I've spent the last day doing due diligence to answer my own questions.
Why weren't the fields developed previously? The fields were appraised in 2015, but the surrounding infrastructure ceased production in 2015/16. Both Kitan and Laminaria had planned production cessation for December 2015 and July 2016, respectively. Laminaria (LamCor) was bought by NOGA who planned for continued production and production extension but had three years of infrastructure failures instead - They went into administration in 2020 and the infrastructure is now decommissioned. Something else also happened in 2014, the collapse of the oil market, hitting a low of $35 in 2015. The price of oil only recovered over $60 in 2017. New PSC's were signed by ENI and Inpex with Timor in late 2019. What happened in January 2020? Covid and $20 oil. It's not hard to understand why the fields were not exploited, surrounding production infrastructure had already been sold, ceased and/or decommisioning phase started and companies like ENI and Inpex do not care about standalone development of 30mmbbl fields, these are $100B companies.
https://tradingeconomics.com/commodity/brent-crude-oilhttps://www.industry.gov.au/sites/default/files/2020-08/review-of-circumstances-that-led-to-the-administration-of-noga-executive-summary-and-recommendations.pdfhttps://www.spglobal.com/commodityinsights/en/market-insights/latest-news/oil/121415-east-timors-kitan-condensate-no-longer-available-as-field-reaches-end-of-lifehttps://www.offshore-technology.com/projects/laminaria/?cf-viewWhy did ENI and Index sell the fields? The companies themselves stated all non core assets in Australia and Asia were put up for auction in 2020/21 to raise money during the virus economic downturn, and because their focus turned to cleaner energy. The bidding was poor, and eventually completely halted, and should we be surprised at that? It was the covid era, none of their assets sold, not even the producing assets. This at least answers why our new fields were available, it seems it was simply multi-national corporate rationalisation and new energy focus, partly forced due to the economic climate at the time. In fact, as of 2024 ENI are now selling their entire worldwide upstream asset portfolio, they are exiting completely.
https://www.offshore-energy.biz/eni-stops-australian-assets-sale-amid-lack-of-satisfactory-bids/https://www.upstreamonline.com/finance/eni-halts-sale-of-australia-assets-reports-say/2-1-939649https://www.bloomberg.com/news/articles/2024-07-01/italian-oil-major-eni-eyes-over-4-billion-in-upstream-asset-sale-planhttps://indonesiabusinesspost.com/risks-opportunities/eni-to-sell-us4-3-billion-in-upstream-oil-gas-assets-to-fund-energy-transition/Was this a good purchase, is it economical? I can't provide hard data to answer this, no one here can. The jurisdiction is certainly much healthier than the UK, with petroleum tax rates at 60% instead of the UK's 78%, and a country who's whole future is tied directly to oil and gas production. I can run my spreadsheet and I get good economics but we really need to change the proposed question. Has FDR seen good value in this acquisition? You have to trust that they have seen positive pre-economics and that the $2m + option purchase is worth it. I don't think we will get another chance like this, we simply don't have the capital or size to purchase a producing asset, and if we can show good economics then we have a pathway to early monetisation - just sell the fields. It's $2m for appraised oil fields and free look at a possible bright future and it plays to our skills. I leave it in their hands and look forward to seeing roadmap milestones completed. It's certainly good to have asset that isn't at the mercy of the drilling gods
GLTA
