The $64,000 question..
We stress we don’t know, but piecing a few things together:
1) Morgan Stanley came with a trading idea on Aug4, arguing they expect the price to rise in absolute terms over the next 60 days, citing a number of catalysts.
2) There were references in the CC which could be interpreted as such
3) Then there was the following perspective from an otherwise very knowledgeable poster:
Now here is some bonus information that you didn’t ask for and you really don’t want. I believe all of the recent talk about getting Government approval to make Antelope-2 a producing well is a subterfuge. This horizontal hole right on top of the water contact is not the ideal place for a producing well. I know we have been trying to get the high liquid content gas from as deep in the reservoir as practical but to think we are going to produce a very high volume of gas from a horizontal hole right above that gas/water contact without producing a lot a water in probably asking for too much. As the gas is produced the water contact will cone up to the producing well bore and water production will commence. This will cause us to have to drill another horizontal hole at a higher level to get away from the water for long term production.
I think the reason for asking for approval from the Government to make this a production well was to put pressure on the Government to issue approval of our application for a PDL. I think our prospective Strategic Partner wanted this. IOC probably had to inform the Government that the lack of a PDL is holding up progress on the sell down and; therefore, the development of the field, LNG plant etc. I hope the PDL will be forthcoming in the near future. The Government is probably still dragging their feet on issuing the PDL because when the PDL is issued I think Petromin is suppose to pay IOC for their share of all sunk costs for the development of Elk/Antelope Field.
4) Today’s share price action, for what it’s worth, is also quite remarkable, an the shares have firmed very significantly the last two months or so.
Click to enlarge
Petengr’s bonus is an interesting take. If the PDL is needed to speed a deal along, does this give the government leverage to force IOC to forego or to delay the governments portion of payment due on issuance of the PDL.
Though interesting I think there is another take on this. I really don’t think from a business perspective they want to burn cash and drill a well that they think will produce water. If one takes the time to read the news releases on Petromin’s website including the Chairman and Director 2009 YE speeches you will get an idea of what well might be going on. The Japanese are all over this project, both the CSP and LNG plants. Mitsui has pledged to cover both IOC and Petromin costs in the CSP. Japex has pledged to cover Petromin costs of exploration and production. I think that means upstream and LNG. Petromin wants this project badly because of the ownership % as opposed to the Exxon project. In the 2009 YE speeches and other news releases read how much they talk about IOC/Elk/Ant. They can’t wait to get these things in gear. So what is going on with this JV partner (I believe Japex)? They want to be sure of what’s there before the kick in both their share and provide Petromin’s in whatever form. IOC wants to maximize value. With the $25 million from Clarion I believe PAC LNG (Henry) as a partner wants to maximize value and once they prove things up they will have Japex satisfied as to what they need to provide. Henry has convinced Petromin that this horizontal is worth it for all parties and seismics must be supporting the idea that this can be a producing well. If so, the PDL will be issued and the money and liquids will flow. Henry is driving this project and has the trust of the Japanese. Phil has the trust of Somare; he stated this in one of the Petromin releases from early 2009.
Thanks, as ever, very thoughtful, Palm, although it looks more complementary than contradictory to what we’ve argued.