RE: write up on RMP15 Aug 2018 19:01
Spinefx
Oil Search paid $400 Million for a 125 million barrel net interest (RMP's potential net interest in the Western Blocks, Alaska, is 126 million barrels), so there's no reason to suggest, on a successful drill result, that a $400 million price buyout target in the future for RMP's interest would be in any way excessive, far from it, given the timing of the Oil Search deal, it could be substantially more.
The deal Oil Search made with Armstrong was over an eight month term prior to the announcement and was at the bottom of the commodity cycle and they also state that Repsol paid substantially more than they did.
The price of crude was sub $30 at the bottom, and now it's over double that, so there's plenty of room for far higher than $400 Million as a buyout potential if they succeed on the drill and flows.
Here's part of the transcript from Oil Search:
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Date:
1 November 2017
Time:
Start of Transcript
Peter Botten: Good morning ladies and gentlemen, thank you very much for attending this conference call. In the room here I have Ann Diamant, our Investor Relations person. Our CFO, Stephen Gardiner, our EGM for exploration and new business, Keiran Wulff, and some others. We're ready obviously to walk you through what I consider to be one of the most exciting acquisitions we've done, and I've done and been involved in some 40 odd years in the business, and frankly without me being [unclear] our Board and management being convinced of the strength of this acquisition we wouldn't have done it. Because I do think this is an unusual and particularly attractive acquisition and balances Oil Search's production portfolio and makes it far stronger and more attractive for many years to come.
Today we announce that Oil Search has acquired interest in the world-class Tier 1 oil assets, with material growth potential in the Alaskan North Slope. A very, very well established prolific oil province with an attractive fiscal regime. The main asset is obviously the Nanushuk field that has been portrayed as the largest conventional oil field discovered in the US in over 30 years.
Obviously we'll see with that but we've bought into this field at a good time in the commodity cycle, just off really what we believe to be the bottom.
Investment fundamentals I believe are compelling. We've bought into these assets on what I believe to be a very conservative 500 million barrels resource, net to Oil Search around 125 million barrels or [unclear] $3 a barrel acquisition cost.
We have some very strong local partners, firstly Repsol has been there for quite a number of years and I should say in their acquisition paid substantially more than we're doing now.
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