Citi gets it wrong our Stavros gets it right

[Indoreservoir]

A great deal of the speculation and conjecture right now (perhaps all of it) stems from the claims in Phil's various press releases that IOC is on the verge of selling some or all of its assets! OH MY! This was then picked up by a few news outlets. Now, as often happens, gross speculation becomes fact for many people.

There is no indication that IOC will sell its E/A holdings at this time. There is no indication that IOC will agree to a takeover at bottom dollar prices. There are statements and facts that IOC may need cash sometime in 2017, should the Interim Resource Payment be delayed due to A7.

There are also statements and facts that IOC is considering the monetization of some of its assets (which is actually what its main corporate purpose is). There are also statements and facts that IOC could issue additional shares to fund any shortfall in cash next year prior to the Total payment. There are also statements and facts that IOC has been considering the value and efficacy of agreeing to A7.

Waiting on things to happen in the IOC world is often (almost always) frustrating, but I don't see the value in fanning the flames of negative speculation based on rumors. Why not speculate that IOC will make a great deal in selling down some share of its assets; or that the OSH certification will be excellent and lead to a welcome rise in pps; or that the BOD is actually competent?

On the sale, we know they have a dataroom open in Singapore and may sell part or all of PRL 15 or other interests, depending on the price.  And PM and many worry what will motivate the Board to make decisions.  It is clear from the Board compensation issue that shareholder value has little to do with their decisionmaking.

Sad to say.

"Why not speculate that IOC will make a great deal in selling down some share of its assets"

A: because they did such a lousy job on the Total sale, lest you forget.  The only criteria I use to say this is shareholder value.

"or that the OSH certification will be excellent and lead to a welcome rise in pps; "

A: on this I agree with your desire for optimism. I’ll put money on 9-10 Ts

"or that the BOD is actually competent?"

A: What a joke.  There there is ample evidence of their incompetence, and desire to enrich themselves without regard to shareholder value (look at the graphs they present in the 2015 and 2016 MICs – IOC is the worst performing asset presented (maybe oil slightly poorer in this year’s MIC).  Yet they award themselves huge bonuses and pay rises without regard to performance.

I harp on about the compensation but it is so obvious I am surprised some others ignore it.  How can anyone square the compensation with share price performance?  Indeed, the Board knows its an issue - they devote some 35 pages (from memory) to compensation in this year’s MIC.

So, lets do a quick summary of Board Performance

Positives:

1. Held 8 Board meetings

2. ?

Note: The IOC Board can’t take credit for Operator actions on PRL 15 – does anyone really think that pink shirt and cronies can tell Total or OSH anything about an LNG plant or operating? I hope not.  So the fact is our Board is taking all credit for things the Operator is doing.

Negatives:

1. Huge compensation to Board  and pay rises to execs

2. Drilled several costly exploration wells, and without obtaining flow rates on any except T, awarded huge bonuses ($3m to pink shirt alone) for the phantom certified volumes.  The only people who will pay anything for these volumes without flow rates are the IOC Board to themselves.

3. Spent much of our cash reserves on the exploration wells – share price has done nothing in response to the well results

4. Sale of the refinery, our only profitable asset, just before dropping oil prices which might have made the refinery very profitable. (And now the twits may not have written the SPA well and may be on the hook for tank sludge. Who wouldn’t sell an old refinery and tankage on an as-is, where-is basis? . Just stupidity if we end up paying for the sludge removal - – we’ll see, )

5. G&A steamlining and cash burn – doesn’t look like we’ve done much to drop our burn – our available cash keeps decreasing while our Q1 G&A went up.  Hope I'm missing something on this.

6. probably others but enuf for a Sunday night.

Good luck PM