Morgan Stanley on IOC Feb 18 2015

[admin]

InterOil Corporation: Proving the Resource

Evan Calio – Morgan Stanley

February 18, 2015 5:01 AM GMT

IOC's Antelope-5 appraisal well encountered reservoir 755ft higher than expected. Given base-line expectations of at least two trains (+7.1Tcfe discovery), we believe preliminary indications are now for 7-10Tcfe (gross). In our view, this supports a $0.5-1.5Bn resource payment by year-end from TOT.
Resolution to the longstanding Antelope resource debate will occur in 2015. Since discovery in 2008, a key debate on IOC has been the size of the Antelope resource. As a pre-production exploration company, the size and value of IOC’s primary gas discovery is critical to the value of the company. Earlier views that existed through 2013, doubting the commerciality of the resource, have been largely disproven. The resource sell-down first negotiated with Exxon (May 2013) then finalized with Total (Dec. 2013) narrowed the debate, yet given the wide resource range of potential payments in the Total agreement, the debate continues. The Total agreement provides for payment based upon appraisal results at various resource levels (3.5, 5.4, and 6.5Tcfe) creating an inference of realistic potential resource ranges. IOC, through two different management teams, believes it has enough resource to support at least a two train LNG development which is +7Tcfe of gas. We believe various bidders in the resource sell-down process also believed the Antelope discovery could support a multi-train development. Independent third parties GLJ (P-50) and Gaffney Cline estimated resource at 9.9Tcfe and 7.1Tcfe, respectively, both large enough for a two train development. The Total agreement provides for likely 3 appraisal wells (Antelope 4, 5 and 6) and an independent determination of the Antelope resource by year end. This determination will finally end the resource debate, triggering a significant payment to IOC and allowing the LNG project to proceed to the targeted 2017 construction start-up (per Total).
What the resource determination means for IOC.

[Gator]

Full PDF attached

[jft310]

Ant 6 decision imminent.
Retiring 1 rig use 4
Returning to Triceratops , Raptor and Wahoo this year 2015
Still plan on Ant Deep in 2015

[Stavros]

JFT ... IOC stated too months ago that the Ant 6 decision was imminent!

"imminent" - Adjective ... likely to occur at any moment; impending

Duh ... perhaps Dr Hession needs to be edicuated in the English Language

[jft310]

What I have been told they IOC want to drill 6 but others had not voted yes yet.Predicting the future has risks.

[Stavros]

With IOC, predicting the past is impossible; so YES predicting the future is risky.

[ArtM72]

"low impedence differences between shale and gas filled limestone".

The geek wannabe in me found that statement shining a new light on those seismic tests.

[ArtM72]

JFT ... IOC stated too months ago that the Ant 6 decision was imminent! "imminent" - Adjective ... likely to occur at any moment; impending Duh ... perhaps Dr Hession needs to be edicuated in the English Language

Imminent may have been stated in the context of presuming the drilling rig at A4 was repaired and up to the task of finishing the hole.  With this new release we find that rig might have to be replaced to complete the hole.  Drilling progress at A4 will be welcome news.

[petrengr1]

"low impedence differences between shale and gas filled limestone". The geek wannabe in me found that statement shining a new light on those seismic tests.

http://www.glossary.oilfield.slb.com/en/Terms.aspx?LookIn=term%20name&filter=seismic%20impedance

click on "view image"

So if the product of density x travel time is the same you can't tell the difference between the limestone and the shale.

[Putncalls]

I really like this one!
"thereservoir was lower than IOC’s model. Initial Antelope 5 results proveIOC’s
reservoir model was not only correct, butalso conservative"