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InterOil Corporation Message Board

  • pickboone pickboone Mar 21, 2013 8:18 AM Flag

    Inside Thailand article and its potential implications for IOC

    In an article last night about Prime Minister Yingluck Shinawatra's trip to PNG, the following line was included, "The Thai delegation will visit a liquefied natural gas project to explore investment opportunities in energy there."

    The implications are potentially much more significant than initially meets the eye for InterOil:

    1) The article almost certainly refers to InterOil's project, as the offtake for the Gulf Project is largely available whereas PNG LNG's is largely consumed and there hasn't been enough gas discovered yet to underpin a 3rd train at PNG LNG.

    2) In the past 3 years, InterOil has developed 10.3 tcfe of resources, and a very smart colleague of mine who was a petroleum engineer for years believes that there is at least another 8 tcfe left to be defined in Triceratops this year. Even after the coming sell-down, which is likely to be consummated with JKM, TOT, XOM and/or CVX, InterOil's interest in Elk/Antelope will probably only be reduced from 58.6% to some number above 40% and its interest in Triceratops will remain at 53%. Oil Search, a $10 billion company in PNG, only retained a 29% stake in PNG LNG.

    3) Hence there's another "bite at the apple" for InterOil in which it can sell down a further slice of Elk/Antelope and/or Triceratops, probably at a significant premium to the initial sell-down since a major partner and operator will already be onboard, and

    4) It can quickly ramp the Gulf project from 3.8 mtpa to a 2-train 7.6 mtpa with the additional investment from PTT for example and Thailand could benefit from most of the incremental offtake.

    InterOil's stock has been flat over the past 3 years despite the addition of 10 - 20 tcfe of new resources (including the Triceratops discovery). 2013 is the year of monetization and unlocking 3 years of massive value creation, and with O'Neill as IOC's biggest promoter, I expect the stock to at least triple from here this year.

    Sentiment: Strong Buy

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