Preparing for 2016

[admin]

We'll start afresh in 2016 as time didn't allow us to keep the previous effort up to date.

Here we'll start with a watchlist of companies we might be interested in buying.

InterOil (IOC)

• Like many names in the industry, it has been the victim of the energy selloff, not only in oil, but also in LNG
• However, it still has a few things going for it, its balance sheet is relatively clean, it isn't selling at today's low prices, and more especially, we are awaiting two resource evaluations to which a considerable payment from Total is tied. This is likely to happen next year, although we had delays in the drilling process that is preceeding this.
• The main risks are:
  
  • A further leg down in energy markets
  • Delays in the certification process
  • A continuing glut in the LNG markets that will make it more difficult to build new LNG plants. Although the Total/IOC/OilSearch plant is one of the lowest cost, there is no guarantee it will win out.

Here is the chart, it doesn't look pretty at all.

However, we believe that if the oil markets stabilize and we get nearer to, and have more certainty about the Total resource payments, things could turn around fairly quickly.