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InterOil Corporation Message Board

  • newmexicois1 newmexicois1 Oct 25, 2013 9:44 PM Flag

    RUSSELL SEARANCKE Wellington 25 October 2013 UPSTREAM Article..

    25 October 2013 00:00 GMT

    Talks between ExxonMobil and InterOil over feedstock gas supplies into the Papua New Guinea liquefied natural gas project have slowed while the US supermajor takes stock of changes proposed by InterOil.

    The pair agreed on major terms five months ago for ExxonMobil to purchase 4.6 trillion cubic feet of gas from InterOil’s Elk-Antelope field in Block PRL 15 to be used as feedstock for an additional train at the ExxonMobil-operated PNG LNG project.

    The talks ebbed and flowed for the first couple of months, but the dynamics of the situation changed in July when InterOil made several management changes, including the appointment of a new chief executive.

    Since then, InterOil has invited other interested parties to bid for Elk-Antelope gas while continuing to try to finalise a deal with ExxonMobil.

    Neither ExxonMobil nor InterOil are commenting on the process.

    Well-placed sources said the latest twist is that InterOil has made new proposals to Exxon­Mobil that the US player is taking its time to absorb and respond to.

    In effect, InterOil’s new management would like to receive more in exchange for their 4.6 Tcf of gas from Elk-Antelope than originally envisaged.

    It is understood the initial terms were based on a sales and purchase agreement of the gas, but InterOil now favours a traditional farm-in type scenario, and that an equity stake in any subsequent LNG train would also be desirable.

    PNG-based sources said that, despite the apparent impasse, there is cautious optimism that a deal can be concluded before December.

    The consensus is that InterOil is in a strong position, for several reasons.

    InterOil has, evidently, a significant gas resource and the financial returns on an expansion train at PNG LNG are lucrative.

    Other LNG majors including Shell and Total are understood to be waiting in the wings for Elk-Antelope gas,

    Sentiment: Buy

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    • I hope IOC mgmt gets some deal with someone done soon. I mean this is just dragging out for way too long.

      I am worried about couple of things:

      1. What if Exxon walks, saying something like this to IOC: "Man you guys made new proposals to us now, so it seems you are expecting much more now from us. You know what, thanks but no thanks. We walk, f you all." What if they say something along those lines? Just asking, what if?

      2. What if everybody else (Shell, Total) everybody capitalize on that and either low ball us or give us a lousy deal or else threaten to walk as well thinking we are vulnerable anyway?

      ==========

      Ideally, I would want some deal done, so we can put this behind us and I can sell at the next pump. Well, ideally, I would want a buyout for top $ (but only after I sell my PUTS next week for a decent profit at a nice dip)

      Sentiment: Buy

      • 1 Reply to koolsdguy
      • I do not think XOM walks, because they have spent $19 Billion and by acquiring the gas from IOC - they will drop their cost per unit substantially. XOM needs to average their cost down in order to increase their margins. Inter Oil has the lowest cost per unit in the world, from the drill site to the refinery. That is a fact Jack and don't look Back, no more no more no more..

        Sentiment: Strong Buy

 
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