What was said and some quite significant implications…
There are some noteworthy items:
- Export: IOC has leased a shipping vessel, starts deliveries today, It also wants a second vessel for more exports, several S/E Asia countries want to import IOC fuels.
- There are still $16 million in hedging profits
- Inspecting a second rig now, as prices have gone down considerably because of the recession and the fall in energy prices, this is well within reach for the company
- Stripping plant, minimum 10,000 barrrels a day in expected production.
- Drilling the second side track: the well is fully cased down to 2347 meters (7925ft). Cemeting the liner is complete, off we go..
- Plan on drilling below where oil was found in the first side-track but 100 feet away from the main shaft, going to test the richer condensates and the oil, will drill under-balanced.
- Testing will require another 2-3 weeks, key driver here is to enhance shareholder value
- All high condensate project discovered around the world have been monetized,and quickly
- The financing for the LNG is paid for from the condensate recovery
- Many interested person as the Reuters story said. The level of interest is much higher due to the high condensates levels. The LNG is good but volatile in pricing. Long term LNG pricing not an issue.
Let us recapitulate:
- There is an oil leg, parameters of recoverability will be revealed in 2-3 weeks, but even in case that doesn’t deliver a commercial oil find, the alternative is almost as good, as:
- The condensates have increased with depth, and are now a main driver of value, both in the upcoming deals and in financing the LNG facility. This alone is quite monumental and greatly reduces InterOil’s need to outside financing for the project, which cost are coming down as well (now $4.5B instead of $5-7B due to the recession)
- Further revenue and profit growth comes from opening export possibilities with the vessels planning, which has the potential to significantly increase capacity utilisation of the refinery, which at present is only operating at 2/3 or lower.
- And on top of that, refining it’s own condensates and/or oil would further greatly enhance profitability
- A second rig, which is now actively pursued, will double exploration speed.