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InterOil Corporation Message Board

pickboone 502 posts  |  Last Activity: Dec 6, 2013 1:23 PM Member since: Jun 12, 2012
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  • A lot of chatter today contrasting IOC with OSH. IOC's cash flow at 9.89 tcfe will actually be greater than Oil Search's over the next 4 years, and that's before IOC's LNG project even starts up! It retains the same 30% that OSH owns 29% of PNG LNG), but with Triceratops now in a PRL and extensions on the other PPL's, IOC will start to get some credit for their value. Oil Search trades at more than double IOC's value and some think this will catalyze that discount going completely away in the next few months. 12 million shares short and now stuck.

    Sentiment: Strong Buy

  • Reply to

    Opinions

    by hottubber99 Dec 6, 2013 12:13 PM
    pickboone pickboone Dec 6, 2013 1:04 PM Flag

    I think the stock trades up significantly when it reopens. Over the next 12 months or so, IOC should receive $5 billion of tax free cash proceeds, starting with $600 million in the next couple of months. Then you add the additional discovery payments, 30% of the remaining project and stake in PRL 15, PPL 237 going to a PRL, and the other PPL's being extended. I also found in interesting that TOT's interpretation of Elk/Antelope seems to be in line with IOC's based on the pages at the back of the SPA just released on SEDAR.

    This morning's confusion might have been relevant if the SPA itself weren't just filed publicly, but now there's complete transparency. I spoke to a top 5 SH who reviewed the SPA believes this deal values PRL 15 at $170 net to IOC fwiw (including his value of the 30% stake).

    Sentiment: Strong Buy

  • Reply to

    Wow, what a call!

    by pickboone Dec 6, 2013 11:07 AM
    pickboone pickboone Dec 6, 2013 11:27 AM Flag

    Just to repeat, IOC will almost certainly be getting its entire market cap in cash with no capital gains over the next 12 months or so and will retain 30% of EA and the LNG Project. Substantial additional resource upside with great variable payment structure. Almost too good to be true. Buy anything below $120.

  • pickboone by pickboone Dec 6, 2013 11:07 AM Flag

    At 9.89 tcf, IOC gets ~$90 per share in payments without further upside from exploration, etc... IOC shareholders get 30% of Elk/Antelope and the LNG project for free. Stock should hit at least $120 today IMO. Base case $1.29 per mcf on tranche above 6.5 tcfe.

    Triceratops now part of a PRL and exploration licenses extended. Also, interestingly, Hession said the option on farm-ins is held by IOC, not TOT.

    Most importantly, the variable payment is due upon the resource appraisal completion, not first gas! Cash is about to flood in and the NAV of this deal is much higher than anyone contemplated! $4-$5 billion of cash coming in over next 12 months or so. Stock is an easy double.

    Sentiment: Strong Buy

  • Clarification on its way. IOC's numbers are accurate.

  • Reply to

    InterOil is a free option at this price

    by pickboone Dec 6, 2013 7:11 AM
    pickboone pickboone Dec 6, 2013 7:29 AM Flag

    Yes, that's my understanding. The calculations being thrown around are an aggregate NAV per mcf of ~$1.65 with 30% of the LNG project from TOT. That would value IOC's interest in PRL 15 at more than double the current market value of IOC.

  • Reply to

    InterOil is a free option at this price

    by pickboone Dec 6, 2013 7:11 AM
    pickboone pickboone Dec 6, 2013 7:15 AM Flag

    I have also heard that Exxon is not happy with this outcome. Some thing the game is not yet over. Good luck.

  • InterOil will be getting almost its entire market cap in cash from TOT over the next 12 months. It will be left with 30% of EA and the LNG Project as well as its current stakes in the PPL's. I expect a triple digit stock today post the conference call.

    Sentiment: Strong Buy

  • Reply to

    I'm very very sorry

    by bonkthegrups Dec 5, 2013 9:30 PM
    pickboone pickboone Dec 5, 2013 10:17 PM Flag

    Bonk, your math is wrong. The 61% is on a grossed up IOC interest that included the IPI but doesn't include the government's 22.5% stake. So it's 47.5% of the gross EA for $3.6 billion. Add the appraisal drilling costs funded by TOT and equity interest in the LNG plant, and you're probably well into the $1 - $2 per mcf range, nicely above the current $75 cts or so.

    Sentiment: Strong Buy

  • Reply to

    TOT deal huge for IOC - stock to double

    by pickboone Dec 5, 2013 9:58 PM
    pickboone pickboone Dec 5, 2013 10:06 PM Flag

    Also, seems from the PR that IOC retains a 30% interest in the LNG Project. If correct, it's a big hidden source of additional NAV in this deal. OSH has the same 30% interest in PNG LNG and a $10 billion market cap. OSH's gas will come on 2.5 years sooner, but it seems IOC will be getting a few billion of cash over the next year or so.

    Sentiment: Strong Buy

  • The TOT deal values EA at about $7.5 billion assuming 9 tcfe, valuing IOC's stake just in EA at more than the current market cap. Lots of cash coming in early 2014 and the remainder in late 2014 / early 2015. Additional $150 million or so from TOT's funding the appraisal program and additional upside provisions from PRL 15 exploration aren't included in this analysis and more than offset the discount from cash payments 1 year from now for EA. If the remaining 30% of EA being retained yields an NAV of $2 per mcf with FID now certain, IOC's remaining stake in PRL 15 is worth $6 billion at 9 tcfe (~$8 billion for all of IOC's current stake in EA). Stock could double from here just based on this deal for PRL 15 if the market credits the remaining gas appropriately IMO. Then there's the upside from the PPL's. Congrats longs. It's been a long wait, but worth it.

    Sentiment: Strong Buy

  • pickboone by pickboone Oct 24, 2013 9:34 PM Flag

    Nice new article posted on SHU. It looks like contrary to what the market has believed, it's InterOil that has requested more for its resources (most incorrectly believed Exxon requesting better terms was the reason for the delay). Sounds like we'll have a deal announced within 4 weeks ("by December") and that it will be bigger and better than anyone would have guessed.

    Sentiment: Strong Buy

  • The chatter is that IOC has an important BOD meeting in PNG this week, XOM deal is very close to closing, and there are bids on the table to buy the rest of PRL 15 over and above XOM's 4.6 Tcf for a new Gulf LNG project.

    Sentiment: Strong Buy

  • Reply to

    Poll - Honest Answer's Please

    by bonkthegrups Sep 27, 2013 1:28 PM
    pickboone pickboone Sep 27, 2013 1:57 PM Flag

    Since XOM could use IOC's jungle gas to make $2-$4 billion a year of cash flow, I think they'd choose IOC's gas over bucket 2, which looks like it has almost no cash flow net of capex based on a quick glance.

    Sentiment: Strong Buy

  • As I've expressed in the past few days, I believe the deal with XOM is basically done. It took long enough! Hession has done a great job of keeping the information flow concealed, but certain things are happening that point to the deal having finally been agreed to. I'm not going to try to justify myself further. We'll see if the price action and options premiums confirm what I'm writing in the coming days. I understand that I've been awful at predicting timing in the past with IOC, but I've been extra cautious this time around and finally have all of the evidence I need to feel confident the deal is basically done. I expect first leaks from the political arena in PNG most likely. Good luck.

    Sentiment: Strong Buy

  • Reply to

    XOM Deal

    by pickboone Sep 23, 2013 3:05 PM
    pickboone pickboone Sep 23, 2013 7:40 PM Flag

    hottubber, you trust Mr. Market and I'll trust the evidence. I think you will see a change in the stock's behavior as this week goes by. My incorrect predictions in the past about timing have made me much more cautious this time around about getting too excited about an imminent deal. The signs I've been long awaiting finally happened as of last week. I think you'll see more confirmations over the next week or two. Good luck.

    Sentiment: Strong Buy

  • pickboone by pickboone Sep 23, 2013 3:05 PM Flag

    I believe the XOM negotiations have just been successfully concluded based on certain things/meetings that are taking place this week. I may be wrong, but I'm confident I'm right. I believe we will most likely first hear about it from the prime minister. GLTA.

    Sentiment: Strong Buy

  • pickboone by pickboone Sep 20, 2013 2:01 PM Flag

    My understanding is this rumored IOC gathering is Asia will be the first one since exclusivity ended. Dr. Mike has gone out of his way to keep everything as quiet as possible during the negotiations, so I take this as a possible positive sign that there may have finally been a breakthrough. While everyone's been conveniently making up negative stories as to why there's been a delay, XOM has continued to repeat its interest in getting something done (and fast). We may finally be about to cross the goal line.

    Sentiment: Strong Buy

  • Reply to

    Chatter

    by squeezefinder Sep 20, 2013 7:06 AM
    pickboone pickboone Sep 20, 2013 10:06 AM Flag

    I actually heard the same thing this morning from a good source. I wasn't going to post it because in each of the prior times there were meetings, they amounted to nothing. Hopefully this time it's different. I believe it's next week.

    Sentiment: Strong Buy

  • pickboone pickboone Sep 19, 2013 8:15 AM Flag

    Value, I agree with everything you wrote other than your last statement. I think the new InterOil under Michael Hession is much more humble and practical and will get the job done.

    Sentiment: Strong Buy

IOC
60.61-1.14(-1.85%)Aug 22 4:03 PMEDT

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