Mr. Lee:
I believe Abacan has no further equity interest in the MOPU (Mobile Offshore Production Unit for those not sure). When Abacan walked (floated?) away from the NGO Field, they left it all behind, along with the debt, for their indigenous partner - Amni. Abacan retained a small 10% interest in the filed on the never never plan. The MOPU was a funny arrangement - the equipment was on a "lease to own" with Schlumberger and the Jack-up Rig, which the production equipment sat, on was on a separate lease through Schlumberger who had leased it from someone else - because Abacan had not the financial where with all to do it themselves. If the payments are not kept up, the equipment would go back to Schlumberger. The storage tanker was from the Fred Olson Group - same arrangement. There is no equity in the equipment left.
The $10 million insurance, I believe, will never materialize for the shareholders. Let's look at the insurance issue. Abacan was not insured. A subsidiary of Abacan was insured. The insurance was to cover "drilling costs" for one particular well. Insurance is not meant to "make you money", but to make you "whole". Abacan's subsidiary will need to prove to the insurance company they incurred the costs. To receive the money, they will need to prove they paid the costs. If Abacan's subsidiary managed to get the suppliers to eat the costs, then what was Abacan's subsidiary' financial damage from the well blow-out? None. Insurance companies "hate" to pay out. Insurance Companies are always on the look-out for scams. Imagine how easy it would be to sell an asset to someone who will welch on the costs and let you collect the insurance. Too obvious. If by some miracle, Abacan's subsidiary did collect the insurance, then the suppliers would be all over Abacan for payment. If not the suppliers, then Total, who still has a $30 million loan guaranteed by Abacan, would be after it.
Let me give you a simple example. Mr. Lee and I decide to build an apartment complex to later rent out. Rental markets are hot a the time we set the deal. I agree to pay the all the construction costs and I have a rental revenue sharing arrangement with Mr. Lee (Mr. Lee brought the opportunity to me.) During construction of the house, the rental markets die-off and the house burns to the ground before completion, for legitimate reasons. We are fully insured. Land values have fallen off since we started the project, and is now worth next to nothing. I have paid none of the costs to date and there are $10 million in construction costs incurred. I now cannot afford to pay any of the bills, and convince the contractors they will get nothing. I agree to walk from the mess and sell the whole thing to Mr. Lee for $1. Is it reasonable that a London Insurance Company will pay me $10 million dollars? Would the contractors sit around and agree to that. If Mr. Lee convinced them they would get nothing, what is my financial loss? Why would the Insurance Company pay out if the Contractors agreed to receive nothing?
Makes no sense to me. I believe there is no value to Abacan shareholders in the insurance claim. Insurance Companies have been around too long to fall for this plan, not to mention they have good lawyers. British law and British courts and all that Ol' Chap.
Actually, the whole thing smells like an insurance scam to me. A scam concocted by Abacan and their partner Amni. Defrauding both the suppliers and the insurance company.
Mr. Lee, you are a lawyer. Pretend for a minute that you are acting for the Insurance Company, and have no financial interest in Abacan. Would you advise them send Abacan a $10 million dollar check? For your advice you are offered the following: You get $250,000 if you can prevent a payment all together, $0 if you lose and Abacan receives the full amount, and $100,000 if the payment goes only to the suppliers for their invoiced costs on the well. Would you take on this file? (And if the dollar amounts are not within typical pricing standards, add another zero.) It seems like a somewhat easy file to me. Always look at it from the other persons perspective.
Maybe this why the payment has not yet been made.
FoxyLoxy |
