General Thoughts, page-5034

I think the chances of Woodside not taking up their option is next to absolute zero. Once they do though, I agree, there is a good chance that they will do what Galp has done, and drill a well or two on their own in order to add value prior to farming down their 56%. On the other hand they may farm down very quickly if the price is right. Here's why I'm thinking that. What follows is 100% speculative.

If I'm right in thinking Woodside may already have an informal understanding with ExxonMobil, I believe Exxon would want to get down to work sooner rather than later while the expertise they've marshalled for developing Guyana is still reasonably intact. If Woodside tries to get them to wait at least another year, I would think Exxon's interest in quickly closing out a deal with Galp would increase substantially.

PEL 83 is further along than PEL 87, carries less risk, and a better timeline. It wouldn't surprise me if Exxon were to leverage Galp against Woodside, if Woodside starts to get too cute. Let us (Exxon) take operational control of PEL 87 and assume the exploration risks now, or we close a deal with Galp to operate a derisked PEL 83. Then you (Woodside) can come talk to us later, and maybe we'll be interested at that time, or maybe we won't.

If Exxon can convince Woodside to farm down immediately and not take the route Galp has taken, then that might also put Exxon in a better negotiating position with Galp. I've no doubt Exxon wants both PEL 87 and 83. Moreover, I don't think they want to wait around for either if they can avoid it.

This upcoming conference should be very interesting.

I'd love to be a fly on the wall!