Although up a solid 20% on more than an average day’s volume yet, there remain a few uncertainties, which keep it from going higher at the moment.
1) Although it looks very promising, InterOil has not performed a DST test yet, so we have no quantification. It’s difficult to escape the conclusion that it is a significant find though, but only a DST test can confirm this.
2) We have the outstanding issue of the loan InterOil owes to Merrill Lynch (around $70M), which is due in a couple of days. We would like to see that issue settled, but perhaps Merrill is using this as a tool to get a bigger slice, as we surmised here earlier.
InterOil’s bargaining position will have been very much strengthened though, as this will open up alternative finance possibilities. They could very well have not one, but two structures with what looks like commercial quantities of gas, Elk and Antelope.
But, it’s not a done deal yet. We’ll have to wait for the DST test. But things definitely look a lot better after this morning.