shareholdersunite.com

Opportunities in smallcaps

shareholdersunite.com header image 2

InterOil from the conference call

November 5th, 2009 · 7 Comments

We had some problems in listening in but were nevertheless able to put a few interesting points together..

  1. Liquids are far more plentiful in Antelope2 compared to Antelope1. That’s hardly a surprise, as the gas/liquids ratio at the top of Ant2 was already as high as the best of Ant1, and that ratio can only increase with depth
  2. The next DST, at the bottom of the well, is going to decide on producing the liquids. The DST will be done before or after the full flow test
  3. North Asian Chemical buyers are very interested in 5-10 year contracts of quality Naptha and are willing to finance the stripping plant so the final investment decision (FID) can ensue swiftly once the results are in
  4. Sales of stakes have been temporarily put on hold as more interested parties have knocked on the door and the resource keeps increasing in value. Sales will go ahead after the full evaluation of Ant2 is finished
  5. Total drilling cost at Ant2 is $20M, that’s less than half of what Ant1 cost
  6. Second rig: two rigs under consideration, the horizontal drilling will determine what rig they take
  7. LNG plant: they are targetting three separate buyers for the gas to spread risk. Demand has increased in the last 45 days as Exxon has helped to put the PNG on the map. Buyers are also diversifying, also to spread risk, which is very favourable for InterOil, according to Raymond James’s analyst
  8. PNG itself also wants a diverse client base for it’s gas projects, as to not to be beholden to any one large party and/or country

So, essentially we’re one DST away from a determining the fate of the liquids stripping facility. FDI could come before year end.

Tags: IOC

7 responses so far ↓

  • 1 Nick Walker // Nov 5, 2009 at 5:23 pm

    I thought there was a DST due any time now, not just a drilling report?

  • 2 Roger // Nov 5, 2009 at 5:28 pm

    There were some drilling issues, see latest drilling report. We need to drill an additional 132 feet then they will conduct a DST. Then drill an additional 600 feet to conduct a DST in the targeted liquids section. We’re 4-6 weeks away from the final DST. However based on IOC’s drilling history we’ll be closer to 6 weeks then 4.

  • 3 Bruce // Nov 5, 2009 at 5:36 pm

    I thought I heard at least three hundred feet of liquids below the gas column. Sounds like a huge pay zone. Liquids plant will be built, building road now, but who pays for plant depends on what kind of liquids they find (Naptha or Oil). Week away from inking a deal for remaining excess refinery output?

  • 4 Michael McRae // Nov 5, 2009 at 5:38 pm

    Regarding #2, the decision has already be made on the stripping plant. Ant-2 data will help better determine price and through put.

    Michael

  • 5 Nick Walker // Nov 5, 2009 at 5:48 pm

    I think we all know it’s going to be worth the wait, just wish it would happen sooner rather than later!! A successful DST is bound to have the snowball effect and be the catalyst for all major decisions/deals.

  • 6 SupaSage // Nov 5, 2009 at 5:55 pm

    To expand on point #7… I believe management indicated that some potential buyers expressed interest in taking all of the output from the LNG facility by themselves. So it seems that the aggregate demand for the output is a non-issue.

  • 7 Roger // Nov 5, 2009 at 7:00 pm

    Yes Supa IOC did state that….and we have heard this interest from India in the past.