What is Elk/Antelope Field worth?

[cybersssss]

I understand the value of the total contract as Pet put it so well. The billion dollar question is.... Is the cost savings of buying Interoil to save their expensive contract worth more or less then the cost savings that total gets by joining png LNG vs Papua LNG???

[Li'loilady]

Cripps,

You quote your friend as saying, "Why would Exxon lowball the initial resource and get substantially less money from Total now and wait maybe 5  - 10 years to get fully compensated? It is to their advantage to get the maximum they can now, especially if it is over 10 Tcfe,".

But, check out Pet's numbers. , XOM will ONLY begin to make money at 10.1 Tcfe.  Under that, they must dip into their piggy bank to pay us.

7.2: IOC $7.07 x 51.1M = $361 million

7.2: XOM .7T x $401M = $281 million

8.2: IOC = $14.14 x 51.1M = $723 million.

8.2: XOM = 1.7T x $401M = $682 million.

9.2: IOC = $21.21 x 51.1M = $1.084+ billion.

9.2 XOM = 2.7T x $401M = $1.083 billion.

10.0 IOC =  $26.87 x 5.1.1M = $1.404 billion

10.0 XOM = 3.5 T x $401M = $1.373 billion

.

So at interim cert. numbers above 10 T's:

10.1 XOM profit = $39.6M  (3.6Tcf x $401M, less $1.404B IOC SH payment)

10.2  = $79 million

10.3  = $119.8 million

10.4  = $160 million

10.5  =  $200 million

Let's say TOT/XOM train 3 starts producing in 2021.  Maybe Antelope South is drilled and tested by then.  XOM can call for final certification anytime after production begins through 25% production.

IF Exxon WERE somehow able to goose up the post Ant-7 cert. by as much as 4+ Tcfe (!) above OSH  (but keep in mind TOT's sub-optimal A-7 drill site and TOT's goal to minimize their payment) then, would $160-$200 million be better to have now or, to have 7-9 times that amt. – $1.404 billion– in, say, 2023 or 2025? ( — plus, of course, payment for anything above my hypothetical 10.5 interim.)  I don't know how multiple trains are set up but, as Exxon will be operator of that 3rd train, might they be able to shift most or all of their production to that train?  Or, maximize production out of the 3rd train and utilize train 1 and 2 as needed to fulfill their contracts in order hasten the likely large material certification payment?  Stavros and others might know if it's feasible for them play it that way.

If they believe the former payment approach to be more financially advantageous, highly doubtful in my view, then they had better make doggone sure they can shoot all the way to that target —well above 10.1 T's.  Otherwise, as you see from Pet's chart at the top, Exxon actually goes in the hole to pay us and if I understand it correctly, they forever lose the payment from TOT between 6.5 and the interim cert. # by paying it, and more, to us.

i do not believe that Exxon's interests are aligned with ours.

I'm expecting a low certification payment for us.

Notice they lose the least at 9.2. (Yeah, except for losing $1 billion in ~7 or 8 years!) Let's see how good of a shot are —whatever their goals.  :-)

[will2bgreat]

Thank you, Crippsfl,

I had the 2nd certification point of view, but after reading your post, I agree that it is in XOM's best interest to get the most money on the initial certification.

[cybersssss]

I still don't trust it. Too much unknown. No control over the process. If I wanted to gamble I would go to Vegas. It's much more fun.

If they were so sure of volume they would put s floor on the crp. Or some kind of guaranteed amount. Otherwise this "deal" leaves it open to significant manipulation.

This crp stuff is not in our best interest unless we are guaranteed the balance payment later. Or unless we get a one stop price for our shares and move in with xom stock. However much the upside is diluted in it, we know that Xom are smart operators and business people.

I will continue to vote no on the deal unless it is sweetened by one of the aforementioned ways. Many I have spoken to agree with me. I believe that Xom will see that the votes are swinging towards no and they will sweeten the pot.

[wapitidropiti]

I still don't trust it. Too much unknown. No control over the process. If I wanted to gamble I would go to Vegas. It's much more fun. If they were so sure of volume they would put s floor on the crp. Or some kind of guaranteed amount. Otherwise this "deal" leaves it open to significant manipulation. This crp stuff is not in our best interest unless we are guaranteed the balance payment later. Or unless we get a one stop price for our shares and move in with xom stock. However much the upside is diluted in it, we know that Xom are smart operators and business people. I will continue to vote no on the deal unless it is sweetened by one of the aforementioned ways. Many I have spoken to agree with me. I believe that Xom will see that the votes are swinging towards no and they will sweeten the pot.

Cyber I hope that you are correct and XOM does sweeten the pot. I am dubious. Without another competing offer XOM will stand where they are. Consider ourselves at a poker table and the guy to our right checks and bids nothing. 9 of 10 players would also check and remain where they are until another player forces them to ante up or fold.

[jft310]

Exxon has zero incentive to sweeten this sweet heart deal . Just string PM along till the vote