Actually I did, nut. Check it out. I'll make you a deal - go find my post where I said it would be a $50-90 trading range and I won't post until 2014.
Question: How many IOC shares have traded since December 6?
Wow that sure is a lot of manipulation and naked shorting. I wonder how IOC has been kept off the Reg SHO list? Probably shorts at the SEC and FINRA. Shorty must sure be desperate to naked short over $1.5 Billion in stock. Or maybe it was just the MM "walking down the price". Either that or Tilson and Motley Fool trading the same 100 shares back and for (230,000 times) to keep a lid on things. Kenny reports that all 30 top holders have been contacted and 100% of them love the deal. Total was doing backflips and but a red bondage ball in Hession's mouth and strapped him to a chair in a Paris boulangerie so he couldn't call Shell on his cell phone.
Not to worry though, once the IPI stake is bought out for only $240 million, Shell and the other "bidders" can swoop in, steal IOC for $125 per share, and breach the contract with Total with no consequence whatsoever.
Ho Ho HO to the shorts when that happens.
Sentiment: Strong Buy
Exactly Jdeo - my point is that the deal is binding so a buyer coming in would have to deal with Total as you say. That is right. I was making these points to counter the view that Shell or someone could just swoop in now and leave Total out in the cold - that is the delusion du jour by the SHU crowd.
The reason I think this highly unlikely is that Total is getting in relatively cheaply - at the 5.4 Tcfe it's about 38 cents per mcf (49 cents post back in), and the majority of the payment is contingent on FID. The read-thru there is about $31 per IOC share. At 6.5 Tcfe I get $42 - so the hope that someone is going to buy the stub of IOC at 2-3X that number in up front cash and then get in the back seat while Total drives the bus is wishful thinking.
Down the road if they discover a lot more resource it could be a different story of course, but depending on Total's mysterious farm-in option that could cool that prospect as well. My take is IOC has thrown in its lot with Total - probably for the best.
It's a mixed bag. A cold winter is good for FGP from a volume standpoint, but wholesale propane is running about 50% higher than last winter so margins could get squeezed.
I don't think the latter jamsam - if I did I would short IOC. I don't see it as a compelling long or short right now.
It's a good deal and there are some legitimate scenarios that could see IOC move higher from here - the biggie is if the reserve estimate comes in at a 9.9 Tcfe then it's off to the races and IOC would be valued in the $85+ range. I think Total's 5.4 Tcfe number is the best baseline, or at a minimum 6.5 Tcfe.
Apart from the delineation, the drilling is a #$%$ shoot and I don't value it much. The wells are very expensive and for every Antelope there may be 5 Elks, or Mooses, or even Triceratops which run the spectrum of worthless to ho-hum. They could get lucky though but that's gambling IMHO.
Looking out 6 or 7 years IOC could be an interesting cash flow story if the LNG plant goes ahead.
It could be that IOC is just a regular old oil and gas company now, with few fireworks going forward either way.
Great points Moose. And of course suing all the naked shorts and "manipulators" that are holding the beach ball underwater with their evildoing algorithms can be profitable as well.
Someone, anyone, somehow needs to come and pay us all a "proper" valuation.
Also there is a 6 month period before the Cut Off Date:
"Cut Off Date
(a) Subject to clause 2.5(c) and clause 2.5(d), if any of the Conditions are not satisfied or
waived in accordance with clause 2.4 by the Cut Off Date (or such later date as the
parties may agree), provided that it has satisfied its obligations under clauses 2.2 and
2.3, or if Completion has not occurred by the Cut Off Date because a Prohibition
Order under clause 7 .2(b) is subsisting, either party may, by written notice to the
other terminate this Agreement."
And during this period:
"it does not (and shall not agree to}, without the prior written consent of the Buyer
(such consent not to be unreasonably withheld or delayed), amend, vary, waive,
supplement or terminate any provision of the PRL 15 Title or any material agreement
relating to the PRL 15 Title;"
The deal is the deal.
You're thinking about it backwards. It is binding now, but those 2 conditions precedent must occur for it to close. IOC can't walk away from the contract - they could only fail to buy out IPI or Duma could fail to approve.
A couple of clauses:
"No Other Right to Terminate or Rescind
No party may terminate or rescind this Agreement (including on the grounds of any breach of a Seller Warranty or Buyer Warranty that occurs or becomes apparent before Completion) except as permitted under clause 2.5, clause 6 or clause 7.3(b)."
"it does not and shall procure that its Related Bodies Corporate do not sell, OFFER FOR SALE, transfer, assign or grant or allow to exist any Encumbrance, trust, option or other right in relation to the whole or any part of the Assigned Interest (other than the Permitted Encumbrances) or relinquish or surrender or agree to relinquish or surrender all or part of the PRL 15 Title;"
and 2.3 (v)
"(v) each party must keep the other party informed of the progress towards satisfaction of the Conditions."
"The parties must cooperate with each other and do all things reasonably necessary to obtain approval and registration and to satisfy the Conditions as soon as reasonably practicable."
If IOC intentionally scuttles the IPI buyout in favor of some other deal (that they aren't allowed to offer to another buyer), Total will simply sue for breach of contract and specific performance and the other buyer will have to wait for a how many years for it to get sorted out. Of course a buyout would also require a shareholder vote / meeting and months and months added to a process that may go nowhere, thus blowing the timelines, and so on.
Not trying to be the party pooper - you just need to understand the deal you got is the deal you got. It's a good one. Just accept it.
Actually Coolaid I just had to lob in a call to Obama and the NSA handed over a complete file on you. We've been tracking your purchases of bullets, deer food, and Pabst Blue Ribbon as of late.
I look forward to your newest letter. Of course I've already read it as we hacked into your PC about 6 months ago (password was easy: "Burrbot*hic*Bonkie*hic*Obama*hic*". The NSA got it on the first attempt. Nice sweater you are wearing today by the way. Look up and wave at the drone.
Grey Poupon goes great with venison. If you don't return my Grey Poupon after you borrow it I will know what it was like under #$%$ rule.
Who knows. I don't think he's a deemed insider any longer (not a director or officer, and below 10% of stock) so I don't think he even needs to file a report under Canadian regs. Under U.S. regs (because he may still be over 5%) he will have to file an annual 13G if he retains over 5% as of year end - so that may not come until middle of February. If he's dumped below 5% I don't think that will come.
It would obviously look horrible if he dumped in November, likely with good visibility on the deal. Dave Holland dumped $1M in stock in late Nov but this was just to cover the exercise price (about $10) of his 100,000 options that expired on Nov 25. I *think* those are taxed on the date of exercise so I think he has to pay tax as if he sold them all at $85, even though he's holding most of them at $54 now. That's gotta sting.
"Now you use the West lake #'s, again you side step and distort, last week after the fall out you stated a $50 to $90 range, did you not?"
Side step and distort? Hardly. I used low 30s as a read-thru value on 5.4 Tcfe long before Westlake published.
Here is what I said a week ago re: trading range:
"think a good rule of thumb for where IOC settles in at, and it seems to work well, is a lower trading range of 50% of Evan Calio's target price, and 50% of Evan Calio's upside case. I may run that math actually but it feels about right. That would be $42.50 to $52.50."
5 days ago I said this:
"At a 10% discount rate assuming everything is on schedule, it's a blended 38 cents per mcf, (49 cents after backin). Completely in line with what Bernstein Research pegged it at also (47 cents).
Oh, and the read through value of IOC at that level is about $31 per share (assuming the refinery etc can cover off their current debt load.
Even at 6.5 Tcfe (close to GCA) I get about $43 per share."
Don't worry it will all be spelled out on Seeking Alpha soon enough.
4. He is delusional and thought IOC was worth $500 per share and would have rather burned it to the ground then sell the "hope diamond" for anything less than $499?
What do you have against crows, Coolaid? Do the crows not suffer from hunger like the deer? If you feed crow meat to the deer does that cancel out the crowicide? I hope you don't lose your booyah this winter or you will know exactly what it was like for non-Aryans in Germany in the 1930s, right?
250,000 signed up for Obamacare last month. The website is working beautifully. And best of all it's free free free to use.
"Even Bonk has stated a $50 to $90 trading range",
Not exactly - My read-thru value range is $31 to $87 (the $3.1 generously assumes 100% chance of FID and 5.4 Tcfe, and the $87 is at the 9.9 Tcfe level).
As to where it trades, who knows - IOC can do it's own thing up or down for long periods. My instinct is the real range will be $40-$60 with some bouts of despair on the lower end and some hope around drilling activity on the higher end, but that's just a swag.
IOC is actually pretty simple to frame now that the deal is done - you can decide how many Tcfe you comfortably want to pay for in advance (personally I think anything over 5.4 Tcfe is speculative given this is Total's estimate), and how much you want to pay in advance for new discoveries - usually the market doesn't pay much until you hit something - even Triceratops is still discounted heavily.
I'd actually consider trading long for a bit if we get into the high 30s (or maybe write some $40 strike puts if it gets to $45) provided there's some pumpola around drilling to be had.
Are you kidding? Total is getting 61% of 5.4 TCF for about 38 cents with over half the payment contingent on FID. Zero chance they now decide to try a buyout. Maybe post-certification but not now.
No, it's binding now. The two conditions precedent in 2.1 are Duma approval and the IPI buyout.
Kind of like selling your house and closing 30-days later. Buyer is still on the hook.
I suppose IOC could refuse to do the IPI buyout but if they intentionally scuttle it they will have exposure and Total would likely sue them and block the deal.
Best to enjoy the deal and live with it rather than waiting for Santa to come down the chimney IMHO.