This waiting is the pits. Unfortunately we must remember that by definition with any disruptive technology there are no road maps or precedents on how this product should be sold or leased or whatever. This becomes more complicated by the fact that we are talking about potentially hundreds of millions of dollars on the proverbial table.
Here's my guess FWIW. TC and STWA have reached an impasse because TC realizes the best deal for them would be to buy-out the company. That way,
they can shut out their competition or better yet sell it to them at a higher profit margin. They would also avoid the issue of having to pay STWA continuing revenues on the savings incurred on each barrel pumped using the AOT. This could also be millions of dollars of lost profits (in their eyes) that they would lose each year from now until whenever.
Gregg on the other hand, will refuse to be bought out for exactly these same reasons. IF he sells the company to TC they lose all additional sales to Kinder, Enbridge, Europe, Africa and the rest of the world. Selling the company outright may mean a huge payout immediately but then that would be it. Gone would be the all the future residual payments that would make STWA an unbelievable legacy investment.
This whole idea of continuing payments on a percentage of savings enjoyed by TC (or any pipeline company) is truly where the focus of these negotiations needs to be. It also must be difficult to calculate.
Will it change when the grade or kind of oil is switched? What is a fair percentage to pay STWA on each dollar saved by using the AOT going forward. Take your time Gregg because you may only get one chance to get it right.
I'm betting TC has hired an army of MBA's to run all the numbers on all the different scenarios i.e. buy lease or whatever and I bet they don't like any of them except for the concept of buying it all outright.
Hence, the stand-off at the AOT corral.
