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InterOil Corporation Message Board

  • pickboone pickboone Mar 25, 2013 7:48 AM Flag

    Profound Implications - Political Risk & JKM

    Two intertwined excerpts from last night's PNG Post Courier have profound positive implications for IOC and essentially remove the most significant remaining risks that have been weighing on the stock and preventing it from breaching new highs, namely political risk and whether the government would allow JKM to compete for a stake in Elk/Antelope.

    From the "Japan Assured" article: "Mr O’Neill led a small but powerful delegation comprising four cabinet Ministers including Charles Abel, William Duma, Richard Maru and Ben Micah for official state visit at the invitation of Japan Prime Minister Shinzo Abe."

    From the "Investors assured of LNG" article: "Prime Minister O’Neill during his one-on-one meeting with his Japanese counterpart Shinzo Abe also acknowledged the increasing number of Japanese companies involved or are interested in expanding the PNG LNG sector and both leaders agreed to ensure a high level of cooperation in this sector. Mr O’Neill informed his counterpart that the PNG Government was committed to bring to production the second LNG project (Elk-Antelope) in PNG’s Gulf Province and other potential additional projects in the country and welcomed interested Japanese companies to invest in these projects."

    The implications are that:
    1) O'Neill's explicit commitment to developing Elk/Antelope in the presence of Duma (and O'Neill bringing Duma along to visit PM Abe) implies that the DPE is much more synchronized with O'Neill in pushing for the development of and investment in Elk/Antelope than the skeptics believed
    2) O'Neill's acknowledgement of "the increasing number of Japanese companies involved or are interested in expanding the PNG LNG sector" essentially confirms JKM's significant interest in partnering with InterOil
    3) O'Neill's welcoming "interested Japanese companies to invest in these projects" implies an acceptance of JKM as a bidder for Elk/Antelope, implying further competition for the resource and hence a higher likely price for InterOil

    Sentiment: Strong Buy

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IOC
47.59-0.05(-0.10%)May 22 4:02 PMEDT