'SupaSage2003' pid='73898' datel Wrote:[quote='Stavros' pid='73884' dateline='1468548619'] XOM now knows what they must beat - - - it's an all scrip deal with OSH valued at about US$ 44.00 It seems to me that XOM will now pull the trigger on their Superior Proposal at about $50
It will be interesting to see where IOC shares trade tomorrow. Based on some figures I've compiled, the implied CVR value (vs. the value per share of the all-scrip offer) over the period May 20 through June 30 (after the OSH bid until right before the rumor that another bidder exists) has averaged about $2.64. Adding that to the current $43.32 (derived from OSH's current price of AUD $7.05), I arrive at $45.96. I would think that is roughly where the shares could trade tomorrow. If the market's view on the final resource estimate decreases, so should that $2.64 number. At the worst, I don't think the shares should trade below $43.32 because if they do, they will essentially imply that Antelope 7 will not increase the final resource estimate at all AND that no other bidder (i.e., Exxon) will emerge and that we will have to accept Oil Search's all scrip offer. So in my mind, $43.32 is the "back up the truck" price level tomorrow.
If Exxon does in fact bid 10% higher (over the value of the current OSH scrip offer) to win over IOC shareholders, that would mean it bids $47.65. Adding the average CVR value of $2.64, I arrive at $50.29 per share. It would seem that is where IOC's share price could stabilze immediately and near term. Of course, for Exxon to ensure that its bid is deemed "superior" by InterOil's BOD, Exxon might bid something materially higher than $47.65, which would put IOC's price at post-bid stabilized price at somewhere over $50.29. In my view, Exxon might offer 20% more to ensure they get IOC's board to deem their offer to be superior. In that case, the all scrip value would be $51.98. Adding the $2.64 CVR value would get us to $54.62 while we wait for Ant 7 to be drilled and the final resource number to be disclosed.
Hope that helps frame my thinking on the IOC situation. Feedback would be appreciated!
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A reasonable view. The OSH release was pretty negative if you've had rose-colored glasses on. In planning and actually building an multi-billion-dollar LNG project, resource estimates MUST be conservative, so no surprise there. The stock did take a 80-cent dip on Thursday, but came back a little on Friday. So, no bloodbath. Which means the market is accepting that we're in a trading range awaiting the outcome of Exxon's offer. While the market can be dramatically wrong (for example $90/sh just before the Total deal), in this case we had an accepted offer in the $40-45 range. Exxon is not going to go crazy and a 10% boost over OSH's bid is in their range. You also have to consider that the OSH bid was already a 30+% uplift. Exxon may want to include a CVR element in their bid, for ease of comparison, but the stock or cash element is unlikely to exceed $50. Any CVR has doubtful value, particularly to instituions. Money has a time-value. Who wants to wait another 2 years(?) while A7 gets drilled and evaluated, then turned over to GCA, etc. What if A7 is a dry hole? Tight? Lost while drilling -start over?
So, again, your numbers are reasonable if it's just Exxon. If Total and/or OSH get back in, it could go higher. I think you could work in whole dollars, though.