Thank you Northoil, et al, for a great discussion. I can accept no better deal at this time. But why do we have to sell now? Let's vote no for the deal and remain independent.
Do I like the deal? No. Was there self-enrichment? Probably. But my whole thesis is that there are no better offers out there. One reason I believe that is Exxon’s actions. They are the dog that didn’t bark. Exxon will walk away from any deal that does not fit their rigorously enforced financial standards. They are intense in this and it’s a bedrock in their corporate culture.
You dismiss “a low ball offer by Exxon, who just happens to be partners with Oil Search”. Again, offers are made, then negotiated. As I recall, that went on for some time, then the Total deal was announced. So, Exxon’s final offer, whatever that was, was not as good as Total’s. In Exxon’s eyes, they offered “fair value”(whatever that may be). They weren’t willing to up the offer. In Exxon’s eyes, Total overpaid. And, the “just happens” insinuates some collusion. Exxon does what’s best for Exxon. And they don’t tell anybody what that is. The “Iron Curtain” may have been invented by Churchill, but Exxon thought of it first.
In round two, their name didn’t show up (actually, nobody’s name showed up- hats off to IOC for keeping it quiet). But I’d be amazed if they weren’t there. (Yes, an opinion). Again, Oil Search was the overpayer. If you think Exxon would gratuitously step aside while their partner, Oil Search, enrich themselves, you don’t know Exxon.
A thing is worth what someone will pay, not what the great unwashed retail investor class thinks is “fair”. Is the OIS deal full value? Probably not. Is it better than anyone else’s? Probably yes. Did OIC hype the reserves? They ALWAYS WERE, the seller, so probably yes.
Were there other offers? Probably, but how could they be substantially better? Existing LNG initiatives have an enormous, overwhelming advantage in bidding for reserves. Who else is out there? This deal is over. There is no better deal. This is it.
.....It's not like Oil Search mailed in a bid and IOC said, "Gee, that's great let's take it"......
What so many forget is that IOC had a deal....with Total. We had the power to enforce that deal by refusing to drill A7. According to our Chief Bottle Washer we had close to a mid range of 10T's......about the only thing he ever told the shareholders. That all changed when he announced the deal with Oil Search which just happened to coincide with a timeline involving a $39 million bonus. So, we close the deal without A7. At that point, how much better do we appear? I would argue much better. But my argument, like yours, is an opinion. Nobody has shown us anything.
.....These are ferociously negotiated by both BOD's.......
Thirty nine million reasons to dispute that with you.
.....No one could afford the delay......
And that is precisely why it could have been used as a bargaining chip. Worse case, we take the deal with
Total, get financing to continue or then sell our share of E/A to whomever. Look, Phil obviously agrees that, at this point, we could not get out of a bad deal by Hession. But he is trying to get fair value. That could only have been achieved by a bargaining chip, such as fear of delaying the project.
.......you have no idea how these deals are done.....
All too true. But I do know that I have fiduciary responsibilities due my shareholders and one of them is being willing to openly announce certification numbers BEFORE I ask them to blindly vote on a deal. All Hession said was another open ended pronouncement that we could have an additional 1-3 T's of gas. Look, IOC has only had to CEO's, both lifetime oil and gas people, both espousing "elephant" like massive gas finds. But it was only upon announcement of a deal, that now Hession implies more than 6 but probably not 8 (using OSH press release assertions, which Hession didn't refute). Our side lacks honorable representation for 39 million reasons. Thanks Northoil.
.....The point which you don't seem to see is that other people have looked at this already......
......Any interested could come in, sign a confidentiality agreement, and see the whole story......
......We don't know if companies other than Oil Search and Exxon have talked to IOC........
North oil, all these statements could be true, may be true......they are all assumptions (except for a low ball offer by Exxon, who just happens to be partners with Oil Search). Unfortunately, OUR CEO gives us no information, doesn't answer any questions at the Annual Meeting, his IR avenue for disseminating information requested by shareholders is non existent. You make assumptions that I believe are very fair to assume, except I can give you 39 million reasons why his actions do not fairly represent open negotiations.
......This didn't happen overnight......
No, you're right. Botten said he has been contemplating and researching this deal for five years. But it wasn't until Hession approached him, hat in hand, last year. So, our CEO, at a quarterly conference in late 2015 openly lies to shareholders telling us we are cash secure through 2016 without additional funding, but then find out we are $200 million into our equity loan by first quarter of that same year. My point is none of this happened overnight but was pointed toward July, 2016 for 39 million reasons. So why would I believe anything concerning the deal.
......No one else has made a better offer.......
You don't know that, nor do I. Perhaps there was a differently structured offer. Perhaps portions of E/A were offered upon. You don't know and I don't know. As a fiduciary responsibility, Hession should have released any information pertinent to the company. But he certainly has done a two step at anything close to representing or informing the shareholders. Merely his total lack of accessibility at the AGM reflects that. I try to do tune on a second reply.
Of course Oil Search or any purchaser pays the lowest possible price. They will screw us to the wall if they can. The point which you don't seem to see is that other people have looked at this already. IOC was/is totally incapable of funding or executing a grass roots LNG project. They HAD to find a white knight. IOC would have had data rooms with every map, well log, seismic section, consultant reports, etc. available. Any interested company could come in, sign a confidentiality agreement and see the whole IOC story. They would make their own evaluation with a less than the rose-colored glasses Mulachek and some retail investors might have.
We do not know if companies other than Oil Search and Exxon have talked to IOC. Shell was rumored at one point, Total almost surely was in the mix but there were probably others. This also didn't happen overnight. It's been going on for a long time. And it's not like Oil Search mailed in a bid and IOC said " Gee, that's a great deal, let's take it." These things are negotiated ferociously and such a deal has to go through the BOD's on both sides. They have fiduciary responsibilities and the awareness that there could be shareholder suits.
There are only a few companies who could approach this project and NO ONE ELSE HAS MADE A BETTER OFFER. The no vote has no chance anyway, but do you really think it's just a matter of saying "we're available again" while you watch the stock go back to 30? "Force(!) a more constructive offer"? Really? "No one can afford a delay", yet that's exactly what starting over would do.
You can call me names, but you have no clue on how these deals are done. I do. And I don't take fools for a client.
Thanks Oliver. Singapore, not Australia. Upon looking at my portfolio after Brexit this afternoon, IOC has the happiest face in my portfolio! How's that for terrible? Will Oil Search see the 5's? I don't think the selling is over.
Pardon, OSH does not trade on the NYSE, so SEC would probably be totally unable to touch them. Ditto for the PNG Government, the SEC won't even try to address that.
Richard, This falls under Canada, Papua New Guinea & Singapore jurisdictions. InterOil has no footprint in Australia anymore.
Points all well taken about class actions.......but do you know who to go to? I plead ignorance. This is a Canadian company, apparently Yukon based, with their sole business in PNG which falls under Australian Court jurisdiction. Who do you sue? And further, if it was that easy or accessible, don't you think some law offices would have started such an action? I mean, I've owned stocks that went down on no meaningful news, and a week later there's a class action announced. There must be international legal complications making law firms uneasy or unable to litigate this thing. That's why I have placed so much emphasis on supporting Phil Mulacek. I believe that he would know best how to take this situation on. The SEC would no doubt be worthless here. They would fiddle while Rome burned. The only answers, I can legitimately see, come from voting NO. It seems to me that getting 33% of all shareholders to vote NO to the deal is not an insurmountable hurdle. I do believe that Phil has made it pretty clear, he is not fighting to keep IOC independent. He realizes the overwhelming odds at surviving when so many don't want us to survive. He is just fighting for a RELATIVELY fair and justified price. I believe if a concerted, viable effort is displayed by all small shareholders, the likes of Oil Search and Total and the PNG government would recognize it is better for all involved to kick up the valuation and make us go away. Right now, the assets are truly being stolen.
The sheep remain inside their pen. Especially the sheep over at SHU. Funny how that crowd can proclaim IOC valuations at $400/share for years and then sell out for $40 and hope without even a legal whimper.
It's pretty clear that PM Peter O"Neill, OSH, Total, and IOC are all involved in this fraudulent transaction. Exxon, with a big stake in Papua New Guinea should have the most to gain in the vast natural gas IOC has. Under any normal circumstance Exxon should be at the forefront of this deal, yet they remain very silent while OSH does their dirty work. What I don't understand is why hasn't any class action suit been filed yet? Any attorney worth his weight would have a field day deposing these crooks and since FRAUD is all over this transaction, punitive damages would make this a class action lawyers dream. If venue can be brought into the US courts, what is everyone waiting for? It seems to me that the SEC could bring criminal charges against all these criminals, yet, everyone seems to be just standing on the sidelines while this transaction reeks the smell of massive fraud and collusion. So egregious is what's going on here that RICO charges should be brought against all these charlatans. What are we waiting for?
......What is it worth today? Oil Search just told us, and Exxon confirmed it by walking away........
Wow, are you a pushover. Do you think Oil Search was going to value us correctly? Is that your idea of smart business? Exxon walked away? No they didn't. They low balled in conjunction with THEIR partner in PNGLNG to steal the asset on the cheap. And finally, you had a willing partner in Hession salivating at $39 million dollar payoffs.
.......with 10's of billions in development costs, blah, blah.......
That is all the more of a reason to have secured one of the cheapest development projects in the world at a fair price to all parties. And, the longer the delay in getting a fair price, the more likely building and development costs will return to higher, more normal costs. A fair price gets all on the same page. Fifty cents on the dollar gets a big NO.
No, northoil, the right thing to do is follow Mulacek's lead and vote no. The pressure of a NO would force a more constructive offer to be presented. No one can afford a delay in development, not OSH, not the PNG government. Man, I hope you're never my lawyer in a courtroom.
It's not so much that there's more or less gas (in fact, I think there's more, and super exploration potential to find even more.), the question is: what is it worth today? Oil search just told us, and Exxon confirmed it by walking away from earlier negotiations and not stepping in now. With 10's of billions in development cost, production not slated until 2022-4, time value of money (and oil companies don't use 5% discount factors - my company used 15% in the US, 25% in 3rd world countries), price risk, etc.. No, we got what industry(who know a hellava lot more than we do) thought it was worth, it's a done deal and it's over. If you want to play the cvrs or Oil Search itself, fine, but IOC? - stick a fork in it.
Two reasons : One, they have a buyout offer at these levels. And two, go to shareholders unite (SHU) and see the hyper-hyping surrounding this stock.