If someone already explained this, please point me to the post.
To simplify the discussion, let's suppose we find plenty of gas and go to FID and IOC's share of the LNG plant, pipelines and wells is 5 Bln?
Where do you think that cash is coming from? Here's my list but finance ain't my gig.
- A gigantic stock dilution which assumes the stock has gone way up, but then will go way down upon dilution.
- Sell down assets to Total, OSH, XOM and/or others
- Pre sell the gas at an attractive lower price to willing buyers. If gas prices move lower after the fact, then this will have been the perfect answer.
- Borrow the funds via bond issues and bank loans. Would anyone give IOC that much cash?
Since IOC has no recurring income, and lots of wells we need to drill, we're at a disadvantage.
Of course if someone comes and buys the company before then, then game over. But if not, then the above will each have it's on market impacts, sometimes negative.
Selling down assets after we have derisked them and raised the value tremendously and pre-selling some gas seem like the most desirable paths to me. I don't like the others.
Comments anyone on what you think the likely paths will be?
Given the long time to get to first gas sales, it seems building and startup of a condensate stripping plant might be a good option to develop an early revenue stream.
