I think the 'contingent on funding' clause is an excellent part of the CO2 deal.
JV partners can have confidence the supply is guaranteed if they sign on the dotted line. We all win.
The CO2 agreement without such a clause would give potential JV's too much leverage as the deadline for ELK taking delivery or face bankruptcy approached. This would be of no benefit to Exxon or ELK ... without the funding we don't want the CO2 .. so the argument is circular.
The clause allows for fair negotiations to take place. We still have the time restraint to get the funding in by .... but it prevents the JV partners playing too hardball as they will simply miss out too or get trumped. Good risk management by both ELK and Exxon.
ELK Price at posting:
20.0¢ Sentiment: Buy Disclosure: Held
