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'jft310' pid='79119' datel Wrote:I suggest all go to section E in the back of the MIC . I laughed when I read through the BMO fairness opinion . Who thinks The assets outside E/A are worthless ????zero value from BMO That the Total payments and LNG plant contract build is worthless to someone with gas and liquids In the ground???Hint Interoil , zero value from BMO Or this fairness opinion is worthless and will be thrown out over time , While it's true Interoil is the one paying the dissenters the company has a billion dollar shelf offering and a contract to purchase the company at $45 plus . Interoil would not have filed the shelf offering if they didn't think they had a reasonable chance of raising the needed money . Interoil just needs a bridge loan until the Exxon deal closes , maybe 60 days in duration . The debt would be paid back by Exxon !! I can't see why anyone would not dissent !!!

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I agree, read the Fairness Opinion.

Here’s a line: “…36 parties were contacted … to acquire a minority interest … and three parties approached the Company with non‐binding proposals in regards to a change of control transaction (including … Oil Search).”

So, 36 companies looked at IOC’s data room, 3 companies made takeover offers.  Oil Search and Exxon were 2.  That's the market.

Valuation of the assets on a DCF basis was $23 to $45/share. But when acquiring a company, a premium is usually paid.  When Exxon acquired Mobil, they paid 27% over market value.  So BMO included a market-history comparison of sales in PNG and the region, summarized below:

7.1 Tcfe Case                      8.5 Tcfe Case

Unadjusted EV / 2CResource

$0.55 per Mcfe                  US$41.97                             US$56.85

$0.90 per Mcfe                  US$55.75                             US$73.38

Market Adjusted EV /2C Resource

$0.15 per Mcfe                  US$26.23                             US$37.96

$0.40 per Mcfe                  US$36.07                             US$49.77

Price / Net Asset Value                                       

 0.80x NAV                          US$20.14                             US$32.74

0.90x NAV                           US$22.65                             US$36.83

Out of this jumble of numbers, you can conclude Exxon paid a premium.  You can’t just pooh-pooh BMO or the Board – they have been hip-deep in lawyers on high alert because of the Yukon judge.  I don’t know which way the vote will go, but I think this opinion is sufficiently bullet-proof and won’t be overturned.

Question: Do dissenters have a floor (ie, the $45+), or do they get whatever the judge decides? Like NAV, maybe something out of the above table.

We need more details on that Paradigm report.  What elements would they include in a valuation??

'Stavros' pid='79126' datel Wrote:The below do not seem correct to me: Value of TOTAL's Upcoming E/A Certification Payment = $0 Value of TOTAL's FID Payment = $0 Value of the Triceratops DISCOVERY = $0 Value of the Raptor DISCOVERY = $0 Value of the Bobcat DISCOVERY = $0 Value of Antelope Deep = $0 Value of Antelope South = $0 Value of Wahoo = $0 (very high pressure but drilled outside the gas containment zone) Value of 2 million other aces and the 40+ Prospects they hold = $0

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BMO states they considered: “ the Company’s petroleum retention licenses and associated expenditures and work commitments”

And:  “notes that the Projections did not include estimated future cash flows for the Company’s exploration assets (other than PRL 15) given the challenges associated with forecasting cash flows for such early stage assets. “  (Of course – exploration “assets” have no present value.)

But:  “However, … BMO … included … net asset value estimates for these assets which … was US$272 million… BMO … notes that given (i) the uncertain economics of these exploration assets, (ii) the near term funding required to maintain the Company’s interest in these … assets, and (iii) the market feedback provided in respect of these exploration assets (i.e., lack of interest from 33 of 36 companies)… the … net asset value estimates … for these exploration assets may overstate their value.  BMO … also considered the book value of these assets.

Also:  “we have assumed … that the potential payments under the Total Sale Agreement will be made as follows: the Interim Resource Payment … on July 1, 2017, the FID Payment … on June 30, 2019 and the First Cargo Payment … on January 1, 2023.  “

So, it’s all pretty much baked in – all the exploration assets, the Total payments(Stavros, please note) and Triceratops were included.  We just don’t like the price.

The DCF analysis and market analysis are the real killers.  Relying on the drumbeaten assertion that the judge will always decide on NAV is speculation.

But, for sake of argument, assume it’s NAV.  BMO’s analysis had a NAV or $25/sh and $41/sh for the 7.1 TCF and 8.5 TCF cases, respectively.  That’s just for PRL15, true, but it’s for real assets “only” 6 years from production. Somehow, the exploration goat pasture and questionable “discoveries” are going to add another $40-50 a share to NAV???

I'm not against dissention  I'm against the assertion that dissention is riskless.  The BMO opinion is clearly independent, solid and comprehensive enough.  It's been overseen and vetted by teams of lawyers who are channelling the Yukon judge.  I believe it will easily stand.  If the judge agrees, the deal goes forward, dissenters will lose the CRP (which still may have some value), may get $45 in cash somewhere down the road, and will lose Exxon dividends and potential stock appreciation in the meantime.  Exxon currently pays a 3.5% dividend and is down from $103; so, room to grow.

The upside for dissenters is a higher NAV, which seems unlikely given the work BMO has done, offset by the time-value of your tied-up money, payment to be made after Exxon fights to the last day, and again missing the Exxon stock appreciation and dividends.  If you’re PM and don’t actually need the money, it could be worth a shot.

I just re-read the Appeals Courts ruling.  Although it's a long read, it's not particularly arduous in terms of legalese gobbledygook.

http://shareholdersunite.com/mybb/showthread.php?tid=11462