RE:RE:Timber...They are probably in a black-out now being so close to year end results being released. The million dollar question is if something has fundamentally changed. The stock is trading like bad news is imminent. The last correspondance I recieved from Thomas after the Petrofac delay indicated the delay was disappointing but everything else was on course...
Last Wednesday’s announcement was obviously a great disappointment to everyone. The GSA Joint Venture has been badly let down by Petrofac. They have not delivered the promised improvements in speed and productivity that were always just around the corner. Getting them to a moment of truth on schedule has not been straightforward. We have agreed a new schedule with them that does not require any improvement in their performance – that’s why we see such a long delay. It is separately underpinned by an incentive arrangement put in place between Petrofac and the Remontowa shipyard.
This is not the first significant delay on the project. Original alignment was achieved by Petrofac being a field owner, providing a cap on the cost of the vessel modifications and being subject to liquidated damages for late delivery. They have already missed the dates relating to the liquidated damages, it doesn’t get any worse for them from that perspective. At the moment their incentive is 6000 boepd of their own production, $m’s per month whilst in the shipyard and their reputation.
The rest of the project is progressing well. The fifth well is coming to a conclusion and the remaining subsea work is scheduled for between now and the summer. We will be waiting for the vessel. We know our credibility is low and that we need to provide regular updates on FPF-1 progress in order to build confidence in the new schedule.
Our task is much more difficult with oil at 60 rather than 100. We have protected ourselves to some degree with hedging through to mid 2016. We have more work to do and are focused on the things that we have some control over.
Thanks
Les