Oil Search and Exxon

[jft310]

Exxon partnered with Oil Search before 2002. The OSH.ax stock price seems to have bottomed in 2003 with problems over the pipeline to Australia. The shorts beat the stock down from $4 to 75 cents with the pipeline problems. The OSH.ax stock price rose from that 75 cent price to over $7 today. The entire time Oil Search had flat cash flow from oil production.OSH has a market cap of $9.47 Billion,has a P/E of 48 because of the coming LNG plant and 1.33 Billion shares outstanding.So the value of the LNG partnering and LNG deal was worth a 9 fold increase in the stock price. You are free to translate to IOC. In a deal with Exxon ,IOC could have conditioned NG and condensate production in 24 months. If I know this than its 100% they Exxon and others know this.Thats why we have the interest we do in partnering with IOC . Its the main reason we don't get taken over at any low valuations. The share counts tells you why we have a GREAT mgt team vs say an Oil Search that did nothing but dilute their shareholders over the years.The Exxon/Oil Search parter agreement for the land based LNG in PM was March 2008.  Something to think about.

[ebster123]

Jim, well said, I have been a major critic of Phil and the BOD in the past. However, the current goings on as well as all you stated AND that I have moved from a high option base to a high stock base make me more comfortable and less concerned with the timing. I hope and trust Phil and the BOD prove my formers sentiments wrong. I will be the first to apologize. IT will happen and when IT does IT will be mighty pretty!!!! Set the sails boys and girls and let us enjoy the ride!!!! See you all at $350 plus!!!!!!

[jft310]

A long time IOC student saw my post and sent this to me. He knows more than I do..
Oil Search and Exxon became partners because of the interests they owned in the resource.

OSH bought its ownership from Chevron.

I think Exxon bought someone else’s interest, possibly BP.

Exxon never bought interest from OSH.

OSH never sold resources to Exxon for cash.

Oil Search sold shares to finance its equity stake in the project.

InterOil will sell interest in the field to a partner to fund its equity stake in the Gulf LNG project

Or my take a HUGE difference.

[cybersssss]

So it seems to be most logical from all this recent banter that the most likley winner of a sell down would be XOM. They probably could pay the most beacuse of their infrastructure.  Even paying 2.50/mcf they are averaging down there cost at the PNG-LNG project.

With this rationale I do not see why they would want to buy out IOC.  Most logical is do a sell down and let IOC continue to do what it does best, find more gas and/or oil in its string of pearls. They can always but them later after all the risk is taken out.  In the long-term this would be best for shareholder value. Although I know many of you would like to see the short term satisfaction of a buyout, it is not the best thing for us in the long run.

[jft310]

cyber has figured this out. Now whose next to understand.??
I still think what will the losing bidders do when they find out they LOST. The Confidentiality Agreements end when the winner is announced.Then the war begins. At some price IOC can be bought today. The BOD will recommend a buyout shareholder vote at some price. I think that price is $400 a share from my work. Their is some price the top ten shareholders would approve today. Is $400 the right number.????Or its gonna get interesting. And its no time to be short IOC.

[cybersssss]

While I would be elated to have a buyout at 400, I personally think that is a lofty goal. Conisdering we are trading at a 3 bil market cap now and at 400 pps we are at a 20 billion market cap.  Not sure how these companies can explain that to their BOD.  I would be happy to take 4 shares of CVX for 1 share of IOC, or 8 shares of TOT for 1 share of IOC, or 5 shares of RDS for a share of IOC.  I just think that this it too premature for that.  In a couple years with Triceratops further delimeated and some of the other promising licenses maybe.

I hope my logic is wrong. Maybe 200 pps for a buyout now, at a 10 bil market cap.  Would love to hear your logic for 400 a share consdiering valuation and how this can be justified ot the BOD of some of the bigs.

[ArtM72]

XOM is not the most likely winner, only the organization with the most skin in the game, the most to win, the most to possibly lose.

It's been some time since someone noticed how that pipeline to Port Moresby goes right past Gulf Province. When the existence of the "tee" was first mentioned here at SHU it seemed to be convenient foresight by XOM engineers. Maybe it was there to manifold LNG plants and fields to improve PNG's overall production reliability. Maybe it was there to provide capacity for multiple unit expansions at Port Moresby. I for one didn't think it might be necessary for their Unit 2 to get up an running as might appear to be the case today.

Now there are three good reasons for XOM to be involved in a selldown of E/A. Maybe just 4 MTPA for a few years while it continues its upstream exploration in the Highlands or Gulf. Maybe there's enough capacity in XOM's line to take everything the Highlands can give AND E/A at 8 MTPA. I don't think anyone here knows the ultimate capacity of that pipe.

Nothing like the pressure and privilege of unused infrastructure capacity. Hell, XOM can sell the gas to anyone they want...and begin within 24-30 months. What are LNG shipments projected to sell for in 2015? Win Win Win Good case for an attractive base bid, no?

[jft310]

Cyber-We have a signed option contract for a buyin from Mitsui at $22 Billion for E/A computed price. The Mitsui option allows Mitsui to buy into E/A for a 2.5% position for $550 million . That contract is still in place valid and is certainly where I get $400 a share. Both Mitsui and IOC signed the contract. Will Mitsui execute their contract?????
Do I think that $400 price happens now with a Super Major a complete buy out well no.Do I think whoever wins this bid will eventually buy all of IOC well yes. Will it be all all cash well no. Could it it be a combination well yes. When IOC can have cash flow in 24-30 months is when the risk of a buyout gets most interesting.Maybe IOC will do both sell some NG to Exxon and partner with a another Super Major. These Super Majors partner up all over the world to reduce risk.Lots of possibilities.

[johnwgrant]

ArtM72 mentions: "It's been some time since someone noticed how that pipeline to Port Moresby goes right past Gulf Province. When the existence of the "tee" was first mentioned here at SHU it seemed to be convenient foresight by XOM engineers."

Can anyone verify (either from InterOil's side or Exxon's) that this "T" was put into the pipeline. Just curious... Even if there is no "T", it is not a big deal to connect in another pipeline, but... just wondering if we have received good information or if this is just speculation...

[jft310]

The T info with cost has been posted direct from the Oil Search slides.Think they made that up??