"Levy believes that InterOil has made misstatements to investors and embarked on complex land deals—frivolously spending investor dollars, not to mention the robust marketing campaign used to continue to fool shareholders. Levy reiterates that the company has no proven or measurable reserves. The natural gas explorer’s key property in Papua New Guinea saw positive flow rates in the beginning, but these flow rates have since disappeared and any evidence of gas has become virtually non-existent. Levy notes that this is not uncommon for the territory, where flow rates appear robust, but end up being duds.
Additionally, despite InterOil’s claims to have applied for permits to further explore the land to uncover the gas, Levy’s firm contacted the key government agency in Papua New Guinea directly, confirming on two occasions that no such applications had been filed. Levy also noted that no less than six other energy companies have explored for gas on the same land and have since given up."
On Nov. 8, 2012, when this story was published, IOC was at about $65. It subsequently fell to about $51, and closed at $75.60 today. You could have made money both ways! It was a good call then. Not now.
For InterOil, although other fund manager positions are very modest, Levy’s short bet on InterOil is betting against the fund managers that have long positions in InterOil, such as Ken Griffin, D.E. Shaw and Israel Englander. . An InterOil short bet should be considered speculative.
Sentiment: Strong Buy
Whats the date of Levy's statement? Can you post some more details - what are the 6 companies, when were they leaseholder, etc? A few facts would help #$%$ what you are saying.
Lakeview Investment Group
Ari Levy is the founder, President, and Chief Investment Officer of Lakeview Investment Group, a Chicago-based fundamentally driven long/short hedge fund formed in 2005 for the purpose of exploiting inefficiencies at the small and mid-end of the global equity capitalization spectrum.
Prior to founding Lakeview, Mr. Levy served as a Vice President and Share Partner at Advisory Research, Inc., a Chicago-based investment management firm with approximately $3 billion in assets under management at the time of his departure. Prior to his time at Advisory Research, Ari served as an Analyst in the investment banking division of Mesirow Financial. Ari holds a B.A. in International Relations from Stanford University and is an active member of Joel Greenblatt’s Value Investor Club.
How come the bears seem willing to put their name under their thoughts while the "bulls" seem to always remain anonymous like stpioc ( shareholderunite ), "resourcearb", and "treasure hunter"?
“This is a company that has NO RESERVES — not proven, probable or even possible; just a ‘contingent resource estimate’ from a firm that InterOil paid, after shopping among firms — and has NEVER delivered on its countless promises of huge natural resource finds in over 200 press releases over more than 10 years. Sure, there’s gas there — this isn’t Bre-X — but we think there’s only a tiny fraction of what IOC claims.”
--- Whitney Tilson
. . . . . . . . .
You're probably right about the reserves. I mean, they only have the calculations done by a couple of "fly- by- night" companies, Schlumberger and Weatherford. Who ever heard of them?
This is simply nonense and shows a lack of understanding of how oil and gas companies operate. A Reserves classificiation requires a number of things before being obtained - recoverable gas under current economic conditions, a firm gas sales agreement, appreciable financial committment, etc. Of course IOC has no reserves because there are is no gas sales agreement. And EVERY oil and gas company pays firms to #$%$ its resources and reserves - does Tilson think these firms should work for free? Bre-X salted their cores with gold - to compare IOC with that behavior is silly. Further, he provides NO details on why he claims "..there's only a tiny fraction of what IOC claims" Also note that 3 different reserve certifiers have said IOC has the resources.
Delivering on promises is a problem that Tilson rightly reports, but that does not outweigh the rest of the nonsense.
Thank you for the heads up Pipelead. Boy oh boy these guys had the wool pull over my head. I guess they still have everyone else fooled but you, Tilson, and Levy.
Good luck with that short, you are going to need it.