|I think it is that straightforward enough... that Shell's changing interest in the region "could go both ways" in relation to the interest Philex, FEP and FECOF might have in making Shell a partner in SC72. |
Shell didn't find a Malaypaya equivalent in their JV with Nido, and didn't find it worth their effort to work the smaller potentials that still appear to exist where they were looking. The news lately saying that the target they picked was "water bearing" ? Ouch. But, that makes the point I've had to make recently elsewhere, that even with 3-D seismic in hand, until you've drilled the structures and shown what they contain, you still really DON'T know what there is down there... until you have drilled into it to find out. Whatever the "rules" say about "proving" offshore values with 2-D, and 3-D... the market valuation that results says that the "rules" that really matter are still the pairing of 3-D with a drill test.
It's also apparent that they're finding it useful to participate directly in the current leasing round... which isn't odd... and won't make them unique. At some point, I'd think the bidding would be set, and we might learn more about who was interested in what... or, more likely, that might remain close held until after the results are announced... and that is an issue for FEP and Philex as well as for Shell, requiring they make choices that will include tradeoffs between focusing on getting new leases, and focusing on development of the ones they have.
Timing isn't going to be driven by investors wanting it to happen yesterday... rather than by the reality in the elements that will actually dictate timing issues in relation to the total opportunity. Management are right to focus on what the calendar actually requires of them in the pace in development, and on the opportunities they have open to them, and not on things over which they don't actually exercise much control.
I do think that the leasing round likely imposes some additional potential timing constraints on FEP in thinking about deal making... or, it might, if other potential partners, not just Shell, are similarly likely to wait and see how the next round goes, wanting to see how it shakes out before formulating plans for the region. So, that makes competitors, for now, out of what might still prove to be partners in the future ?
I don't think that means that a company like Shell isn't going to participate in doing deals with others, where that makes sense... even if they'll be inclined to wait and see what the overall opportunity looks like before proceeding...
My understanding is that the leasing round will be wrapped up in the second half of 2012... which should make it more or less a non-factor in FEP's planning, as they're proceeding to analyze the 3-D and pick a couple of target to drill test themselves in 2012, with Philex Petroleum largely funding that effort...