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IOC 2.75 11/15/2015
INTEROIL CORP
SR UNSECURED 2.750000Cusip:
460951AC0
The majority of IOC current debt (70MM issue) is already trading at a discount to yield 5.89% in 2015. Any new issue will have to be higher in yield than the existing bonds. In addition, if things don't get rolling soon, that debt will mature in just over three years and IOC would have to roll it.
"And maybe someday we will find , that it wasn't really wasted time"
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You guys have done a lot of great detailed work on this very complex subject, which can be defined and evaluated in various ways, and ultimately requires some subjective judgment as well. I have a background as a CPA and corporate financial manager, and now in investments, and have done a fair amount of detailed analysis and comment on this for IOC in the past, in reply to sussman, Tilson, etc, more than I have time for now. Without any intention of downplaying your extensive great work here, the following was my bottom-line comment on Yazoo to sussman, etc.:
For his own trading self interest and ego purposes, sussman has been distorting and criticizing IOC's financing and cash management for probably five years or more, and claiming periodically the whole time the company was acting against shareholder (including the CEO's) interest and going to "run out of cash" and be unable to accomplish its goals. Bottom line, he has been consistently wrong on those salient points all that time and continues to be wrong now. On numerous occasions in the past I have analyzed the details and identified distortions, mostly correctly, and argued the conclusions, always correctly. I don't expect to deal with his trees in the forest any more; it is meaningless and a waste. Anyone who thinks he has any credibility on the issue is ignorant of his history and what the company has accomplished, or a glutton for useless punishment, although for admirable motives of fighting against incompetence and/or dishonesty and corruption. I doubt anyone could find a development stage oil and gas company that has raised capital and accomplished as much as IOC has with more effective use of that capital and less shareholder dilution than IOC; and it now has huge confirmed and extremely economical resources on the verge of almost certain highly profitable monetization, while its operations and balance sheet and overall financial condition are by far the strongest in its history. It has always found cash when it needed it in the manner most effective for its shareholders, and will continue to do the same. It has recently made it clear that near-term further financing will be most likely from some sell down of partnership interests, or from readily available debt sources if needed before then. Anything contrary to all that from sussman, or anyone else for that matter, is not credible, and worthless.
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I realize that my post above is insufficiently appreciative of the work Sam and Palm have done here, that wasn't at all my intention, which was that my private position is that I'm not at all worried about exactly how much cash they spend per quarter. I realize that this is somewhat, perhaps even overly cavalier.
Thanks again, for all the work guys (and don't mind me, I'm just a simple economist).
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Sovereign Wealth funds have offered IOC money to develop the assets before at 1/2 of 1 %.At that time the fund involved was the Japanese.(2006) Today we have an offer from Japex/Kogas/Mitsui that reminds me of that 2006 offer.That offer was spoken about at a RJ Institutional Conference in NYC and was recorded. The disks of that recording were circulated by Harry C who had a copy .I can't imagine that post Antelope and with T-2 looming that the Japanese sovereign wealth fund would be less interested.
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That's one of your huge adds here stp; a great big picture view that keeps us mindful of the big externals that could turn things upside down in an instant. We have a wealth of knowledge here and tons of people with history of IOC. Really is pretty amazing. And we don't have to dodge the idjits and have 400 people on ignore. Really is working well.
Getit, I know you feel very secure also with IOC's cash position and ability to borrow, but where do you see the upper limits of what can reasonably be had if need be. I know they have these other working capital facilities, but I think those are just that; for the refinery and downstream divisions, correct? If something did push us to the point of needing cash for exploration, do you also feel debt is the answer, or an equity offering?
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I am now Phil.If necessary I would declare FID and book the Antelope assets. Hint Horizon has already done exactly that without PNG govt approval. Then borrow vs those assets.
Further hint has IOC already started pouring footers for EWC module installation without PNG govt approval..What exactly does that say???
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As mentioned in Sam's thread; we can declare FID until the cows come home,but we still are where we are. A lender will say, nice resource/reserve, but how's it getting out of the ground? Has the gov approved an amended PA, etc?
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Palm, yes, I would use debt rather than an equity offering anywhere near the current stock price; and I feel certain the company would not issue stock at current prices. I'm not in a position to do enough research and analysis to calculate a maximum availability, but I believe they could get as much as they would need to get into production and also continue creating additional value through exploration and development.
They are working on the project without FID, an obvious indication of their confidence, and I share that confidence, although I wish NEC official approval could be next week, which it probably will not be.
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Folks,
Without NEC approval of the Gulf project, IOC basically has nothing to sell, develop, and/or borrow against -- and no need to borrow.
NEC approval of the Gulf project will allow all the dominoes to fall in appropriate sequence.
Measuring a $600 million borrowing capacity against current EBITDA is quite meaningless. Measuring it against an NEC approved Gulf project and the assets that are unlocked by the approval is a slam dunk -- if they need such funds.
Given that 1) the Gulf project is in everybody's best interest, 2) the PNG politicos are evidently firmly backing it and 3) the suppliers/partners/investors are lined up to reap the rewards, all the rest is rock-and-roll except formal NEC approval of the Gulf project.
VS
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