Using the Shorts

[davidhmtk]

Just for the sake of argument, I do not recall chatter about share buyback yet I recall comments about divs and stock split, specifically from Aug cc by CV. In cut and paste form. Collin Francis Visaggio - Chief Financial Officer Thanks, Phil, and welcome to everyone listening to today's presentation. Just a few opening remarks. We continue to progress and expand on our Gulf LNG project to monetize the existing resources, and we also continue to invest in our exploration portfolio for the future. We had completed another milestone on the Triceratops discovery monetization, with the signing of the farm-in agreement with Pacific Rubiales Energy, which Phil just highlighted. Completion of the agreement in the next few months, in addition to the debt financing proposed, will increase our cash position and fund our near-term accelerated drilling plans. The assets sell down will fund our Gulf LNG Project and our longer-term accelerated exploration program. Once this sell down is concluded, we will consider our optimal capital structure and potentially return funds in excess of our requirements to shareholders. Additionally, we will consider creating trading liquidity through a stock split.

The dividend plan was prior to the tax law changes on tax rate of dividends for individuals with income over $450k.

[Libtardius Maximus]

[quote='Libtardius Maximus' pid='21062' dateline='1366312820'] Just for the sake of argument, I do not recall chatter about share buyback yet I recall comments about divs and stock split, specifically from Aug cc by CV. In cut and paste form. Collin Francis Visaggio - Chief Financial Officer Thanks, Phil, and welcome to everyone listening to today's presentation. Just a few opening remarks. We continue to progress and expand on our Gulf LNG project to monetize the existing resources, and we also continue to invest in our exploration portfolio for the future. We had completed another milestone on the Triceratops discovery monetization, with the signing of the farm-in agreement with Pacific Rubiales Energy, which Phil just highlighted. Completion of the agreement in the next few months, in addition to the debt financing proposed, will increase our cash position and fund our near-term accelerated drilling plans. The assets sell down will fund our Gulf LNG Project and our longer-term accelerated exploration program. Once this sell down is concluded, we will consider our optimal capital structure and potentially return funds in excess of our requirements to shareholders. Additionally, we will consider creating trading liquidity through a stock split.

The dividend plan was prior to the tax law changes on tax rate of dividends for individuals with income over $450k.

My point was stock split vs share buyback. I would like to know how the commentary about share buyback got started and by what exec?

[jft310]

Sam Tibbs contacted Phil Mulacek and sent his sharebuy back excel model info to Phil M about how Sam had modeled a real share back scenario with adjustable amounts of buyback dollars. Sam posted that model on this board awhile ago. Sam is a real CFA . He can use the initials. It was very accretive for shareholders.

[Libtardius Maximus]

Sam Tibbs contacted Phil Mulacek and sent his sharebuy back excel model info to Phil M about how Sam had modeled a real share back scenario with adjustable amounts of buyback dollars. Sam posted that model on this board awhile ago. Sam is a real CFA . He can use the initials. It was very accretive for shareholders.

Thanks for making my point with such clarity JFT. If anything, we should be talking about stock split, not share buyback since buyback has not been brought up by IOC exec level.

Dividend too regardless of one's tax bracket. Either or, maybe both.

[jft310]

David
The companies strategy for years now is:
1)Split the stock so it trades into the twenties post deal. Maybe a 5 for 1 split STOP THE MANIPULATION.Higher float count.
2)List on the Singapore exchange to let the Asians who will have invested in the Interoil project a chance to own the shares
3)Issue a cash dividend to shareholders with any excess funds.
4)Sam Tibbs model might be a new wrinkle . When I looked at the numbers the sharebuy back was most accretive to present shareholders. Buying back shares is a great idea because those bought back shares can be used to fund with shares the executive option program or said another way to lighten up the dilution of the option program.
Take a look at IOC share counts and you can see two numbera -1) current outstanding shares and 2) fully diluted shares. The stock buy back can cut down or even eliminate that fully diluted number.

[Getitrt2]

A stock split will not instantaneously affect the float portion or stop the manipulation.

Buying back shares will reduce both share counts, reduce the float, reduce shares available for borrowing, and increase earnings per share (and reduce cash, of course).

[jft310]

Getit

The advice is from the IBers

. A stock split makes the stock more attractive to more investors as does the Singapore exchange listing.

Or it expands the number of potential investors.

If one splits the stock before the buy back then to reduce the float one would have to buy back all the split shares

, Odds not likely.

IOC is gonna have a lot more cash.

So total cash will go way up from were it is today.

It was mentioned $500 million for a buy back in NYC it was reported.

[Palm]

Cash to buy back the split shares would be the same total as the pre-split shares, but I agree a split and the Singapore listing are important. But I think the split is a last step in the process. I would not be surprised that there are limitations on what IOC can do with its capital structure until the SD is done. If we remember the Mitsui JVOA has restrictions on that. For instance, actually issuing debt before any deal could be considered a weakening of the financial position and could affect financing/ FID. That's why the PRE funding is important. There's enough cash to keep the company going until a SD happens.

So ideally it seems that the SD must happen injecting cash and creating value in the monetized asset. That's the first arrow out of the quiver. Then if there is enough up-front cash, a moderate one-time dividend to reward shareholders elevates stock price and fries shorts as they must come up with the dividend in addition to covering their short position. Arrow 2. At that point pps is doing nicely and then is the time to announce a split (at one time someone mentioned a 5-1 would be good at $120; we should be there), and then the listing on the Singapore exchange. Arrows 3 and 4 and the shorts are down and out and IOC shareholders are velly velly happy.