Lets look at PNG and Oil Search and Exxon. In order for Oil Search to participate in the Exxon project they had to do a capital raise that killed the stock price per share, Oil Search raised the money true but the stock price dropped 30% from where it was trading for the secondary to get bought by the insitutions.
IOC has pulled the rabbit out of the hat. Call it "The Hat Trick" if you must. There will be no capital raise for Interoil. There will be a loan because rates are so low.Thats zero dilution of the current shareholders. IOC will receive a pile of cash upfront with more staged payments. Exxon will fund future drilling, build the infrastructure, build the CSP, build the pipeline and IOC may have to pay $200 million in costs. So IOC monetizes its NG for $200 million and has zero dilution to current shareholders. The Price for IOC sharehlders is the price per mcf is perceived as low but in reality is robust. The PRE price was $3.85 discounted by the bankers see the Morgan report to $2.85 today. The Exxon deal is in the same range.
Thus the title the dream. Why is this happening?? IOC has the current assets that Exxon needs and the best prospects for finding more assets that Exxon might want . Bronte Capital is long Oil Search and short Interoil betting against Interoils NG being used by Exxon today. Problem is Oil Search can't find the assets and Exxon needs NG now. Or bad bet for Tilson and Bronte Capital etc. The PPS will cme around as the deal closes.