Interesting times for InterOil…
The rumor is for a $110 per share take-over from Sinopec. We REALLY don’t know what to make of that
Second, in a RJ conference, datelines for monetization were confirmed:
IOC: RJ Conference Presentation Affirms Plans for LNG Deal by Year-end
- InterOil presented today at Raymond James’ 6th Annual European Investors North American Equities Conference in London, England. While the company remains understandably reluctant to share details about the ongoing liquefied natural gas (LNG) negotiations, management expressly reaffirmed the previously laid out timeline — at least one strategic LNG partnership, including resource monetization, by year-end 2010. With the shares having spent most of the past six months within a $45 to $65 trading range, the market is clearly somewhat skeptical about the prospect of an LNG deal in the next 100 days, but management confirmed that the process is on track to meet the year-end target.
- Similarly, the final investment decision (FID) for the condensate stripping plant with Mitsui is also on track to be reached by March 31, 2011. Of note, InterOil recently received $6.25 million from Mitsui to secure the option for Mitsui to acquire a stake in the LNG project.
- Above and beyond the “main” (onshore-based) LNG project, in recent months InterOil has increasingly highlighted the opportunity for a fixed floating LNG plant as well. There are six consortiums looking at this option in Papua New Guinea, and InterOil has had discussions with all of them. The advantage of this concept is its speed to market: first LNG deliveries would be realistic in 2013/14 (versus 2015/16 for onshore LNG), which means start-up would be essentially concurrent with the condensate stripping plant. This would avoid the expense of having to build a separate gas injection pipeline to return the dry gas back into the reservoir. Perhaps the most interesting comment from management regarding floating LNG is that the related project agreement should be signed prior to the “main” LNG agreement, which clearly implies both being signed by year-end. Another important point is that InterOil would not incur any upfront capital costs for the floating LNG plant itself; it would only have to cover the cost of the gas pipeline to the coast, which is estimated at $100-200 million.
- On the operational front, Antelope-2 is finally approaching its conclusion after more than a year. The second horizontal sidetrack is currently being drilled, with the objective being to identify the water contact point. Three drill stem tests (DSTs) are planned for this second sidetrack, and based on the current timeline we think that Antelope-2 should fully wrap up by the end of October. The rig will then move to drill Antelope-3. Beyond that, Bwata is expected to be the next prospect, and by that point, the company’s second rig (which recently arrived from New Zealand) should finally be deployed.