Member Info for stevemocal

There are two issues with piping the GS gas to TL i.e. is it is more expensive and more risky. Even if technological advances now means the risks are no longer so pronounced, it still leaves the matter of the additional cost and who will pay it. Woodside is a business and IMO will make the right business choice. If the politicians in TL or Australia want to influence the business choice, then surely they will need to subsidise the project to swing the business decision? Not heard any politicians offering to put their hand in their pocket yet.

Santiago - What would we be farming out if it wasn't the drilling (costs)?

Santiago - The answers to your questions are out there and just need some research. You either can't be bothered to research yourself or you are just trolling. Probably a bit of both.

VT - It is almost exactly 9 months since the 'pregnant with news' comment was made. Let's hope it was a very deliberate analogy and that news is about to drop.

"The Australian Financial Review last year reported that the independent study showed total capital cost for the LNG project would be $11.8 billion in Darwin, Australia, and $14.1 billion in Timor-Leste."

Source: https://www.reuters.com/business/energy/timor-gap-ceo-expects-great-sunrise-gas-project-decision-by-november-2023-05-04/

How can a solution to the impasse between TL and Woodside be to pay for both pipelines? Even if they make one a bit smaller and don't need quite as much new infrastructure at the other end. It looks like an incredibly expensive way for Horta to save-face... would the TL people not see straight through it and stop it?

Dulyred - Depends what the news is.

Meadow - A PSC breaks down a work programme into phases, setting out activities (and often minimum spend) that the Licensee must carry out on route to production. At the end of each phase, providing the Licensee has carried out the required activities of the phase, the Licensee has an automatic right to enter the next phase. If they are not ready to commit, then they can ask for an extension to the phase (in this case it would be to the ANP), which BOIL has done and the ANP has approved.

There is a copy of the PSC in the public domain but it is in Portuguese. Here is a link...

https://www.laohamutuk.org/Oil/Project/SO-19-16/PSC%20TL-SO-19-16-SundaGasPtEnh.pdf

We are currently in 'Contract Year Two', which has been extended until 18th June 2024. I believe BOIL has delivered everything set out during this phase and it is now up to them to make a 'drill or drop' decision before that date (or ask the ANP for another extension) because Contract Year Three contains a commitment to drill an appraisal well.

I suppose it is possible that somewhere in the PSC there is a clause that the Licensee has to show evidence it has the funding to complete the next phase, but I doubt it (more than happy for any Portuguese speakers to go through the contract and advise otherwise!). So, even if the ANP were not to give an extension beyond 18th June 2024, it appears to be entirely in BOIL's gift whether they decide to move to the next phase (to drill) and they could take the gamble without the financing sorted if they were confident enough.

IMHO, there is no imminent risk of BOIL losing the licence and no indication that TL (through the ANP) would ever want to effectively steal the licence back. The number of extensions already granted by the ANP is also strong evidence that they have no intention of doing such a thing and are very supportive.

As always people... DYOR. Link above to the PSC contract if anyone wants to spend the weekend using the Google Translator to study it!! Tables showing the requirements for each of the 7 yearly phases can be found on pages 16 and 17. There will probably be additional detail of the requirements but I don't have the time or inclination to try and find and translate it.

Thanks for the update Bob.

Filthy - By 'green light' I am specifically referring to a route to market for the gas.

Remember, TL blocked plans for a FLNG facility at GS or for the gas to go to Darwin. The only route to production/market that TL will consider is for GS gas to go to a (yet to be build) processing plant on TL. A plant that doesn't exist, and will only exist if Woodside agree to pipe the gas there. Which leaves Chuditch gas in limbo pending a deal with Woodside or some other 'green light' from TL for getting Chuditch gas to market. My hope is that this 'green light' has been negotiated as part of a deal with a major to take over Chuditch, and would therefore be announced at the same time (or thereabouts) as a deal. It's the only way I can make sense of the farm-up deal.

It is over 5 years since Timor Gap borrowed $650m from the Petroleum Fund to increase their stake at GS. At the time, they scheduled repayments to begin in April 2028, when they assumed they'd be receiving revenue from GS. I don't think they are really any closer to production and, as Filthy says, it seems extremely optimistic that they can do things 2 years quicker than they originally thought.

On the plus side, it is good news that they are confident the GS issues will be resolved shortly, resulting in the gas going to the island, which will provide the much needed 'route to market' confirmation. Not so good for TL is the long wait for production and revenue. They surely need something that can be progress far quicker to fill the fiscal gap and associated risks. Will we get a green light for Chuditch next?

Eddie - I have seen copies of the slides you refer to on the TG but I don't use Facebook. Do we know who posted them?

He is clearly a long-game investor.

I am no disciple of the Climate Cult but the shift to cleaner energy makes sense, and I see the current trend of electrification continuing. It is therefore only a matter of time before the price of copper goes up, Bushranger is sold and those recent copper plays by Bird could really pay off. I may buy a few more shares myself, throw them in the bottom draw and makes this a long-term copper play.

Aiming High - The big RNS will come and when it does you will still have no friends, still won't be getting any, and the trolling of others to try and inflict hurt back on a world that constantly rejects you, still won't ease your pain. Such is the sad life of a troll. You have my pity.

Herd followers arrive to tell long-term investors and posters how to interpret the RNS and to DYOR. It's a crazy world.

Hull - There are other potential JV partners/buyers, including Shell but ENI is an interesting one.

PR shy BOIL unusually posted a congratulations message on Twitter when ENI signed their recent PSC with Timor Leste. I also saw a photo from the signing event (can't remember where it was originally posted but it is on the TG group), that showed the 'VVIP' table. There were seven people at the table, including our very own Andy Butler... what was he doing there?

VT - Repayment of the $650m loan is due to start April 2028 (as per the Timor Gap Annual Report and Accounts 2022) and, as you say, is based on when they thought GS would go into production. That can be renegotiated but it is going to through a big spanner in the works in terms of economic forecasting and future budget setting. If loan repayments are not forthcoming, then budget cuts will come harder and faster and will reduce funds available for other efforts to diversify and improve the economy.

The growth of the economy has also been hampered due to the reliability and quality of power supply. Businesses struggle to grow and compete because it is unreliable and expensive and government subsidies just deplete the Petroleum Fund more. They need to be using their own cheap and reliable fuel instead of importing expensive fuel.

It really is crunch time for TL. They can't kick the can down the road again. One of their oil & gas investments has to come good. Here's hoping it is Chuditch.

JC - Yes, it was borrowed from the Petroleum Fund and the repayment plan could be renegotiated. But, as you say, it would be a political disaster and have serious consequences in terms of setting future budgets for the island. They are 'all in' in terms of their oil & gas investments and they need an ROI soon. It really does feel like crunch time.

Filthy - Definitely crunch time. Timor Gap borrowed $650m (4.5% compound interest annually) in 2019 to buy out Shell and ConocoPhillips at Greater Sunrise. Repayments are due to start in April 2028. The island is on a fiscal cliff edge and they need to get something producing asap.

The Timor Gap Annual Report 2022, lists in-year milestones achieved under each of the projects they are invested in. Under Chuditch, the list includes a 'preliminary development concept study', and they use an image/slide from a BOIL presentation showing an FLNG solution as the preferred method for fast-tracking the gas to market. The JV partnership also worked closely with the ANP during this work and I don't think the partnership would have suggested an FLNG facility as the preferred option without the support of the ANP and their political masters. I think we have island backing for the Sundagas plans and that completion of the farm-up (a nice kick-back to the island) will see that support confirmed. Then the real deal can happen.

Someone might sell 100m shares for 'peanuts', which could still equate to a doubling of their original investment.

They might also do it knowing that the reaction to the deal with Timor Gap becoming 'unconditional' (following ANP formally signing it off), was way over the top. It was a foregone conclusion that the ANP were going to sign it off and a doubling of the SP made no sense. I was so tempted to sell and then to look to buy back in when the market regained its' senses. But I am no trader and decided to just leave it... wish I'd done it now though!