Here is a fact for you Kenny. In the last 4 years IOC has had a total return of 1.4%. That is 0.35% annualized, during a generational bull market. The S&P 500 is up 95% with dividends reinvested, which is 18.2% annualized.
The last time the company sold stock to investors was at $75, in 2010. Investors that bought into the "4x oversubscribed" deal are sitting on a 24% loss vs. +76% for the S&P. IOC needs to instantly go to $131 for them to catch up to the market. And of course IOC was way more volatile and risky than the market.
Facts like that Kenny?
" This will only make the shorts pause and increase slightly their anxiety"
It actually prompted me to short it today as I think the pop will fizzle fast.
As for longer-term shorts the prospect of IOC having $50M less in the bank is probably encouraging for "them".
Sentiment: Strong Sell
Those red thumbs must be cathartic*
1. of or pertaining to catharsis.*
2. Also, ca·thar·ti·cal. evacuating the bowels; purgative.
*catharsis - Psychiatry.
a. psychotherapy that encourages or permits the discharge of pent-up, socially unacceptable affects.
b. discharge of pent-up emotions so as to result in the alleviation of symptoms or the permanent relief of the condition.
Sentiment: Strong Sell
Disclosure: I shorted IOC today in the mid 57s.
I view the "buyback" as a gimmick:
1) It is just an authorization - they may not even buy back a single share. "Up to" $50M includes zero.
2) IOC has no business buying back shares. It needs every penny of cash it has and then some.
3) Such announcements generally have fleeting effect on the stock price as they do not durably reset expectations.
4) I view IOC at best "fair" value
5) They may be priming the market for further disappointment on Raptor and Bobcat. Maybe they expect to buy back shares in the 40s.
So my bet is it fizzles and we are back to the $54-55 range in short order, so hoping for a quick 6-10% return with a tight stop in the 58s.
Could be wrong. No big deal if I am.
Sentiment: Strong Sell
I think on August O/E it should conservatively hit $400:
1) Slow down Raptor and Bobcat drilling to suck in the shorts
2) Call the big boys on Thurs before O/E and tell them to call in their shares from the shorts
3) Announce Raptor results pre-market on Friday.
4) Announce Bobcat results at 11am
5) Announce 2-for-1 stock split at 1pm
6) Announce $250 million buyback with refinery proceeds at 3pm
7) Sit back and watch the epic squeeze into the close.
It will happen Ho Ho HO to the shorts.
Some are excited that Hession "exercises" his first set of options. Well...
A) These are not options, but performance share units.
B) The exercise price is zero
C) They expired on July 11, 2014 so the fact that he converted them is not "good news"
Sign below if you agree with the following:
"Dear Sirs (IOC Board of Directors). We have collectively decided that we will grudgingly accept a buyout offer at only a 70% premium to the current price, or $90. Failing that, we demand the immediate reinstatement of Jungle Phil. Obviously the market prefers a CEO that overpromises and underdelivers to one that underpromises and underdelivers. "
The pressure could be from anything ed (e.g. water). There are gas shows and oil seeps all over the place. Remember the "indications of oil" at Antelope? Furthermore there is nothing that would indicate a "reef" like Antelope. Elk is practically worthless but Antelope is valuable.
The news is negative, no question. It doesn't mean Wahoo is worthless though. What we do know is they are spending 10s of $millions more than expected on it, it's taking longer, and it's suspended.
To quote the CEO "this is neither success nor failure".
Desperate touts with a deflating share price are gullible to any morsel thrown into a PR ("indications of oil!!), but stretched timelines, lost millions, and suspended wells are only good with SHU Goggles on.
If Bobcat and Raptor (which are also past their best-before date already) are "suspended" as well the stuffing will really get knocked out of IOC and low 40s or high 30s isn't out of the question. It will call into question IOC's upside, and perhaps trickle over to the risk of the Antelope appraisal wells which could very well be negative (or positive to be fair, but the market may increase the risk profile).
For every $100M in cash that IOC evaporates in the jungle that is about $2 per share.
There are upside scenarios as well of course (success at drilling, confimration of a larger Antelope size, progress on LNG), but to think this could get knocked into the 30s in short order is naive IMHO.
I am not short (I was a week or so ago) and would personally love for Bobcat and Raptor to be huge busts creating a big oversold situation - I'd look to trade the bounce like I did on 12/6. But no way I'd touch it while it's still up in the 50s.
"Moose-2 has its day
Wednesday, 10 December 2003
InterOil has moved onto Moose-2, the follow-up well to the successful, yet lengthy, Moose-1 wildcat which has tapped an estimated resource of up to 200mmbbl.
Testing operations have confirmed the need for artificial lift (pump) to flow the Moose-1 structure. InterOil then decided that the fastest and most economic means of determining the Moose structure's potential was to SUSPEND operations on the Moose ST1 and move on to drill and test the Moose-2 exploration/appraisal well."
Only $5.79 to go it seems. I might even consider a long position as a trade if it gets to low $40s. Another well debacle on Bobcat or Raptor might very well do it. Need to knock the speculative mania that's keeping it up in the 50s.
"Are you lying, or do you just have a reading problem? It was not Hession who used the word "exciting"."
Getit, you lying criminal SEC-violating 1934 distorer. From Hession's AGM address:
"in the heart of a very exciting emerging province."
"This is an exciting prospect"
"But, any way you look at it, we have a busy and exciting program under way."
"We have a busy and exciting program, and the financial capacity to deliver it."
1934 SEC Criminal!!!
I never left Getit. Always here. Waiting. Ready to throw cold reality-water on your dreams.
The point on Raptor and Bobcat as that they were completely silent on it. Things must be going so great for IOC to clam up about it. It's IOC's style to sit on "good news".
Regardless of what lipstick you or Hession put on it, Wahoo-1 has now been suspended. It's done. Sure, one day they may come back and redrill it, but from an economic standpoint calling it Wahoo-1 or Wahoo-2 is semantics.
IOC is now a zero-revenue upstream pure play pouring hundreds of millions of dollars into the jungle. It's a big gamble.
Especially up here in the 50s.
The Real Bonk.
P.S. it's funny reading your lunatic rants on SHU. Seems I'm not the only one that knows what a jack ars you are now :)
There may or may not be meaningful hydrocarbons at Wahoo, and if there they may or may not be of value (i.e. commercial). What I wrote was that IMHO Wahoo-1 is a bust IMHO. If and when they come back I doubt they'll drill the same hole. Is the rig even on the pad anymore?
For all intents and purposes, IMHO, a new well at Wahoo will be like starting from scratch - i.e. enormously expensive even if they do it.
Don't shoot the messenger.
Frankly and simply it means Wahoo-1 is a bust and a writeoff and the $50-100M they spent on it is flushed. It means someday they might come back and drill a Wahoo-2.
The tidbits about propane, ethane, methane etc. in the PR are virtually meaningless IMHO.
Obviously the public is the last to know, as always.
This was not a surprise at all. The most interesting thing about the PR to me is that they provided zero update on the other two wells that are 100+ days post-spud. IOC never sits on good news so draw your own conclusions.
All IMHO of course.
If you don't think many IOC investors are looking for multi-baggers I suggest you read SHU. Note the guys ready to throw in the towel and sell for only 2x now. "At this point I'd take $120 and move on". And those are the despondent ones. I didn't say it was rational.
I agree completely. If it closed at $57.99 we'd be in a world of hurt over the long term. But since it closed at $58.18 it pretty much guarantees that IOC is an excellent investment for the next 10 years.