We don't know what the deal is worth, but if Total/Oil Search want IOC they need to up the bidding. And so it starts!!!
Interesting and thoughtful analysis.
I do not believe the value of the CVR's are (accurately) priced in to the current stock price.
I think the total value of the deal with CVR's will push the value to IOC shareholders to $50-55 per share.
I am keeping my remaining small position to see what happens.
Yes, personal transactions can be traced. Lets see what can be found. I wonder what information can be winkled out over the next few days? Its going to be interesting.
Byker and Nicholson were recruited by Roger lewis to undermine Phil, and push for a replacement. As Byker and Nicholson were searching for a replacement CEO, Lewis produced one that he had prepared earlier, and Viola! Hession was fired just in time to be the knight in pink armour that Lewis, and then Byker and Nicholson used to oust Phil.
The problem is that teflon Mike had cooked up the plan with Lewis, and on the 5th December 2013, they drove the sharpened stake into InterOil heart, and then played the fiddle while the change control bonuses piled up and up, and then today people ask, how did it happen?
The answer is: we got screwed by our BOD and their secret weapon [S]lippery [H]ession the [I]rish [T]ransvastite from Galway.
I wouldn't say there is no upside to the CVRs, I just have no idea what it is.
The whole deal is this: First, you get OSH shares. They are listed on the Australian exchange. That in itself is not the end of the world. Most brokers (my shares are with Schwab) can handle it. You have to pay broker commissions like we used to pay in the US. I think Scwab told me 0.75%. Not terrible. There are Pink Sheet and ADR possibilities, but more complicated.
As I said before, OSH is not a bad company to have, especially with low oil prices and if you think they screwed IOC. That means the value has moved to them. The trouble is, they have large debt and as you noted, will need a lot of cash themselves. And the project will take years and years to monetize.
Second, the CVRs. Trade-able? - usually, but they haven't said so. And it's a one-time deal - more like betting on red at roulette - not investing. Given the uncertain nature of the reserves and the certification process and the time and potential delays, I said I'll pass.
Anyway, in theory, the CVRs have to be already priced into IOC stock price, so selling IOC now gives you the present value of the CVRs.
I always believed IOC had a great resouce base and great exploration potential. However, I didn't invest for an actual LNG project, I did it because they had to sell themselves at some point. Now they have, so we got what we got. Overall, I lost money. Even though I don't think the deal will be voted down, I decided "out" was better than "in" . If the deal goes away, there is no floor under the stock.
or did he? CAN YOU TRACE THE TRADES? Never.... so what do any of us know? Insiders can short and sell all they want to. No forms.
I defend the #$%$ bag in no way but the oil collapse did not help.His motive from day one was himself, byker clearly did not do his homework when this clown was hired!!
During the first conference call after Hession punted the Exxon deal he said "the deal being negotiated would add significant value to shareholders within a year." When he said that we were at $85. Listen to it!
interesting. Thanks for the honesty. Now I understand why, even though you no longer own shares, you are willing to say that the deal is as good as you can expect. Obviously, since you sold at 44, you feel there is no upside to the CVR's......so you felt the valuation at 44 is pretty much full valuation. So, why do you push so hard when others question the deal? You obviously didn't think there was upside or any chance that OSH would sweeten the deal. Well, stocks are cyclical as you know. So are gas prices. It is inconceivable to me that Hession, a high level guy in the business for three decades, would be willing to sell "an elephant" at the low of the cycle UNLESS he had $39 million reasons to betray us shareholders. I don't feel that IOC will fall back to 30 because a minimal valuation floor was established by the OSH offer. I further believe that a new offer, not by OSH, but by Total (or Total plus OSH) will occur soon after this is voted down. Why? We have a bonafide binding deal with TOT, they have a firm obligation with PNG, and they are well aware of the certification numbers and the fact that IOC has leverage in who the consulting certifiers are, and we have right of refusal at drilling A7. And we have Phil Mulacek.....like him or not, he has a big interest in seeing this through. Right now, in this deal we have nothing, just devalued OSH shares (not even tradable on the NYSE) which will be just as cash poor as us......and CVR's which you yourself don't really feel have value (and we have no influence in contesting if they cheat us). And then again, as an aside, I just don't like to be taken.
It's a pleasure North.
Well, I invested for the same reasons. The Total deal broke my heart (and my bank), but I continued to buy in the 20's and 30's, because it IS a string of pearls. 8T's of gas is huge, more has been found and more will be found. Whatever. Where I was mistaken was to assume all that gas would be monetized at some multiple. I failed to see it was a buyers market. When the OIS deal was announced, I waited a week or so, then bailed out. I had 16,000+ shares which I sold at 43-44. I still lost a lot of money on my pre-Total shares.
So, full disclosure, I'm an interested spectator only with no dog in the hunt. I really shouldn't be opining on this board, but I've been on it for a long time and have an historical background with PNG.
I got out because, If the deal doesn't go through, the share price will drop back to 30, then decline from there as we burn cash and sell off attractive acreage. If it does go through, as I think it will, having Oil Search shares, 30% off their highs because of oil prices, isn't a bad thing.
.......Given everything you say, you should have been out long ago.....
North, had you told me that Hession was telling us fables at his conference calls in 2015, I would have been out. It has always been about the gas.....not even the prospects of the refinery......the gas. Wasn't one of our goals, to drill, find, sell off......then drill, find, sell off. That was the reason IOC sold off its oil refinery and petroleum distribution business to Puma. Interoil COO John Ozturgut (hand picked by Hession) said, "our upstream and LNG business has become CORE to the company's growth and as a result of the success we have had in discovering and monetizing gas, the time is right to focus on this part of our business." (6/30/14)
In every conference call after that, Hession trumpeted the size of and the development of our gas fields. Would you have sold? Obviously you didn't. Then, like a bolt of lightning, we are told by Hession we are broke, our fields are not nearly the size implied, and we should sell at market low prices to another company (who even though they have cash flow from PNGLNG are TOTALly cash poor). But I should have sold? Look, Northoil, I'm not disagreeing with your assertions.....not at all. i am saying that if this has to take place, a better deal should be offered. If not, everything you say may come true. But, I invested in this company on its gas finds. I believe that, if necessary, solid portions of E/A could be monetized after our deal with Total is consummated. Those additional funds could be used, along with other forms of stock issuance, and loans, to
carry refinery costs (if we chose to continue in that vain).....or go back to drill, find, sell off. I am not opposed to anything you say, just PLEASE me certification numbers to vote on. Would you make a decision on surgery without talking to your doctor and looking at X rays and scans? Why any different when hundreds of thousands of my dollars are concerned.
Peroxide – when you say “through startup”, that means the project actually starts. PNG-LNG project cost was listed at $19 Billion. We have a year or two for design, approvals, etc. and 4 years or so for construction, drilling, pipelines, etc. A billion won’t cut it.
Dilution: OSH has actual revenue and multiple producing interests. They pay a dividend. Their offerings have been sold at or near current price (last big one was 150 Million shares to PNG government at about a 5% discount. Although the number of shares expands, the price per share is hardly affected. IOC has only one future project. If the market just said our shares, given all the discounted future earnings, are worth $40 with a $ 2B cap, and we need another $4B(for example), then dilution cuts your value by 2/3rds
Richard – We’re arguing different things. You’re complaining basically about bad, even corrupt, management and a flawed sale process. I think there’s some things you overstate – but never mind. Given everything you say ( if you believe all that, you should have got out long ago – the last thing anyone should invest in is bad management)), I’m talking only about the future. I don’t think the deal will be stopped and there isn’t a better deal. I think the proxy share management companies will conclude the same thing.
Just as an aside, the future is not linear. Sh*t happens. Here’s a quote: “Papua New Guinea has the most active volcanoes in the South West Pacific.”(Volcanodiscovery.com). How would you like a Mt. St. Helens eruption near Antelope? Come back in 20 years. Also check their earthquake history – up to 8.0 and tsunamis. Could the government fall? Could they nationalize? Labor strikes? Bankers and institutional investors think of these things and discount risk accordingly.