The value of releasing JDZ results vs. the value of NOT releasing.
As I think, about my Chevron question from my last post, I have to really wonder about the value of not releasing results.
Chevron did not ever, at least from what I've observed, really give the 'true' value of its JDZ block, to the extent that it could ascertain it from its Obo-1 results. It MUST be that had the results been good, by announcing what they had found, they would have had a bidding war for the block between say Total and company XYZ.
Chevron clearly did not go this route, because they must have felt that the value of a tight holed secretive Block 1 would be worth MORE than what is gotten through a bidding war. It's the only logical explanation, but if true, then WHO would pay the secrecy 'premium', WHY would they pay to have such a premium, and WHEN would they then finally announce what is in Block 1?
Well, the answer WHO must now be clear to everyone, it has to be Total. They had to be the only bidder on JDZ Block 1, because Chevron would not disclose the 'true' results, to any potential bidder, imo. Total though must've known SOMETHING from Akpo, maybe they found some underground system or discovery which makes them think that a secretive Block 1 is worth the extra money.
So I envision that at some point Total had approached Chevron and said, DO NOT tell ANYONE what is down there, and in fact don't even drill more in Block 1 and in exchange we will pay you MORE than any bidder war outcome. It is an offer you cannot refuse.
Maybe Total even paid Chevron some 'hush money' for every year until Sinopec/Addax had drilled the other blocks. Then SOMETHING must've happened to trigger Total to go ahead and buy the JDZ Tightholed Block 1. What would that SOMETHING be? Sinpec and Addax drilling the other blocks.
Likewise, I could also envision ERHC Energy doing a similar deal with Sinopec. If ERHC's share price value if it were somehow able, in concert with Sinopec, to release the results is let's say $30 after a bidding war... (just pulling a random number out of thin air).
...then ERHC must realize that the price of keeping quiet is ($30 minus current share price) and therefore demand from Sinopec that if it is to agree to remain quiet, then Sinopec must pay at least that premium, let's say $35 a share at some point in the future.
That'll make silence over results very worthwhile, for ERHC shareholders (some time in the future for those who are willing to wait).
But even with these assumptions and all of the logic surrounding them, I still haven't answered the question as to why there even is a premium being paid for the silence over the results in the JDZ. Namely and once again:
WHO would pay the secrecy 'premium', WHY would they pay to have such a premium, and WHEN would they then finally announce what is in the JDZ.
Total makes sense as far as the "Who" goes. They have the most knowledge in the area vis. a vis. Akpo. They need neither to release results nor obtain any more results. They are so convinced that the JDZ is worth it that they are even willing to pick up Block 1 from Chevron without taking on more info from Chevron, and even willing to pay MORE than any other bidder, because that's the only way Chevron would 'ok' such a transaction. Otherwise, as stated above, Chevron would've released results and initiated that bidding war.
Now what about the WHY. I mean if you are already paying a premium, why would you Total, want to shut off all sources of information on the results? Maybe because you felt that what you have learned with Akpo extends even past the JDZ and maybe even past the EEZ. Maybe Total knows that there's commerciality all across the GOG, as it appears to be the case from what we've learned from Lukoil and Vanco's recent discovery in the deep waters near Jubilee.
Ok, so we have the Who, let's say it's Total, and Why, let's say it's because Total knows what it wants to know (from Akpo), and doesn't want anyone else to know because it wants as many of the other players out, other than its partner the Chinese, as possible. What about When? Maybe never. That might still be acceptable to us. If ERHC has an offer which includes the silence premium, and that offer is the hypothetical $35, then really who cares about knowing what's down there? Give us $35 for our shares, and heck no questions asked from us. Right?
But if the answer is not 'never' then when? After the EEZ is said and done in about 6 months? Next week? When?
Krombacher
AI
