Focus on 3 revenue sources from the Exxon deal
One--A price per metric cubic foot for the IOC NG. Thats a dry NG deal. Per IOC mgt this Exxon deal is not a dry NG deal.One needs to look at the gross price per mcf before
Exxon paid items and then the net cash price to to IOC per mcf. The shorts will focus on the Net price to IOC and thats a HUGE mistake.Exxon is paying for certain items
Two-The condensates ,136 million barrels of them says the GLJ report. This deal involves the IOC
condensates. That price that IOC receives for its condensates could over time be more profitable than the NG
Third-This deal with Exxon involves IOC participation in the LNG revenue. Source IOC mgt this week. What the
number is we dont know. IOC can pay for that LNG buyin with additional dry NG and condensates. This can
easily be the more profitable than either the NG or the condensate sales. IOC owns the NG at 5 cents, trades
at 60 cents per mcf and can be sold as LNG for $14 plus per mmbtu. Thats the BIG money.
So in order to understand the Exxon deal look for 3 things, the price per mcf gross before Exxon paid items ,
the condensates sales price and most importantly the LNG participation rate in the third and or 4th train
percentage.Add all 3 items together for the complete picture.
This is why IOC mgt stated after the deal "Best Possible Outcome"
With this post, you just opened up a can of worms and may have inadvertently offered an explanation of why the stock is in the tank.
If you allege that the profitability of back-end participation in Train 3 or 4 is greater than the sale of the dry gas and condensates, why wouldn't the buy in be of a greater cost than what IOC receives for the sale of the dry gas and condensates?
If payment for participation in Train 3 or 4 can be paid for by providing additional gas and/or condensate participation, from what resource will that be taken -- and when? (Seems like your presentation conveniently left out this KEY POINT of COST TO IOC SHAREHOLDERS for participation.)
In addition, all this ongoing allegation of "Best Possible Outcome", while it might be true, cannot be proved without critical independent examination of the competing bids, and amounts basically to a self-serving management statement, quite typical of all companies in a similar kind of transaction.
The bottom line remains that we need the deal to close -- so we can find out the terms.
Connect the dots.
Sentiment: Strong Buy
VS: are you seriously engaging Jimbo Tate on anything substantive? Are you kidding? Why bother? Out of all the long pumpers on all the various Boards...and that is a fairly notorious group...Jimbo is the worst of the worst for the most basic of reasons. Kenny thinks he is smart, he thinks he knows things, he thinks he has inside contacts....and yet, he is actually a complete and utter moron, knows little if anything, and apparently has contacts who intentionally feed him false information, likely knowing all too well they are dealing with someone with an IQ hovering around 95. He lies, misleads, and distorts, and I think even his fellow longs disdain him.
As a result, my advice here would be simple. Don't bother engaging or trying to deal with facts or reason in discussing these obvious points. They are simply over his head. I would ask him how the weather is, what dance moves he is working on, or whether a Five Brothers burger is really worth the extra coin. KISS. Keep it simple, stupid.
It will not be dilutive to IOC shareholders the dollars needed to monetize the assets. I addressed this directly. Exxon will have a Gross price paid to IOC before the Exxon paid items. Exxon per the Press Release and RJ research will pay for the CSP, the pipelines, the well drilling costs and the wharfs. IOC may have to borrow some money for the pipelines. After the Exxon paid items IOC will receive cash per mcf.
The buy in for the LNG can easily be covered by an in kind NG/condensate exchange for a portion of the LNG plant. Not rocket science.
We will never ever see the other bids. And they are never revealed the losing bids.By anyone.
To this we agree we need a closed deal and all terms revealed with multiple research houses explaining the deal details so even the simplest can understand.
Yes thats why the stock price has been weak the terms need to be fully explained.
Most of the talk has been on IOC's price for the NG. Well that's important but it ignores the price to be received for the condensates and LNG revenue to be received.
Many think we get the deal terms revealed within the 60 day window by July 24th. Could it be earlier or later well sure.
"We need the deal to close" and sooooon. Then we need the gov't to approve the deal and soooon.
Then we need to get the first cash from XOM : WHEN WILL THAT BE?
Does any one expect XOM will issue a check before the gov't approves "The Deal"?
As Bonk has pointed out, "Time ( of payments to IOC) is of the essense".
What good will come to IOC if XOM payments are delayed another 6 months, or more?
They need to drill, NOW!!!!!!!!!!!!!!!!
Keep in mind they need to drill Tuna and Wahoo, NOW. Not after next March. IF they don't drill Tuna and Wahoo before next March, they will lose their only arguement ( that they have fulfilled ALL their work commitments) for PNG to grant them new PPL's ( to replace the expiration of their current PPL's)
Mgm't strongly hinted that a farmout agreement was in the works for Tuna and Wahoo BUT (!!!!) they were awaiting the conclusion of "The Deal". WHY?!!!!!!!!!!!!!!!!!!!?????????????????
Why can't these guys get ANYTHING concluded?
Time is NOT on their side.
Classic kencooksam baffle them with "rational" sounding boool sheet.
there is no deal - just a term sheet - kenny wants the muppets to assume facts that simple are not there, period.
Sentiment: Strong Sell
Just to keep the units clear, the NG units are thousand cubic feet (mcf) not metric cubic feet. Also IOC doesn't own 136 million barrels of condensate. Their share of the condensates reflects their proportional ownership share of E/A so it is less than 136 million barrels. Other than that your points are valid.
Sentiment: Strong Buy
by the time this deal is done, we would have all raked leaves off our lawns, because it will be winter time and IOC knows this but cannot say it otherwise their stock will collapse. It will be at $40 when this deal is announced - if there truly is one.