Put simply the deal with PBR was better for MEO and their SHs mgc.
Notwithstanding the financial clout of PBRs offer, from MEO's release at the time
(16th November, 2009):
'The preferred Farminee is a major international petroleum and energy company. Its reputation, size and independence will provide substantial long term benefits for MEO ..........
.......... This transaction involved the resolution of complex issues beyond those for a simple farm-in agreement.......
..... Additional analysis and discussion was required with respect to the potential implementation of an integrated LNG project in the event of exploration success.'
So apart from just selling the gas to a farmin partner for an already established LNG train and market MEO have the opportunity to take part of the establishment of a complete project incorporating WA-360-P. The 'implementation of an integrated LNG project' alludes to this, even though one permit participant didn't agree.
Independence means that PBR are not involved with the politics and positioning in the area. They will want to get on with the job of discovery and development. WPL may have drilled Artemis and, even if there was success at A#1, where would that leave the Artemis development in the pecking order of WPLs business plan.
Other issues and long term benefits may include PBRs interest in other MEO projects which WPL hasn't shown to date. Once FIRB approval is obtained then these may be pursued by the new alliance.
I believe Woodside would have been in the data room negotiating with MEO but were trumped by PBR.
Perhaps CUE were also talking with PBR and using their share of Artemis as leverage for their farmout negotiations re Caterina, hence the stand-off in March. Who knows and it is of no consequence now.
CUE's farmout agreement in their release:
Woodside farms into WA-389-P
'Woodside will obtain a 65% interest in the permit by committing to;
(a) Pay Cue's back costs to US$5 million.
(b) Paying 100% of the cost of acquiring 1440 km2 of new 3D seismic data.
(c) Paying 100% of the cost of reprocessing existing 3D seismic surveys and merging
these data with the new data.
(d) Paying 100% of the cost of the first exploration well in the permit.'
If we compare this to MEO's agreement with PBR:
MEO Executes binding farm-in agreement with Petrobras International Braspetro BV
'Key terms of the farm-in agreement include:
- Petrobras to earn 50% equity in WA-360-P by funding 100% of the first well to a cap of US$41m (MEO retains 20% interest)
- Upon receipt of all regulatory and Australian Government approvals, including Foreign Investment Review Board approval, Petrobras will pay MEO a cash bonus of US$31.5 million and reimburse MEO�s share of the past costs of approximately US$7.5 million
- In the event of a successful discovery, Petrobras will carry MEO�s share of the cost to drill and test two follow up wells in the Permit to a cap of US$62 million per well, together with payment of an additional US$31.5m cash bonus in January 2011
- MEO to remain Operator until the completion of the first well after which Petrobras has the option to assume Operatorship'
Perhaps WPL offered MEO a similar deal as CUE's but we can see why the work put in by MEO and the negotiation skills they showed paid off in the end - even though it hasn't been realised in the SP yet.
FIRB approval should soon alter that.
There is no wonder Woodside were miffed at losing the Artemis farmout at the same time as Apache chose Chevron for their gas sale at the time.
Just my thoughts.
#:>))
Put simply the deal with PBR was better for MEO and their SHs...
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