Raymond James comments

[ltinvest]

 Oil search buys third-party stake in Elk/Antelope at a bullish multiple. Following weeks of speculation, the Australian energy company Oil Search confirmed today that it is buying a third-party owner's 22.8% stake in the Elk/Antelope field for $900 million upfront, plus additional variable payments depending on the amount of resource. Recall, Total (TOTF.PA/Outperform - covered by RJ Euro Equities) is in the process of buying a 61.3% stake from InterOil in the same resource base, but almost the entire purchase price is comprised of as-yet-undetermined variable payments. Therefore, it is useful to extrapolate from the Oil Search deal value. Just based on the upfront payment Oil Search is making, Total's 61.3% stake is theoretically "worth" $2.4 billion. And if we add in the variable payments Oil Search would make based on GLJ Petroleum Consultants' resource estimate for Elk/Antelope, this adds $0.5 billion on top of the $2.4 billion. For context, InterOil's current market cap is $2.8 billion. To be clear, InterOil is not getting any cash from Oil Search, because Oil Search is buying this stake from Pacific LNG, the main third-party owner in Elk/Antelope. But it's still beneficial to InterOil, because InterOil will not have to handle this buyout itself - thus eliminating the associated dilution risk.

[Brew Swillis]

 Oil search buys third-party stake in Elk/Antelope at a bullish multiple. Following weeks of speculation, the Australian energy company Oil Search confirmed today that it is buying a third-party owner's 22.8% stake in the Elk/Antelope field for $900 million upfront, plus additional variable payments depending on the amount of resource. Recall, Total (TOTF.PA/Outperform - covered by RJ Euro Equities) is in the process of buying a 61.3% stake from InterOil in the same resource base, but almost the entire purchase price is comprised of as-yet-undetermined variable payments. Therefore, it is useful to extrapolate from the Oil Search deal value. Just based on the upfront payment Oil Search is making, Total's 61.3% stake is theoretically "worth" $2.4 billion. And if we add in the variable payments Oil Search would make based on GLJ Petroleum Consultants' resource estimate for Elk/Antelope, this adds $0.5 billion on top of the $2.4 billion. For context, InterOil's current market cap is $2.8 billion. To be clear, InterOil is not getting any cash from Oil Search, because Oil Search is buying this stake from Pacific LNG, the main third-party owner in Elk/Antelope. But it's still beneficial to InterOil, because InterOil will not have to handle this buyout itself - thus eliminating the associated dilution risk.

Ooh, hadn't seen that yet.

[cybersssss]

So we are basically trading at the vale of ea at 2.8 billion market cap.

[TxPm]

Cyber I agree which brings me back to why wouldnt Total just buyout IOC or at least attempt to buy it out. Or why would say Woodside or Shell not attempt a buyout

[Putncalls]

I don't think it's fair to fully value IOC based on what OSH paid PAC. PAC was stuck between a rock and a hardplace.