While I'm amongst the group who wanted and expected a transformational deal to be accretive the pps share right away, I am not in the camp who believe there is some long period before IOC shares appreciate significantly again. Why? Well, first of all, the story has been derisked considerably. For years, we heard of "Phil" risk, no deal risk, PNG govt risk, stranded gas risk, no license renewal risk, no SM would want to a deal with IOC risk, no cash risk, and so forth. Yet today, virtually all of those risks have been eliminated.Yet we trade at a level comparable to 2011 when the PNG govt was in chaos and Duma was threatening to throw IOC out all together.
Think of where we will be 6 months from now and a year from now. IOC is getting ready to drill wells in PPL 236, PPL 237, PPL238, a couple of delineation wells in PPL 15 and potentially others. The path to monetization and value creation is clear for the first time in company history. There is only one remaining risk or question.......and that is: How Much? If IOC certifies PRL 15 for anything near the GLJ estimate (let alone upside) and has any kind of success with the other exploration wells, then IOC/TOT are on their way to a minimum 2 train LNG plant. FID and everything else will take care of itself. So the unkown is...how much gas do we have. That unkown will be much more known in 6 and 12 months. Once it is known, estimates of future cash flow and value can begin with some precision.The way forward will be clear.
Bottom line: you either believe in the resource(s) or you don't.
