IOC Research Note - AGM 2012

[Spartina]

What an honor to be able to be a part of such an exciting adventure with such a cool group of people.. Hemi you are a class act, thank you so much for your efforts, and all others who helped. Can't think of a better way to start a father's day than reading a well written synopsis of such an important and positive event over a hot cup of coffee... Thank you so much, Harry

[Ass0ciatedPress]

I sincerely thank efi, tusk and the lurkers who put this together. Have a wonderful weekend.

[ValueSleuth]

RE: stock buyback, split, modest special dividend, listing in Singapore, etc.

A specific discussion I had with Collin confirmed that all these are on the table AFTER the deal(s) is done. "Let's get that done first."

The parameters of what is possible can't be determined until the specifics of the deals cut and the timing of cssh flow become better known -- and how the stock price reacts.

With respect to a split, Collin noted that $15-$30 a share is considered the sweet spot to foster broadest public participation in equity ownership and trading (providing liquidity).

One thing we absolutely know is that the stock will be split, or a stock dividend will be provided. Same difference for small share count increases (<100%). From where we probably expect the stock to go, I'd expect a substantial split.

VS

[ValueSleuth]

RE: borrowing

As a supplement to what efi reported, there was a question at the AGM which prompted the answer from Collin (and I believe WA chimed in, too) that indicated InterOil was "under-geared."

This was a follow-on comment to a question directed to the issue that IOC didn't have enough money coming in between now and any up-front future sell-down payments to avoid hitting the borrowing markets. Efi addressed that portion in his comments.

There is no doubt that the capital structure of IOC at some point will leveraged up. This could happen in many ways, including but not limited to, borrowing on specific infrastructure projects as well as general unsecured borrowings, preferred stock, etc.

None of this kind of gearing will happen until the current deal(s) are defined.

Borrowing for a company like InterOil aspires to be is definitely not to be feared. It is the only rational way to go when cash needs are better defined -- for a development program that will likely morph from anything we've been experiencing. Think more investments like the Philippines venture, in addition to further resource development on PNG.

VS

[ValueSleuth]

RE: Pet's comments

Collin offered to facilitate Pet's access to InterOil officials to answer Pet's questions (within appropriate information restrictions) the answers to which would allow Pet to provide even more pointed comments in his geologic interpretations of what IOC releases in the reports/presentations.

So, we are all likely to gain further knowledge (for geologic dummies, in my case) of the potential of the many identified structures on the IOC holdings.

Of course, all of this allows us to enhance our dreams.

VS

[ValueSleuth]

RE: chatter on SD, SM, partners, status of negotiations, etc.

Any yammering elsewhere on who, how much, etc. is nothing but exercises in creative speculation -- fiction, for now.

There was a TIGHT LID on any information beyond what was publicly presented at the AGM.

While management representatives would expound on many subjects related to IOC, that one was effectively "off-limits" for all the obvious reasons.

Anyone professing to know anything is only guessing. Those who know didn't talk.

Needless to say, all Spinnaker attendees respected management's ability to keep the lid in place.

One of these days (later, later, rather than sooner -- think mid-August at the absolute earliest, based on Sir Rabbie's comments on gov't formation timelines) some pictures will be taken.

VS

[admin]

Thanks Efi for an informative summary and Value for the wise words.

[efi426hemi]

Hey VS, I didn't hear about Collin offering to provide Pet a more direct line to ask questions about drilling operations/results. WOW!!! That is some exciting news. Thanx for your addendums!

Thanx for all the kind words everyone, from my point of view, we need to kick our feet up, relax and let this thing happen.

H&H,
efi

[jake990037]

I'm very grateful to you efi for the summary and to those who have added. And I respect and agree with VS and others re respecting the need for discretion.

A question I have for those who were able to be there is about the tone of relations among the IOC leadership. I've heard that it is Colin not Phil who is authorized to negotiate for IOC in an important part of the negotiations, though not necessarily in all of the negotiations going on. This suggests there might be some discord among the leadership, though not necessarily. My question is whether anyone saw any direct evidence one way or the other regarding relations between them, especially between Phil and Colin.

[jiminsidz]

Hey Jake. There was no doubt about management solidarity to my eyes and ears. I saw mutual respect and mutual confidence. Collin did mentioned that he and Phil have divided the list of bidders - which I took to mean that for efficiency they are sharing the current tasks leading up to the final deal. Hmmmm....I wonder if that means there are 4 bidders?