3 Stocks in a Tailspin

• Report this Comment On July 10, 2009, at 9:03 AM, kencooksam wrote:

  Another bashing article about IOC. This stock IOC is up 100% year to date. Motley Foll clearly is being paid to bash IOC or is just incompetent.I mean 3 negative IOC articles in 10 days. How much did you receive for this nonsense Motley Fool.?? Where the Fair and Balanced idea!! Here's real DD on IOC, Will Motley Fool report on their mistakes . Don't hold your breathe.Platts IOC to name partners SOON!! Interview CEO Mulacek

  Tokyo (Platts)--9Jul2009

  The InterOil-led Papua New Guinea LNG project is about to narrow down the

  field to "a few" potential partners to take a stake of 25-35% in the

  development, with an eye to making a decision by the end of this year, the

  Canada-based company's chairman and CEO Phil Mulacek said in an interview this

  week.

  "We [gave] access to 30 companies interested [in the project]," Mulacek

  said. "We are now trimming [them] down to a few groups," he said of the

  ongoing qualification round.

  InterOil plans to invite new partners to take a 25-35% share of

  developing the Antelope gas structure, liquefaction and offtake. "We are

  working in the qualification through partners to join our project first, and

  then [the] next stage is the LNG offtake," Mulacek said.

  The interested companies included "a couple of Japanese consortiums," and

  also came from China, Europe and the US, Mulacek said, declining to identify

  any of the parties. He was scheduled to meet a number of Japanese companies in

  Tokyo over July 7-8.

  Mulacek would not detail definitive time frames for concluding the

  qualification round, but said "it is in everyone's interest to get

  negotiations to define [it] as quickly as possible." Speaking to Platts in

  Tokyo in May, Mulacek had said InterOil was planning to make a decision on new

  partners "over the next two to three months."

  InterOil is also drilling the Antelope-2 well over the next 90 days to

  define oil and heavy condensate as part of serialized efforts to certify

  reserves, Mulacek said. The LNG project is based on reserves in the Elk and

  Antelope gas fields.

  "We have certified between 3.4 and 4.7 Tcf of gas as of December 31,

  [2008]" he said. "All the parties have upgraded that to 6.1-7.3 Tcf [in their

  interim reports]. The utilities want 2 to 4 Tcf, so we clearly have more than

  enough gas requirement for the first [LNG] train," Mulacek added.

  The project's first LNG production train would have a capacity of 3.5

  million mt/year and a nominal throughput of 4 million mt/year.

  "They [potential buyers] can now price the gas, but what we cannot yet

  define is the question whether there is 100 million barrels of condensate or

  oil or is there 500 million barrels? We do not know yet but we know it is

  going to be a very significant amount," he added. InterOil's current estimate

  for the field's oil reserve is 100 million barrels.

  "All we can do [now] is work with the Japanese consortium to work out a

  pricing structure," Mulacek said. "As the liquids and oil are finally defined

  then we can proceed with closing. This is the mechanism we are focused on," he

  added.

  "We have had expression [of interest] for 100% of the offtake so we are

  very comfortable," Mulacek added. "In an agreement we design for two trains,

  but we are looking at this one after another."

  InterOil and its project partners PNG's national petroleum and mining

  company Petromin PNG and Pacific LNG, an investment arm of Switzerland's

  Clarion Finanz, now plan to make a final investment decision on an oil and

  condensate development at Antelope this year. Oil and condensate output from

  the project would start up in 2010 and 2011 respectively, Mulacek said.

  The final investment decision for the LNG project is targeted for 2010,

  with production planned to start in 2014.

  Separately, Petromin is seeking an offtake-for-debt agreement with Japan

  to fund its purchase of equity in the LNG project, Mulacek said, declining to

  elaborate. The company is seeking up to $500 million in financing from Japan

  and in turn would offer 20%, or at least 800,000 mt/year, of the project's LNG

  offtake under a 10-year agreement.

  Petromin is also in talks with state-owned Japan Bank for International

  Cooperation and Japan Oil, Gas and Metals National Corporation on the

  providing of financial support for PNG's upstream-to-downstream LNG chain.

  --Takeo Kumagai, takeo_kumagai@platts.com

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