Year End results are out

[Movieguy]

. . . and for this call I gave up watching paint dry! Sheesh!

Seriously, the most important deal of the company's history is in some version of limbo, and they won't comment on it? Won't even tell us if they are receiving the money? Where's "transparency" when you need it?!

[Palm]

Yep, will be interesting to see whether funds hit the account on Wednesday. If not, what will be the discussion w/ Credit Suisse on repayment of the $100 million plus?

[jft310]

Quick process from the London Arbitration doc
How quickly does the LCIA appoint a Tribunal?

Article 5.4 requires that the Tribunal be appointed “as soon as practicable” after service of the Response, or, if there is no Response, after the elapse of the prescribed 30 days from the date of the Request.

However, the constitution of the Tribunal may be expedited in accordance with Article 9 of the rules (see, further, the answer

[jft310]

Yep, will be interesting to see whether funds hit the account on Wednesday. If not, what will be the discussion w/ Credit Suisse on repayment of the $100 million plus?

Read thee MD and A when time permits. The answers are there.

They are getting or have gotten the money.

The loan can be refinanced per the Q and A .

[Palm]

Note 16 to the financials state:
"Subsequent to year end, a further $50.0 million of the facility had been drawn down. During the year ended December
31, 2013 the weighted average interest rate was 5.65% and the total interest expense included in finance costs was
$471,201. Deferred financing costs relating to the loan of $4,174,507 as at December 31, 2013 are being amortized over
the period until March 2014. The facility was initially payable in full within two months of announcing any sale or disposal
of the Company’s interest in the Elk and Antelope fields. Subsequent to year end, the lenders approved a request to
extend this repayment date until April 30, 2014 or the completion of any sale agreement, whichever is earlier. Post
completion of the Total SPA on March 26, 2014, this facility is expected to be repaid in April 2014."

The MD&A says basically the same thing and wasn't able to listen to the CC. If they made a statement that the loan facility can/might be renegotiated, that would be good. Seems they would have said something to that effect in the 4Q financials or MD&A. If they say it in there somewhere, I missed it. Note also that they have pulled down another $50 million since YE.

[Palm]

Encouraging note in financials about OSH Dispute filed:
"Oil Search dispute under PRL 15 joint venture operating agreement:
Subsequent to year end, on March 27, 2014 the Company received notification from Oil Search of a dispute under the
Joint Venture Operating Agreement relating to Petroleum Retention License 15 in Papua New Guinea. InterOil will be
responding in accordance with the terms of that agreement. Any proceedings commenced by Oil Search seeking to set
aside the transaction completed with Total on March 26, 2014, in which Total acquired a 40.1% (gross) interest in PRL 15,
will be strongly defended. The Company does not believe any action will be successful, and based on strong legal advice
received; the Company does not expect this dispute to have any material financial effect."

"Our attorneys are better than your attorneys"

[jft310]

Posted my notes. The ? about refinancing was raised by Westlake and addressed by Spector. They might refinance. They have enough cash to finish the program. Implies they have the Total cash. Without the Total cash they would not have the cash.

[Li'loilady]

Not sure any questions answered other than it is going to be IOCTOT v OSH in London. Spector wouldn't even give a clean statement if the first payment is coming from Total. Instead he said "once funds received" and McDougal from Westlake reply: "OK, great". If Hession's three points of Stabilize, Monetize & Secure were taken out of the presentation it could have been over in 5 minutes. How many times did he repeat those three bullets? Triceratops appraisal: March or April of 2015. No rush apparent there.

Not to drop names but Mr. Specter assured me that they "will advise the market as soon as the Completion Payment is received from Total."

[Palm]

This statement in the financials I think speaks to the point Collin made when asked about the taxability of the sale proceeds where he said it would be tax free as cost recovery, but it does appear there will be some gain.  You would assume that might be taxable, but not sure:

"Conveyance accounting policy:

Based on the accounting policies followed by the Company conveyance accounting is triggered on the sale of a property, where applying judgment to the facts presented, it concludes that sufficient risks and benefits of ownership has passed to the transferee. If a part of the interest in an unproved property is sold, the amount received shall be treated as a recovery of cost. If the sales price exceeds the carrying amount of a property, or exceeds the original cost of a property, a gain shall be recognized in the amount of such excess. As Elk and Antelope fields do not have proved reserves as at the date of accounting for this transaction, the amounts received are first treated as recovery of cost, and only amounts received over the carrying amount of property is booked as gain on conveyance of the asset.

Preliminary assessment of Conveyance accounting as at March 31, 2014:

The conveyance accounting for the revised Total SPA will be accounted for in the quarter ended March 31, 2014. The following table presents the preliminary view of the cash flows that are expected to be recorded for the quarter ended March 31, 2014.

Conveyance accounting (excluding FID and cargo payments, and appraisal carry on wells within PRL 15) based on Gaffney Cline certified best case scenario of 7.01 Tcfe

Conveyance proceeds receivable:                   

$959,111,450

Discounted value of cash f low s 906,635,158

Less allocation against oil and gas properties in the balance sheet (604,348,475)

Expected gain on conveyance 302,286,683

On a conservative basis, no cash flows relating to final investment decision or subsequent first LNG cargo payments relating to Elk and Antelope fields have been included within the cash flows calculation above. When the transaction is accounted in the quarter ended March 31, 2014, these numbers will change reflecting an updated assessment of the relevant inputs including discount rates and other risk factors relevant to the underlying transaction. At each reporting period these factors will be assessed to take account of any changes to the underlying risk factors used in the calculation along with changes to resource estimates, which will result in a change to the gain on conveyance."

[Palm]

Not sure any questions answered other than it is going to be IOCTOT v OSH in London. Spector wouldn't even give a clean statement if the first payment is coming from Total. Instead he said "once funds received" and McDougal from Westlake reply: "OK, great". If Hession's three points of Stabilize, Monetize & Secure were taken out of the presentation it could have been over in 5 minutes. How many times did he repeat those three bullets? Triceratops appraisal: March or April of 2015. No rush apparent there.

Not to drop names but Mr. Specter assured me that they "will advise the market as soon as the Completion Payment is received from Total."

Thanks for that Lil.  That's my reading on the SPA; Wednesday is when that transfer would be due per the SPA.  Hopefully we see that.  Based on the disclosure in the Financials that legal councel feels confident that they will prevail, hopefully Total feels the same way and will make the transfer and not withhold them or escrow the funds.