the exploration drilling), but they likely have enough for at least a 2-train startup. What all happens with PNG LNG expansion has yet to play out, but it will all be much more clear a year from now. Note also that Tri lies outside of that tieback red circle as does most of the resource Pet pointed out in his post.

2 years? Not sure where you are getting that, and I hope not from Duma's comments which I believe were taken out of context. If you've told your spouse and offspring to expect anything like that, then you and they are setting yourselves up for very unreasonable expectations and big disappointments, which would be your doing and not IOC's. Good luck with that more than lofty expectation. Your life just may be shortened by unnatural causes and you might as well get any bucket list events out of the way.

[sageo]

Sageo, I do believe PRL 15 partners will build an LNG plant and it will likely be in Gulf Province. It could end up in PM, but that would be a bigger political/social issue and one that could cost O'Neill a bit of support. When you consider what's likely within PRL 15 and then look at the "red circle" that IOC shows as what all can be in a "tieback distance of Antelope" for aggregation it will likely be a no-brainer. Drilling has to all prove out and that's more of a risk than many seem to feel (and Hession tried to bring some reality to that picture during the CC around the exploration drilling), but they likely have enough for at least a 2-train startup. What all happens with PNG LNG expansion has yet to play out, but it will all be much more clear a year from now. Note also that Tri lies outside of that tieback red circle as does most of the resource Pet pointed out in his post. 2 years? Not sure where you are getting that, and I hope not from Duma's comments which I believe were taken out of context. If you've told your spouse and offspring to expect anything like that, then you and they are setting yourselves up for very unreasonable expectations and big disappointments, which would be your doing and not IOC's. Good luck with that more than lofty expectation. Your life just may be shortened by unnatural causes and you might as well get any bucket list events out of the way.

Palm- Appreciate your response. Will keep your thoughts concernig the time frame on my "front burner". Have a good week-end.

[sageo]

Palm- Meant to say "two years to start the plant". Sorry I wasn't very clear.

[Getitrt2]

Pretty impressive when you see what they have done with returns to shareholders. Also announced increased dividend with PNG LNG early startup. Check out slide 6 showing pps performance since Jan '03. Cash flows make a difference and IOC has potential along these lines.

http://www.asx.com.au/asxpdf/20140516/pd...b3pl69.pdf

Great post, Palm, thanks.

Hilites:

#20:  Gas Growth Strategy - Build on PNG LNG.  Upside in 1P reserves at Hides plus substantial discovered undeveloped gas resources at nine fields, including P'nyang and Elk/Antelope.

#22:  P'nyang - PRL 3:

     - Key resource to support potential growth from PNG LNG:

          - Total 2C recoverable gas resources in P'nyang field of 2.5 tcf

     - Concept selection work well advanced - engineering, environmental and social mapping

     - Development work to continue through to submission of PDL application in early 2015

     - PRL 3:  Exxon 49%, OSH 38.5%, JX Nippon 12.5%

# 23:  Elk/Antelope - PRL 15:

     - Up to three appraisal wells to be drilled, to prove up sufficient gas resources to support LNG development.  First well expected to spud in July.

     - Substantial exploration and appraisal upside in PRL 15.

     - Dispute resolution process underway.  Negotiations to achieve commercial resolution ongoing.

#31:  Good progress made by new Minister of Petroleum and Energy since taking office, but further work to be done on ensuring Project benefits are delivered.

[Getitrt2]

Also an interesting read is the Chairman of the Board's address. On pages 4 and 5 he discusses the OSH buy-in to PRL 15, the Dispute and the "logic" of the PNG purchase of OSH shares. His mention of the Dispute is interesting; at the end of the comments on page 4 he states: "We have also engaged in formal negotiations with the parties in the event a commercial resolution can be reached. Given the potential substantial value of an LNG development, to the Joint Venture participants and to the nation, we support the appraisal and development of PRL 15 as quickly and efficiently as possible." http://www.asx.com.au/asxpdf/20140516/pd...fn2gdv.pdf

Thanks again, Palm.  Other very interesting excerpts:

"Now that the foundation PNG LNG Project infrastructure is in place, a key objective for Oil Search is to capitalise on this asset base through LNG expansion.  We are actively working together with our joint venture partners to aggregate the necessary gas resources to underpin the development of further LNG trains.  As well as the LARGE gas resource at P'nyang in PRL 3 and potential upside in the existing PNG LNG fields, in particular at Hides, early this year we added materially to our gas portfolio by the acquisition of a 23% interest in PRL 15, containing the Elk/Antelope fields.

While further exploration and appraisal drilling is required to better quantify the size of the resource, we are confident  that PRL 15 contains SUFFICIENT GAS TO UNDERPIN A COMMERCIALLY ATTRACTIVE AND VALUE ACCRETIVE LNG PROJECT.  TOGETHER WITH THE POTENTIAL EXPANSION OF THE PNG LNG PROJECT, this means there is a high probability that the Company will have invested in UP TO THREE FURTHER LNG TRAINS BY THE END OF THE DECADE."

"I'd now like to address two issues related to our PRL 15 acquisition that have been receiving a lot of attention.  The first is the legal steps we are taking regarding the sale by InterOil of part of its interest in PRL 15 to Total SA in late March.  Oil Search believes that the transfer of this interest, first announced in December 2013, is subject to various notifications and pre-emptive rights under the PRL 15 Joint Venture Operating Agreement.  As a result, the Company has commenced a dispute resolution process, which includes arbitration proceedings in London.  We believe that, as we set out on what we hope will be a twenty-year plus relationship, it is vital that our legal rights are respected and that all parties have full clarity on the Joint Venture operating rules and commit to abide by them.  We have also engaged in formal negotiations with the parties in the event a commercial resolution can be reached.  Given the potential substantial value of an LNG development, to the Joint Venture participants and to the nation, we support the appraisal and development of PRL 15 as quickly and efficiently as possible."

Based on the above, while nothing is set in stone (except oil and gas!), it certainly sounds to me like the way forward and future envisioned by and being worked toward by OSH is a separate two-train LNG project supported by PRL 15 and an expansion Train 3 at PNG LNG supported by other gas fields OSH has an interest in.  Unstated here is the possibility of additional expansion trains at PNG LNG supported by future discoveries in PPLs OSH is trying to acquire interests in from IOC minority interest partners (Pac LNG).

Regarding the JVOA legal dispute comments, while open to more interpretation imo, it sounds like to me OSH may not be at this point trying to reverse the Total transaction, but may be satisfied with some formal concessions or assurances about the JVOA rules and how they will work in the future.  If so, that would imply a resolution of this sooner than otherwise, imo.  Beyond that there is the important support for not allowing this issue to slow down progress on PRL 15 appraisal and development, which matches Hession's statements to that effect on the conference call.  Nevertheless, I think it would be very good to get a news release sometime soon on resolution of that.