Macquarie report

[Putncalls]

BTW nogetit getit! I designed the first commercially successful fiber optic transmitter when you were still a wet dream. Maybe you should learn to respect your elders!

[Getitrt2]

I thought a PM would be appropriate Getit. Given your fondness for public insults I can't help myself. You may think your more educated and astute than everyone else but you're not. Mcguire also had a strong buy on IOC years ago when it was at 75 BTW. You think you understand math? I doubt you could understand a transform or a matrix solution EVER! Here is another mathematical reason to own IOC that you don't have time to understand. Total = (1 + ROR)^years. IOC is tax free until you sell.

I never thought any such thing compared to "everyone else", including about math; so you're wrong about that, too.

Actually, IOC is tax deferred until you sell, unless it's in a Roth IRA.

I didn't expect you to address anything about this objectively.

[Getitrt2]

BTW nogetit getit! I designed the first commercially successful fiber optic transmitter when you were still a wet dream. Maybe you should learn to respect your elders!

Okay, I guess you're the one who's superior to everyone else on everything!  Actually, I would think we both should be able to contribute something.

All irrelevant to this, but you must really be old, given I'm no youngster.

[jft310]

Getit is an ole fart like me puts . Both 68 , but let's not get into personalities as we wait. It's not productive and I regret when I get emotional also. The time delay wears .

[Relker]

JFT thank you for uploading the Macquarie report.

Although their analysis is much better than many other analysts, I do want to make some comments:
1. Most importantly, the size of the LNG plant will have a large impact on the future cash flow of Antelop plant.

It is not clear to me why Macquerie calculates with 7mtpa for a 2-train. IOC, itself mentioned 8 mtpa in December. I have the impression that IOC hopes to build a larger capacity plant as they are focussing on prospects with tie-in distance from Antelop. Moreover, FID is delayed to 2016.

For technical reasons it would be better to increase the capacity per train as this will improve the efficiency of the heatexchangers.

2. The GCA certification is seen as a conservative version of the GLJ certification. I understand that the GLJ certification is based on more recent test results.

3. It is mentioned that the operational field responsibility will be transferred to Total after FID. This will be later.

4. The report is based on the situation before the sale of the refinery. Although Macquarie report is rather negative on this activity USD 17/sh is attributed to this activity. This will go down to 10/sh after the sale. However, Macquarie is missing the point that a revamp was needed for this plant. Moreover, the refinery sale will pave the way for a cooperation with the Japanese who want to set up a DME factory which is a substitute for diesel.

[sydbod]

  For technical reasons it would be better to increase the capacity per train as this will improve the efficiency of the heatexchangers..

It is not an airconditioner where one is concerned with energy efficiency for moving heat from an evaporator to a condenser. It is a LNG plant where one is concerned with rate of return on investment.

If one chooses to overbuild the infrastructure with reguard to the proven reserves, then the ROI goes down or even negative and the big banks possibly won't lend the money to build it.

[Tusker]

"With an estimated ~700mmboe (net) of exploration targets to be drilled over the next 15 months and FID planned on the Antelope LNG project by mid-2016, the upstream NAV could drift significantly higher over coming months. Indeed FID on Antelope LNG alone could add ~U$22/sh with a further U$42/sh added in the unlikely event that all four proposed exploration wells are successful)." In other words $100 to $120/SH. Buyout, thanks!

700mmbbl net at only $10/bbl yields $7 billion.  And that is only targets in the next 15 months, discounting E/A and Ttops.  Hope you're not the Mike that heads IOC.

$1 today is worth more than $1 tomorrow every day.  How about $120 today instead of $64?  Mac's analysis lays out the case I've been making for some time. Using reasonable assumptions and not perfect world $120 is a fair price.  It's time for management to start preparing the whole enchilada.  UBS may already be working on it.  Let's hope so and let management know it.

" $1 today is worth more than $1 tomorrow every day."

That may come as a surprise to FX (foreign exchange) traders and central bankers around the world.

Imagine their relief, It is only a exchange market of 50 Trillion USD per year, more or less.

[jdeo1969]

[quote='jdeo1969' pid='46268' dateline='1404405526']

[quote='jft310' pid='45551' dateline='1403653658']

Wayne addressed this subject of stock appreciation with every person he spoke with he stated. Interoil is where Oil Search was after signing with Exxon . From that point OSH rose 650 percent including several large dilutions . With Hessions sell down we should not need a sell down to finance our portion of the Total LNG build . So Mike wants 100 percent on his money and wants to run away . With LNG cash flows for  2 train LNG plant with 30 percent interest to be $1.5 billion per year that 650 percent drafts other places to put your proceeds. That's the problem with a short term mentality it's taxable and then where to make the balance of the Interoil 550 percent upside.

Best to wait and peel off a few shares to live large in the future. If IOC finds nothing we get a 2 train LNG plant

With all due respect, how often was Wayne correct?  I'd like specific examples.  I would take 120 today, and I have to belive you would as well.  You state a 550 percent upside, but you have been saying that for how many years now?  You may be correct ultimately, but as of today, right now, there is absolutely no reason to believe you.  Do I think the company is worth more than $120/share?  I'm not sure, but I will gladly accept a 100% premium on my investment today.  I think you would be crazy not too as well.  What is so radical about that?

Good luck longs

Jdeo

Management answered that question at the AGM . They said why cap the upside?

They believe in this string of pearls theory first stated by Tusker in maybe 2004/5. Worst case we have a Elk/Antelope which gets us 2 train LNG plant . That  should make most happy may not make all happy.

Let's approach my question this way:  You state that 120 is well below the ultimate payoff.  Ok, we know where you stand.  Now, what in your opinion has to happen for the stock to go to 120/share?

JDEO imagine a ladder with steps . As Interoil climbs the steps the stock price will rise

some of the largest steps are

drilling results, both exploration and antelope 4 and 5 results.

recertification number and payment

FID

Offtake contracts

LNG plant start construction

LNG plant 50 percent completion

LNG plant opening.

Each will derisk the stock price value to net asset value.

I can't say the value of each step but as more steps are reached the de risking increases.

Look at the Oil Search stock price chart as a guide. Smoothing out the dips for share issuance it's a upward sloping line. Interoil can sell down asset finds for their financing vs Oil Search . Huge difference.

The shorts will find more fertile ground .

Thank you for the reply JFT.  My point, and believe to MIkeIOC's point, is that the time value of money would dictate that $120/share right now would be a win for all shareholders.  We double the value of our investment and move on to find something else.  The list you comprised is a lengthy list that may take more time than most investors are willing to wait.  That is the point I was trying to make.  WHile I certainly see more value than 62/share, 120 is a double, and even if I miss the upside of 200 in 5 years, 120 now seems like a good trade IMO.  I believe many who entered into this investment just prior to Dec. 6th would agree as well.  I am not arguing the potential, just being practical that 120 is a win from here.  It isn't where you were, it is where you are and reality is that we are sitting well below expectations of likely every shareholder reading this board.  I don;t care how we get to 120, but I would like to see it sooner, rather than later, and if that means losing the opportunity to go to 200 in 4 or 5 years as an example, I am ok with that trade off now.  Just my humble opinion.

Good luck longs and happy Independence day.

Jdeo

[Relker]

  For technical reasons it would be better to increase the capacity per train as this will improve the efficiency of the heatexchangers..

It is not an airconditioner where one is concerned with energy efficiency for moving heat from an evaporator to a condenser. It is a LNG plant where one is concerned with rate of return on investment.

If one chooses to overbuild the infrastructure with reguard to the proven reserves, then the ROI goes down or even negative and the big banks possibly won't lend the money to build it.

The mechanism of the LNG plant can be compared with your fridge. There is always an optimum between extra capital cost and the time it will cost to deplete the reserves. If you find more reserves rightaway, you will build a larger plant

[sageo]

Getit is an ole fart like me puts . Both 68 , but let's not get into personalities as we wait. It's not productive and I regret when I get emotional also. The time delay wears .

Jft - You guys are 68....still youngsters ! On July 1st I turned 83 ,and while I pray for" Binck" once in a while,I would rather not join him just yet. ( As you probably know,the older you get the longer your prayer list grows, with a lot of your friends "going on". I consider myself very lucky to be a board member and get to read (almost daily) a lot of very good discussions between some extremely smart folks. A happy "fourth" to all our members and may' God bless America'  !