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InterOil Corporation Message Board

  • pickboone pickboone Mar 11, 2013 8:47 AM Flag

    The Exxon wild card and implications for IOC

    On March 6, Exxon issued a presentation for its annual meeting in which the second "New Development" in the entire presentation is its PNG LNG Project. The fourth bullet on slide 32 of the presentation states, "Adding resource for a potential third train" and there's talk about adding additional trains beyond this.

    On the previous day, an article in Islands Business included the following quote from Oil Search head Peter Botten, “If Oil Search was to keep growing in PNG it has to make major acquisitions and it has to buy the major companies”.

    Given the marginal cost of adding LNG trains (a 2003 EIA paper estimates capital costs of less than $200 per ton of annual liquefaction capacity for trains at existing plants) and the accelerated time horizon for commencing new production at PNG LNG, InterOil's gas should be worth way more than the ~$3 per mcf at which PNG LNG transactions have occurred in the past. XOM's ~7 mtpa plant will cost almost $20 billion, but if an additional train costs even $500 per ton to build, that would equate to less than $2 billion. Adding another $500 million for the pipeline, XOM and OSH could theoretically increase PNG LNG's capacity by 50% for an additional investment of 10-15% of its cost for the first 2 trains.

    The XOM & OSH option has major potential implications for not only the Elk/Antelope sell-down, but also for Triceratops and for increasing the probability that IOC will soon be acquired. For those who listened to XOM's annual meeting presentation, you would know how upbeat XOM is on PNG at the moment.

    Sentiment: Strong Buy

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    • Thank you!

      Sentiment: Strong Buy

    • Do you think phil was talk about Exxon when he said "some maybe portfolio issues that maybe that they are

      really in need of a strategic supply of near-term fuel."

      : Okay. And then, you know, assuming the process move

      forward as you are anticipating, what do you think is the realistic timeframe

      to physically begin construction of the LNG facility?


      : You know probably we have to get with them and sit down and map it out,

      but one of the key is, what process are they going to use, from the stick

      belt, and we have discussions from 36 months to 60 plus. So, I mean, everyone

      has different project, that's to build it. So everybody has different

      concept, some maybe portfolio issues that maybe that they are really in need

      of a strategic supply of near-term fuel. So, as I said, I mean, we -- that

      process is going to kick-off in earnest in the next 24 hours. We are going to

      know a lot more over the next 30 and 60 days. So that's what we would like to

      Sentiment: Buy

    • Yes... And it has taken XOM 6 yrs to figute this out! And the LARGEST oil and gas company in the world is sitting like a little kid around a table waiting for their chance to "bid" for the assets of the company. Their main adversary on the other side of the table is "kogas" and fiji islands oil and gas corporations... I hope exxon can come on top!
      You guys are pathetic.

    • Just to repeat what I heard on the CC from last week, the Exxon officer said they could have 3,4 or even 5 trains. And, the comment on the board today about XOM putting in a "T", which was directed towards IOC's prospects is another one of those HMMMM events that seems to indicate XOM is a little more than a bit interested in IOC's prospects.

      With their already established relationship with the PNG gov't., one would imagine they could get approvals to keep drilling on IOC's prospects, should they buy them out. With the 3 million net acres IOC has, the huge naptha worth somewhere in the $13-15 billion range with current pricing and the already drilled wells, XOM could increase their Barrels of oil equivalent by at least 1 billion and maybe they suspect(or know) it might be 3-5 times that..

      They could even change the signs on the IOC gas stations. They are building a HQ in Port Moresby. Would they need that for just a 9tcf, 2 train operation? They would, if they planned on a 40 tcf. production/shipping operation.

      Sentiment: Strong Buy

    • Bingo. Seems on point Pick. FWIW I believe a large energy focused fund started accumulating on Friday continuing into today. I'm expecting a continued squeeze higher on all of the leaks today, new institutional accumulation and no shares available to borrow. The move so far has been orderly and the shorts have to be approaching a level of pain that will cause the squeeze to start in earnest.

      Sentiment: Strong Buy

      • 1 Reply to squeezefinder
      • Also very interesting that there's minimal volume today. Won't take much buying today to drive a squeeze. The short interest data tells me that the move up has been all real buying and the short squeeze is still yet to come. That will be the meatiest part of the rally and the fiercest. If the shorts try just to trim their positions, they'll quickly notice that the sellers aren't around at these prices. The longs have waited too long for this moment and aren't interested at selling anywhere near here.

        Sentiment: Strong Buy

    • The "T" in the XOM pipeline offshore from Kerema is the tipoff. XOM wants and needs IOC gas. A preemptive bid on the partnership could be a good move for XOM, establishing a business relationship with IOC and making XOM the operator (seller) of ALL PNG LNG, and keeping other big players out of the mix.

      XOM has announced that it plans to spend $190B over the next 5 years on acquisitions. Certainly they could buy IOC whole or in concert with their existing partner OSH (which has also announced that it wants to acquire oil and gas properties in PNG). The big thing is that XOM seems to believe in PNG LNG even after the cost overruns in their existing plant. Adding capacity to that plant using gas from T-tops or other IOC discoveries allows them to average down their costs in that plant.

    • Just seems like XOM & OSH makes sense.....its a win-win for both sides. They are already there and should be no problem for PNG government approval.
      IMO, IOC would like the combination even if they weren't high bidder.

      Sentiment: Strong Buy

    • The fog begins to lift.

 
IOC
50.60+1.32(+2.68%)Apr 24 4:02 PMEDT