Repsol, OSH, IOC & Gulf LNG

Hi everyone,

while there are not many shareholders, less that read these posts & even fewer who actually post their thoughts here, I am however surprised that their has been no comment on what I think is the standout couple of paragraphs in both Cott & KPL's latest quarterly reports regarding Pandora development options.

It seems to me that FLNG & Daru options are out & a cheap jack-up rig & inclusion in a Gulf LNG (Elk/Antelope) aggregation along with the Pasca & Uramu offshore gas fields could be the way forward.

As we all know, their are transactions in process among the bigger players which effects everyone including Cott.

Oil Search is ofcourse at the centre of everything but I will get to them later.

The big event that could effect Cott & Pandora is the Repsol takeover of Talisman.

Repsol appears to want Talisman primarily for their North American assets and I don't think a couple of Tcf of gas potential in the PNG highlands rates very highly on their radar.

However this rates highly with OSH who have already made a repeated play for Talisman's western province assets for an aggregation with P'nyang to justify a NW hub train expansion of PNG LNG.

Repsol may well sell the whole of the Talisman PNG assets to OSH in one approx. US$300 million ransaction.

If so, then we could see OSH as the new operator by default with 25% of PRL38 (Pandora), an asset they are very familiar with having owned it previously!

What's different this time around is:

1. OSH is now cashed up with income from PNG LNG and very much into new expansion for the future.

2. They have conducted a drilling program recently offshore only 70kms or so north of Pandora & seem to have discovered a fair amount of gas with their Flinders & Hagana wells to add to the existing Pasca field - approx. 1 Tcf plus they have another 370 Bcf in the Uramu field further north near the coast.

3. OSH has now very strategically bought into Elk/Antelope & may yet bring Exxon along with them (subject to arbitration) to speed things up via possible integration with PNG LNG.

As with Pandora, there is potential exploration upside & therefore perhaps 2-3 Tcf in the shallow waters of the gulf, which definitely cannot be ignored especially given the proximity to a possible Total/IOC LNG facility on the coast south of Elk/Antelope.

KPL has highlighted that Jack-ups are getting cheaper & from what I can tell a shallow water pipeline north from Pandora would travel 70 kms to Pasca & another 70 kms or so north to join a future Elk/Antelope pipeline/facility. This total distance approx. 140 kms is less than from Pandora to Daru. (Wison has suggested a 160 km subsea pipeline would cost around US$428 million).

With Oil search onboard & the sharing of a pipeline, the economics might stack up even better then a standalone FLNG option.

It could even be possible for Cott to farm out 30% at some point to fund development costs for it's residual 10% stake in the project & perhaps stay in right up to near production stage. IES would still have their $23 million rights but would have to wait until monetization of the asset.

Anyway, just some positive thoughts to balance all the negative stuff I've posted here in recent weeks!