You assume someone know something extremely serious the management has not disclosed. That is just BS.
The Elk-Antelope project would have a development cost of roughly US$12 (K31) per barrel of oil equivalent (boe), break even at just below US$8 (K20)/MMBtu and generate an internal rate of return (IRR) of around 21 per cent, InterOil said, citing Wood Mackenzie research.
PNG LNG was developed for around US$15 (K39)/boe, breaks even at close to US$16 (K41)/MMBtu and has an IRR of approximately 12 per cent.
Analysts at Goldman Sachs agreed that PNG’s gas industry looked poised for expansion – at a time when the LNG market is growing by 4-5 per cent per year.
“We believe there is scope for a major expansion of capacity in Papua New Guinea, proximity to Asia, de-risked gas industry and low costs,” the analysts said.
“InterOil is a key beneficiary of this and may be able to leverage existing infrastructure – this is not fully priced by the market yet, in our view.” They gave InterOil a ‘buy’ rating, with a 45% upside to their 12-month price target.
Of course, the oil price remains a key concern for the project, Goldman Sachs added. Brent crude slipped below $45.90 per barrel on Wednesday. The decline is taking its toll on long-term oil-indexed LNG prices, which are on a three-to-four-month lag.
But an even bigger uncertainty for the project is the size of the resource, which Total is now evaluating with a three-well appraisal programme.
“We believe funding would be a longer-term concern if the Elk-Antelope appraisal drilling disappoints and/or if capex is higher than we currently expect,” the Goldman Sachs analysts said.
The Elk and Antelope fields are the largest discoveries in Papua New Guinea and are about half the distance to shore compared with the fields that supply PNG LNG. After drilling six wells and flow testing four, previous operator InterOil estimated the resource size to be 141-255 billion cubic metres, according to Goldman Sachs.
Nevertheless, a resource base of 150 bcm would supply one 5 mtpa train for around 20 years, Haines noted.
Total and InterOil are planning to start marketing gas from the Elk and Antelope fields in Gulf this year, while deciding how to develop an LNG project, Interfax reported.
In a presentation this week, InterOil said Total aimed to begin negotiating heads of agreements (HOAs) for LNG supplies in the second half of this year and finalise sales and purchase agreements by 2018.
Earlier, the French operator told The National it planned to complete the LNG concept by mid this year, carry out front end engineering and design (FEED) work and issue a call for tenders next year and start construction in 2017.
“While there is significant optimism around the onshore Elk and Antelope fields – plus nearby, less-explored gas prospects – the timeline for starting offtake discussions may be overly ambitious, said Christopher Haines, an oil and gas analyst at Business Monitor International.
“Talking about HOA discussions from Q3 2015 (third quarter this year) seems quite optimistic, mainly because Total is still carrying out its own appraisal programme in the Elk and Antelope fields,” Haines told Interfax.
He added that the companies may have to proceed more slowly in light of the oil price slump. “Lower oil prices are going to make it easier for LNG buyers to negotiate better contracts, so sellers probably wouldn’t get as strong a revenue stream as they could have a year ago, so negotiating may be harder. They may just want to wait until oil prices have stabilised.”
A two-train Elk-Antelope project is expected to cost less and earn more than ExxonMobil’s two-train, 6.9 mtpa PNG LNG plant.
Good luck. Hope you're right.
I'm taking the chicken little approach, trying to sell some $25 puts for $5.
Recently sold a very small amount of $30's for $5 +.
Trying to average down. LOL
This is really sad. Lot's of faithful getting really hurt.
Oh, and it's OK for you to post constantly , without even a trace of humor?
At least Moose is funny. Your posts are just plain droll.
Add something to the board or why don't YOU give it a rest!!
XOM is smart, they have used OSH to stall the deal and create uncertainty.
They have the share price where they want it.... give or take a few bucks.
they have shareholder morale at a low with some majors trimming or exiting.
They have created the perfect scenario to make a low offer that will be accepted.
hession is naïve and has been outmanouvered.
XOM has let little IOC do the hard yards in proving up the resource and other exploration.and will swoop at the right time. XOM all over.
Why do consistently bash that's what we want to know? Nobody cares what someone said on another MB please for the love of god get over it.
It’s funny, when you think about it, the company has never been in better shape: Balance sheet, management, BOD, partners, research coverage and yet, I don’t think I have ever seen the RSI this low, 16 and a fraction.
My sense is, without Chandler’s selling, the stock should be somewhere between $40 and $45 and heading a good bit higher into the end of the year. Hopefully, we can get past options expiration and regain our footing.
You are right though, with an enterprise value of less than $1.4 billion, IOC’s days may soon be numbered.
I agree and xom caught a huge break with oil downturn. They appear to be the only one that can afford it and best fit. The arb move by osh was nothing more than a proxy act. The only way IOC survives this downturn is to lose arb and get same deal from osh/xom with % of train but I do not think that will be likely. PNG won't object since their osh shares are underwater and they need jobs and have the trained workforce. If Hession is going to save his seat he best pull something out of his backside post haste.
It will end up owned by XOM anyways, and they will get the whole enchilada for peanuts.
Well done hession..... major transformation accomplished
I was hoping that would happen today, if not we are in for more pain. As it appears to me, a buyout should be expected soon pre-arb results with about a premium of 50%, if lucky 75%. All of this could have been avoided if Hession would have selected Exxon to begin with.
It has long been argued by the faithful no buyout offer below $400 or so, lmao, would be accepted. Less fervent folks (or people not on crack) knew if a bid at a 50% or so premium was presented to shareholders it would certainly attract the needed 51% of the shares. Now we see of all people dumping, at around $40, is Sir Richard Chandler.
Some facts I gleaned from SHU:
IOC has hundreds of millions cash, right? IOC is 100% for sure getting a resource payment of close to 2 billion from TOT, right? RC already owned 20% of the shares, right?
Given those facts, here is what I want to know:
Why didn’t RC offer to buy the other 80% for $70 or so, instead of dumping? He could have taken the company private for almost nothing, owned the string of pearls for free and been in line to have 30% of the LNG cash printing machine to himself forever. He could have even teamed up with his boy Phil.