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Wow Hotelking, You are really resouceful, well done.
But do you think this news can translate to better bottomline for Guoco Leisure in the future ?

Thxs to hotelking for sharing Im actually more interested in the thistle and guoman hotels than the Oil royalties. Almost 90% of Guocoleisure NAV is derived from properties including its landbank in Molokai.

I was just thinking about freedom's posting when I came across this on the net. I thought its interesting

http://www.exxonmobil.com.au/Australia-E...LIP_40.pdf


Bass Strait has had a long history, and still has a very bright
future.
There is significant oil supply and approximately 7 trillion
cubic feet of gas remaining in the basin, which will see Bass
Strait continue to supply vital energy to Australians for more
than 30 years.
In 2001, the Joint Venture commissioned the largest 3D
survey ever recorded in Bass Strait – a 3,900 square
kilometre seismic blanket over the northern oil and gas
fields, which delivered a massive flow of information into the
Gippsland geoscience dataset, and resulted in a series of
successful field drilling programs that continue today. Since
this seismic survey, approximately 1 trillion cubic feet of gas
has been added to existing resources in Gippsland.
New oil and gas projects continue to be developed in
Gippsland with the Kipper Tuna Turrum development project
representing a $3 billion investment in Australia’s energy
future, heralding a new era in the history of Bass Strait.

Looks like this oil and gas royalty is not a unsafe bet , should be able to generate v. good FCF for GL till year 2040.
Take an average of US$40m, after amotisation in FY2011. 40 x 28 = US$1.12 B.
Do I miss out something ?

you missed a lot.

when oil price drops, the production will fall because of both high cost and certain reserve not feasible to extract, so triple whammy for the royalties. Just check royalties payment history, only in recent years, when oil price above 100, royalties starts to make meaningful contribution.

also, there is time value concept. If production falls, certain production will be postponed to the future if the reserve is still feasible to extract. as future money is not as valuable as present because of inflation, so quadruple whammy for royalties.

(11-08-2012, 11:47 AM)freedom Wrote: [ -> ]you missed a lot.

when oil price drops, the production will fall because of both high cost and certain reserve not feasible to extract, so triple whammy for the royalties. Just check royalties payment history, only in recent years, when oil price above 100, royalties starts to make meaningful contribution.

also, there is time value concept. If production falls, certain production will be postponed to the future if the reserve is still feasible to extract. as future money is not as valuable as present because of inflation, so quadruple whammy for royalties.

Freedom,
You are not wrong to predict this scenario if the oil price drops below say USD90 or even lower to 60 or 50. But what about the scenario of oil price move back to USD 120 or more ? Believe that was the reason why Stocker used avarage price to give his figure. Nobody knows for sure oli price will go up or down.

---

Just curious is this ' Marathon Oil Corp - NYSE: MRO ' related to the second largest shareholder , Marathon asset management LLP ?

(11-08-2012, 11:47 AM)freedom Wrote: [ -> ]you missed a lot.

when oil price drops, the production will fall because of both high cost and certain reserve not feasible to extract, so triple whammy for the royalties. Just check royalties payment history, only in recent years, when oil price above 100, royalties starts to make meaningful contribution.

also, there is time value concept. If production falls, certain production will be postponed to the future if the reserve is still feasible to extract. as future money is not as valuable as present because of inflation, so quadruple whammy for royalties.

So wouldnt you say that the previous management of Guocoleisure, when it was still known as BIL International, was smart to have monetised the Bass Straits Royalty from 1997 -2007 by forming the BSO trust? Oil prices wasnt that fantastic back then.

This royalty relates to gas production as well. And if you read the above article which I posted, its really positive that the BHP/ESSO JV is pushing the Aussie government to link the gas produced to international prices.

As extraction technologies improve over time, the Bass Straits area should be able to yield more hydrocarbons due to utilisation of more efficient techniques.

I do not forsee Oil prices coming down in the forseeable future ahead. As the world population increase, so would demand for oil.

Inflation is what will push up the price of oil and gas as well.

Published August 11, 2012 , Business Times.


Olympic boost for London hotel occupancy, room rates

Average room rates rose 87% while occupancy edged up

STRIKING GOLD
Fans of Japan's women's soccer team at a match in London. Visitors to the Olympic Games helped maintain occupancy rates and boosted room rates in London hotels. - PHOTO: AP

LONDON hotels' average room rates rose 87 per cent for the Olympic Games and hoteliers reported a slight occupancy increase, according to data compiled by hotel industry researcher STR Global.

Hotels charged an average of £216.42 (S$421.6) per night from July 27, the day of the opening ceremony, to Aug 5, while occupancy numbers rose to 87.1 per cent, a 3.2 percentage point increase from the same period last year. Revenue per room almost doubled, according to the report.

There has been a recovery from the visitor slowdown during the pre-Olympic period, the report showed. Tom Jenkins, executive director of the European Tours Operators Association, said in an interview last week that 800,000 summer UK visitors have shunned the capital amid travel warnings and high room rates.

I fail to see why M&C is trading at a higher price to book than Guocoleisure.

Quek Leng Chan's open market purchase in GL stopped on 2 Nov 11. Should one tracked back in history, Quek has always been actively accumulating GL whenever the window for insider trading opens.

Wondering if his inactivity since 2 Nov 11 could be a prelude another buyout attempt?

The ongoing Euroland concerns could be used as a lame excuse to privatise GL on the cheap...