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Propaganda Machines Doing What They Do Best

  1. 2,153 Posts.
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    The deal is done. The terms of the deal were more or less signed off back in January subject to due diligence by WPL and possibly some to and threw negotiations between the parties but the fact remains that the parties both stipulate that the agreement was done in January. Now in that agreement I am speculating that both parties had agreed on a price structure otherwise there was no need to add the plus costs incurred since January. A cost structure of X dollars per barrel with the 2c 330mbo was I suspect locked in and no reference to the later RISC to increase the bid was in the agreement. Otherwise why have that costs since January added to the final price? Since January the 2c has risen by 230mbo. Now if we assume that the deal was signed on the 330mbo 2c then COP's share was 115mbo and therefore the price paid per barrel was US$3. Now the RISC report has come out and added another 80mbo to COP's numbers and I am speculating that that the agreement signed back in January had already agreed on the 2c in the field and that COP would only be reimbursed for all expenditure after the date of the agreement subject to the deal passing WPL's due diligence. Oil was just coming off of its low of $26 (trading low $30's) when the deal was struck and realistically the SNE assets were probably the only assets getting any nibbles.

    Here's where the propaganda machines spring into action where both parties claim they have pulled off bargains of the century. WPL claiming the price paid covers the RISC 560mbo and COP claiming an asset on their books for $250M was sold at a 40% premium for $350M. Win/win both sides. I dare say you will not find anything in COP's announcements referencing 2c 560mbo and their share of 196mbo. I could be wrong but I believe both companies propaganda machines have been working overtime. The old saying,"Don't Let the Facts Get in the Way of a Good Story" rings true with both parties.
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