I see no obvious tax advantages Raiseyou.
What is interesting now is that while OSH is a partner of Total in other licenses, OSH could be at odds with Total now from a strategic standpoint:
For OSH (and Exxon) the absolute highest return on investment / maximum NPV is a train 3 and 4 on the PNG LNG project - cheaper, faster, lower risk = higher NPV. That is at odds with Total who is out in the cold on PNG LNG.
A Machiavellian view of the OSH/Civelli action is that OSH buys the IPI interest to kill off Total or extract concessions from them. Killing off Total puts OSH and Exxon in the drivers seat with IOC in a corner with no option whatsoever other than into the arms of Total and OSH (the latter being a quasi-SOE of the PNG Government).
IT could be much more benign than that. My speculation at the time of the Total deal was that Total either wanted to reserve a piece for OSH (potentially and potentially swap in gas assets from the existing Total/OSH partner PPLs), or for another entity altogether.
IMHO IOC needs to pull out every stop to close Total. If the deal collapses I think the stock would follow. With Exxon and OSH ready to feast on the corpse and secure E/A for their PNG LNG endeavors.
IOC's cryptic PR doesn't help much. People may fear the worst and the burbots could have a field day.
Interesting cardealer. We can only speculate of course. What we know is that the Total deal can't move ahead as advertised (i.e. the condition precedent of IOC taking out IPI). We are in the dark.
It seems a bit that OSH is effectively a quasi SOE now (State Owned Enterprise like in China).
It would certainly make business sense for OSH and Exxon to take it all as they can move to trains 3 and 4 on their project quicker.
I find the situation impossible to analyze in the dark. Is the Total deal now in complete disarray or is this the final pin in it? Who knows.
Expecting selfless rationality out of the Papua New Guinea government is a dangerous bet. My jaded view of PNG is that with the potential for regime change at the end of this year (the 30-month no-confidence period expiring) it's all about securing position when the PNG LNG dollars start flowing. In such a corrupt kleptocracy I really think everyone's motivation is to funnel as much of that cash into their personal pockets as possible. Everyone will want a taste.
IOC needs to consummate the deal with a big kid right away (Total, Exxon, or whoever). Partnering with OSH is great because it plays into the government's corrupt greed - OSH will start paying dividends to the government before long so what is good for OSH is good for the pocketbooks of the kleptocracy (all things being equal).
I am Gobsmacked (Hi Tree) that the ownership percentage and deal amendments couldn't be worked out that the same time. We seem to be back in the dark.
Like I said before IOC may soon become boring - just another E&P company that the market prices properly. What fun is that? We can at least pray that Mulacek starts another company.
"You twist and shout your twists to hills. "
I don't know what the frack you're trying to communicate here but that sounds kinda fun.
Kenny you fool this is the verbatim quote from page 22:
"Gross Elk/Antelope 2C contingent resources estimated by Oil Search at approximately 5.3 tcf..."
See the part that says "estimated by Oil Search" ?
You do understand that Oil Search is not GCA, right?
Wow you are dumb.
"Gross Elk/Antelope 2C contingent resources estimated by Oil Search at approximately 5.3 tcf of raw gas inc
75 mmbbl condensate, with significant exploration upside potential in PRL 15"
"Independent assessment by Gaffney Cline & Associates in December 2013 estimates P50 recoverable raw
gas resource of 7.0 tcf inc 96 mmbbl condensate"
OSH is at 5.3, Total is at 5.4. No surprise. At least they acknowledge the upside and the GCA report is encouraging.
I wouldn't disagree with that Raiseyou. Less cash for more optionality or vice versa. I think the crux of the flexibility is whether or not OSH was the target of the ~19% Total selldown post-deal. If they don't need it any more they could simply buy less from IOC.
I agree good deal all around and one could make a decent argument that IOC is fairly priced around where it is. I won't be buying it of course but nor would I short it. I have a lingering hope that there will be some pumpola around the drill bit which may provide some trading opportunities.
"it is CRITICAL for IOC to make sure that the appraisal wells are drilled in locations that will produce maximum potential increases to the resource estimates. Unfortunately, the location that appears to be selected for A-4 seems not to do this IMO."
I'm not sure of this VS. A-4 is a step-out well to the southeast and if they find a phat reef there uber flowing with uber gas that would help maximize the resource estimate as it helps delineate the lateral extent of the reservoir. This could be the type of thing that would get a GCA agree with GLJ. A1,A2, and A3 were all drilled in the crest of the formation. A-3 was a high probability "success" as it was in between the two. My understanding is the lateral extent is a major question. A-3 was great for another Phil flare party but IMHO they should have drilled out delineation wells after A2 - e.g. drill A-3 where they are thinking of drilling A-4 now.
We're still working through our Cabal Daily Talking Points Jdeo. There is massive dissention in the ranks and the Cabal is in disarray. We have two lines of thought:
1) This is amazing and we should go long. The IPI overhang is cleared out and Clarion is gone. IOC will get all the cash now and never have to issue a share again. The drill bit will do the talking and shorts will get squeezed ho Ho HO.
2) What a nightmare. IOC owns 75% and is selling 61% to Total on the cheap and without the IPI piece will be left with scraps - an 11-12% rump, and won't get a nickel from OSH and will be at that back of the bus. The only hope now is that GLJ is right and Total and OSH are wrong about expected volumes. Indoreservoir puts the probability of drilling failure at 80%. E/A has been stolen from us and Clarion walks away with a massive payoff. oh Oh OH.
In all seriousness OSH is a great partner and clearing up the IPI overhang is a big bonus. But the ambiguity about re-cutting the ownership structure offsets the euphoria somewhat - if IOC is to retain a higher % then that means less cash from Total, but also no dilution from the IPI overhang. My sense is that it will come in about neutral to the Total deal at the end of the day - but the wildcard is whether or not Total still wants the 61% or would settle for less (and pay less). I t*think* the answer to that question is whether or not OSH was the originally contemplated selldown partner in the Total deal (e.g. was that 19% or so chunk reserved for OSH or someone else?) If so Total may be happy to simply buy less from IOC to end up in the same place at the end of the day - e.g. maybe a $400M cheque to IOC instead of $600+ and so on.
The reality is IOC is becoming a plain old oil and gas company and the market is pretty much getting it right. I don't see compelling value in the 50s but nor do I see it as a good short.
I do however find it inexcusable that they couldn't work out the percentages now.