Oil Search on acquisition trail

[bdahl385]

Until IOC gets certification payment amount and date from Total on E/A, and/or until the US$300m credit facility is increased and/or repayment moved further out, and / or new monetization deals from BRT materialize - I would argue IOC is very stressed financially. By mid year 2016, the $300m will be fully drawn and probably $200m or more already spent. IOC must repay this loan by year end, so where does IOC get the cash for the $300m payback + interest ??? This is why Dr. Pink Shirt has had to slash spending and there is no talk of Antelope South drilling and not wanting to approve A7 drilling. Phil M sees this and is why he wants shareholder approval over any further asset sales, more drastic personnel cutbacks, among other things.

So, if one accepts your argument that IOC is financially stressed, how does a possible restriction on asset sales help the cause?.  Looking at the last financial statements, what kinds of cuts where will get the job done?   G&A is only about $40 million.

 The proposed restrictions on asset sales would be structured to require shareholder approval rather than IOC management making the deal and then giving us shareholders the "transformational news".  I think Dr. MH would structure an asset sale to better his and the BOD well being over the shareholders.  I don't fully trust his judgment or motive.  As far as the $40m in G&A, I will take your word for it that it is the correct amount.  Phil wants to reduce the headcount number on the BOD to reflect what is actually required by the current operations IOC finds itself in these days. He also wants their pay to be in large part given in company shares / options instead of cash - so once again their interest would therefore be aligned with shareholders.  I make no money on my IOC investment unless the SP is moving upwards - I want the BOD to have a fair amount of skin in the game too.