IOC.N, InterOil Corporation ($50.25) /Research Tactical Idea
Evan.Calio@morganstanley.com, Ryan.Todd, Ben.Hur
- We believe the share price will rise in absolute terms over the next 60 days. IOC will conduct the full flow test of the upper section of its Antelope-2 well on December 1st , kicking of a strong month of potential catalysts. Based on log data and Drill Stem Tests to-date, we believe there is high probability that gas and condensate flow rates impress, which could:
- 1) increase resource estimates,
- 2) support the upstream sell-down process, and
- 3) accelerate timing on a liquids stripping operation.
- IOC also expects results from Antelope-2’s tests in the potential condensate-rich and liquids zones in mid-to-late December 2009. Liquids success offers material upside to our estimates, as we currently give no value for oil and our condensate resource assumption is based on lower top-of-structure flow rates. We estimate that there is an 80%+, or “almost certain”, probability for the scenario