If you can look through all the fluff and stock price gyrations…
We’ve made our case for buying InterOil on many cases, see our summary here, for instance.
But today, some unexpected news came out in a RJ report we printed earlier today.
- InterOil disclosed the results from an additional third-party reserve engineering firm (Houston-based Knowledge Reservoir) during its annual meeting today – with the estimated “mid-case” (P50) gross resource potential coming in at 6.7 Tcfe.
Some are belittling this news, which came totally unexpected to us. We would say, DOUBLING of the resource estimation is something, well, quite big. Suddenly, the Elk/Antelope resource has, well, doubled. Exploration companies are mostly valued on the basis of what they have in the ground. We already know the gas is a lot cheaper to get out at Elk/Antelope compared to most other projects in the region.
This little sentence, tucked away in an analyst report, should really significantly increase the companies valuation. Buying for the mid term (6-12 months) is likely to be richly rewarded, there can be little doubt about that, major mishaps excluding. Today’s sell-off provides an excellent entry point for those that missed the boat earlier.