I looked back at some posts I made in early June, I made two posts titled: "The Deal" and The Deal II." Here are those posts and what I believe to be very accurate information at that time.  It is interesting to contrast these details with the TOTAL deal.

1) Exxon is the winning bidder. In the natural evolution of negotiations, Interoil selected Exxon as the winning bidder. They have a signed terms sheet. Management did not want to issue a press release until the final terms were complete. However, counsel advised management the signing of the exclusive negotiations document between the two companies was a material event and necessitated a press release. The release was drafted by both Exxon and Interoil.

2) Interoil requested the recertification of Elk/Antelope. The concept is simple. Exxon is buying 4-4.5T right now. 4.5T is approximately 50% of the GLJ certification currently. Interoil believes the resource is larger. Once the recertification is complete, the % ownership of E/A will be determined. If there is 12T, IOC doesnt want to Exxon to have 50% interest but rather 33% (4T/12T for simple math). Importantly, IOC will be able to choose what they want to do with the remaining gas in a separate deal......whether thats a Gulf LNG or selling more gas to Exxon. I'm told Exxon will be motivated to buy more gas from IOC and will be very competitive with any other alternatives.

3) There will be approximately 1.5 billion in infrastructure costs for the pipeline, gathering system and CSP (Exxon and IOC will be partners in the CSP). The costs will be split based on the % the recertification determines (i.e if Exxon is buying 4T of 12T or 33%...they will pay $500 million and IOC will pay $1 billion). Exxon will carry IOC on these infrastructure costs.

4) Payments to Interoil will be staged. The carry for infrastructure, recertification, and an upfront $ payment........ plus additional $ at other stages.

5) Expect the deal to be in the 4 billion to 5 Billion range. (4T-4.5T x $1.00-$1.20)

6) The pipeline, gathering system, and CSP should be operational in 24 months.

7) The cost overruns Exxon experienced at PNG LNG motivated them to add trains sooner rather than later and improve the economics of the project.

8) Interoil will have flexibility to pursue other deals but expect the Exxon/Interoil partnership to grow over time.

9)The PNG govt will get more $ faster......they are very supportive.

10) The final details will likely be completed easily within the 60 day period. Expect a new CEO this summer.

1. Maybe this needs no clarification, but in order to make sure we are all on the same page as much as possible (or at least you know where I'm coming from) let me clarify the transaction. This is not selling gas to Exxon. This is selling an ownership interest in PRL 15 to Exxon. The long anticipated "sell down." Again, this may be clear to many but this is a different transaction than many of us contemplated (no Gulf LNG at this time). Importantly, there are no capital gains on this asset sale.

2. Exxon and Interoil are now partners. Pretty obvious I realize but the importance of that statement cannot be emphasized enough. Exxon is our partner in PRL 15.

3. Don't confuse cash price...all in price...or any other price. Interoil will receive $5B +/- from Exxon for their purchase of 4.6T. (staged payments with some upfront) Ownership % will be determined after the delineation wells and recertification takes place. Exxon will likely end up owning somewhere between 33% and 50% of PRL 15 (4.6T/ Total Recertified Resource). THAT IS THE DEAL.

4. From the $5B +/- Interoil receives, they will contribute $1B +/- to the pipeline, gathering system, and CSP construction costs (same % as their ownership stake)

5. Interoil and Exxon will be partners in the CSP. I have done this part an injustice. With the liquids selling for close to $100 a barrel currently, this will be quite meaningful to Interoil.

6. Exxon will be building 1 additional train at PNG LNG at this point. The ownership structure of that train is being/will be negotiated. Obviously, Exxon has existing partners. It is possible Interoil will trade some of the $5B +/- for an ownership stake in the 3rd train. Emphasis on "possible."

7. The partnership and infrastructure will allow Interoil to convert resources into reserves at PRL 15 and likely Triceratops as well.

8. The price Exxon is paying was not the highest price offered. This is about today AND tomorrow. The partnership with blue chip Exxon and the infrastructure unlocks huge value for Interoil and makes everything down the road far more valuable.

9. Modular and Floating are not here today but their acceptance is growing and can't be ruled out at a later date.

 10. Kavo is fully supportive as massive infrastructure & CSP will be added to the Gulf Province. Gas flowing through the pipeline will kick in landowner 2% royalty far sooner than Gulf LNG. And he knows this is just the beginning.

 11. As the infrastructure is being built, a return to drilling can commence as new discoveries can be easily monetized and are economically viable.

itinvest:  the original XOM deal was no where close to $1.00 to $1.20 per mcf and was more likely sub $0.60 per mcf.  The $1.29 is on incremental gas above the thresholds, not on the whole resource which investors had assumed going in.  I don't think this has still sunk in with many, IMO.  This tells me thre was no bidding "war" and one is not likely to erupt.

'SamAdams' pid='35180' datel Wrote:

itinvest:  the original XOM deal was no where close to $1.00 to $1.20 per mcf and was more likely sub $0.60 per mcf.  The $1.29 is on incremental gas above the thresholds, not on the whole resource which investors had assumed going in.  I don't think this has still sunk in with many, IMO.  This tells me thre was no bidding "war" and one is not likely to erupt.

Why speculate? No one know the deal here yet......

'SamAdams' pid='35180' dateline='<a href="tel:1388160 Wrote:

itinvest:  the original XOM deal was no where close to $1.00 to $1.20 per mcf and was more likely sub $0.60 per mcf.  The $1.29 is on incremental gas above the thresholds, not on the whole resource which investors had assumed going in.  I don't think this has still sunk in with many, IMO.  This tells me thre was no bidding "war" and one is not likely to erupt.

I have tried to point out facts so that we can all evaluate the current situation.  In addition to the low valuation, I do not belive the company has any near term intentions to buy stock, split the stock or issue dividends.  When you have contradictions like this, you (we) need to relook at our assumptions.  If XOM were so desperate for the gas, why would their offer have been so low?  After all these years, and the gas worth so much, why would RDS have not outbid TOT?  Perhaps these companies think the stock is fairly valued?  I don't pretend to know.  I hope I am wrong and this apparent deep discount to NAV is narrowed by investors who this has "dawned" on.  I think one of the issues with the stock is that the longs are so concentrated and so entrneched you get a long squeeze.  No matter how low the stock goes it gets that much more attractive.  I also think there are unrealistic expectations creeping in around deal closure/IPI closure/hostile bids etc that its a negative feedback loop.   We need incrementatl buyers and the company's credibility has always been a hindrance.  The bullish CC in Nov, dissapointing headline $ per mcf metrics and bungled PR from TOT just reinforced that view.  Investors were dissapointed that the deal wasn't with XOM, but few realize XOM was not in the ballpark, or perhaps that did dawn on them.

[quote='sfiaes' pid='35196' dateline='1388167044'] " If XOM were so desperate for the gas, why would their offer have been so low? " Maybe I missed this, but how do you know XOM's bid was "so low"? [/H

MH's description of the May XOM deal was that it was "horrible", not just on $ per mcf but way too conditional. It did not improve much, if at all, after exclusivity expired.  that's why I've also stated that IOC did not leave anything on the table.  The TOT dieal is a good one, just not what people were anticipating.

LM, that ultimately might have been the fate of an XOM bid but that's not what happened.  Spinning the story to now say IOC was covering for the govt is just fantasy.  The fact is the BOD signed a "horrible" deal with XOM and one that MH could and would not live with.  Period.  End of story.  That might be a bitter pill for all us to swallow but XOM wasn't in tjhe ballpark at the end of the day.  Again, the TOT deal is a good one, but not what longs were "expecting". It might be easier to believe MH had to turn down a blockbuster deal with XOM to accomodate PNG, but that's not what happened.  I have no other genda other than to tell it like it is.  I have not sold a share buthave to reset expectations as to how this all plays out and when. I have tried to pass on some firsthand information here in different threads but realize it takes time to sink in.  Not sure how many more times I can pass it along.