Timing

[ltinvest]

Mike, the great thing is everyone has the free will to invest however they choose. Should someone perceive greater returns elsewhere, that's where they should invest. The current pps makes your hindsight correct. I differ with you on return expectations going forward and your charactzation of IOC's position...quite strongly in fact.

[ebster123]

Mike if you traded IOC like some you would have done VERY well (I did not do this). I agree with your first half of the comment and disagree with the dollar value you believe IOC is worth. The market will decide. I for one find it very interesting RDS has been so quiet. Time will tell but one either waits or sells and all are free to do either. I like MH's quiet approach. I also like that he does not tell WA or Meg everything as well.

[ArtM72]

YOu just need to look at the thread by Gator about what Total said at the European Gas Conference regarding cost of production to appreciate the margin that will be available for IOC's currently discovered gas. There is no disputing IOC's new PPLs sit on top of some big kitchens. Now it's all about the drill bits looking into the cupboards above.

[Getitrt2]

Anyone ever heard of opportunity costs? There have been countless other places to park cash that provide significantly greater returns than IOC with far less risk. That trend became significantly more costly after IOC transformed itself and promptly lost 50% of its market cap. IOC is going to have to accept whatever PNG, Total, Exxon, and Oil Search decide they want done. While intriguing this story has become a broken record and IOC is now a pawn. Let's just hope those truly in control simply make the logical decision and give IOC their parting gift, $126. Everyone happy now? I know that can be significantly greater by 2020 just by owning Oil Search. IOC could be discarded costume jewelry by then.

Mike, I would say your apparent assumption that PNG, Total, Exxon, and OSH would be completely in agreement on anything related to all this is very unlikely, "ridiculous" even comes to mind.  I see Total and Exxon as still competitors in this situation, as they have been up to now,  which I don't think leaves IOC, with current ownership in PRL 15 of about 75% and a mutually indicated pending SPA and partnership with Total, as just a "pawn".  At this point, OSH has the minority ownership they wanted, with a premium payment and vote of confidence in IOC's PRL 15, and little more;  and Exxon has nothing unless they are willing to put up a much better bid or pay enough to buy the Company.  Exxon also knows they can probably buy other gas later from IOC for expansion, and may opt for that if needed.  Perhaps it should also be noted that OSH is pursuing minority ownership in IOC's PRL 39 and PPLs, which would be the sources of that gas.

I certainly can't argue with your comments on past investment returns on IOC, unless someone could have successfully traded it, which I think would have been very difficult unless you were a manipulator in the know. Like you, I am also extremely unhappy and frustrated about that.  However, I agree with ltinvest on the future outlook, whether in the form of a buyout at your $126 or more, or otherwise.  Apparently, you agree with that regarding a potential buyout, but I also agree with ltinvest on IOC in the future otherwise, given PRL 15 and LNG ownership, and enormous prospects for future discoveries, which IOC will have a much bigger interest in than OSH, assuming OSH can even finance buying into them with LNG cash flow or debt or further stock dilution.

[mikesioc]

I have not been sitting on my hands these last 5 years and wouldn't still be here if I didn't believe IOC had the potential to far exceed other opportunities in the near term. The market is offering us Philadelphia pawn shop pricing right now but waiting a bit longer for results of the current negotiations seems prudent. After that a reassessment is certainly in order. When all is said and done it will be very interesting to track OSH v IOC by 2020. How much interest in how many trains for each by then? Assuming OSH will own 22.85% of PRL 15 and maintains its options for confirmed discoveries the current perception has OSH well ahead. If Hession can bring RDS or Woodside into the current bidding IOC can exert some leverage and make up some ground. Further if drilling results are successful. That being said based on recent twists PNG seems likely to guide this into the outcome that best serves PNG which are more aligned with OSH/Exxon and may conflict with IOC's best interests. We'll know soon. Best of luck to all whatever your expectations may be.

[jft310]

In my opinion we will have enough gas for both . It's not an either or situation. Others must agree or why else all this drilling activity. Interoil is spending $300 million of borrowed money in fact to prove it out. Actions speak loudly here.

[Getitrt2]

I have not been sitting on my hands these last 5 years and wouldn't still be here if I didn't believe IOC had the potential to far exceed other opportunities in the near term. The market is offering us Philadelphia pawn shop pricing right now but waiting a bit longer for results of the current negotiations seems prudent. After that a reassessment is certainly in order. When all is said and done it will be very interesting to track OSH v IOC by 2020. How much interest in how many trains for each by then? Assuming OSH will own 22.85% of PRL 15 and maintains its options for confirmed discoveries the current perception has OSH well ahead. If Hession can bring RDS or Woodside into the current bidding IOC can exert some leverage and make up some ground. Further if drilling results are successful. That being said based on recent twists PNG seems likely to guide this into the outcome that best serves PNG which are more aligned with OSH/Exxon and may conflict with IOC's best interests. We'll know soon. Best of luck to all whatever your expectations may be.

After the PNG option exercise (almost certain), OSH will actually own 17.7% net, and IOC plans to and probably will own 25 to 30% net.  Also, OSH has NO "options for confirmed discoveries".  They have the exclusive rights to negotiate for six months with PacLNG for interests ranging from 11.04% to 13.43%, which I think are probably gross interests, and there are no prices agreed upon, which will be higher with any "confirmed discoveries".  I also feel sure PNG is not going to borrow any more to buy OSH shares to finance any such purchases.  IOC already owns interests in all those properties ranging from 50.5% to 60.5%, and I think those are probably net after PNG's 22.5%, including, I believe, PRL 39 (Triceratops), a confirmed discovery.  In the meantime IOC is now investing hundreds of millions of dollars in exploration and appraisal in all those to increase their values.  How does all that favor OSH over IOC?

As I have explained in more detail elsewhere, I believe what is in PNG's best interests is a separate LNG project by Total for PRL 15 with future expansion of both, and I do not believe PNG will interfere with commercial agreements between IOC and Total.  Therefore, I guess we disagree on that also.  Best of luck to you as well.

[ltinvest]

PNG will have 22.5% of Gulf LNG, correct? They have how much of PNG LNG?

[mikesioc]

Exactly. Enough gas to go around for Exxon, Total and OSH. As I've asked before does everyone get it that anyone can own all of IOC for less than the remaining interest in PRL 15? Why would each buy one piece when they can own the whole pie for the same price? What do you think each would pay to buy the whole pie and split it 50/50 right now? First gas going to PNG LNG expansion and Total getting enough to lead a Gulf facility. At the current PPS IOC is a pawn because the entire company can be owned for less than the remaining interest in PRL 15. Furthermore IOC is out on a limb and has no cash until Total gives it to them. Be certain that Total and Exxon (Woodside & Shell?) have been talking without IOC in the room and if they can agree on a split then IOC is shown the door. No sense getting into a bidding war when they can cooperate and each get what they want for the same price. Reality is getting $120 today for the entire company would be quite a coup.

[Getitrt2]

Exactly. Enough gas to go around for Exxon, Total and OSH. As I've asked before does everyone get it that anyone can own all of IOC for less than the remaining interest in PRL 15? Why would each buy one piece when they can own the whole pie for the same price? What do you think each would pay to buy the whole pie and split it 50/50 right now? First gas going to PNG LNG expansion and Total getting enough to lead a Gulf facility. At the current PPS IOC is a pawn because the entire company can be owned for less than the remaining interest in PRL 15. Furthermore IOC is out on a limb and has no cash until Total gives it to them. Be certain that Total and Exxon (Woodside & Shell?) have been talking without IOC in the room and if they can agree on a split then IOC is shown the door. No sense getting into a bidding war when they can cooperate and each get what they want for the same price. Reality is getting $120 today for the entire company would be quite a coup.

I don't know what it takes to get through to you, but I'm about ready to give up.

No one is certain now that there is enough in PRL 15 for both PNG LNG expansion and a two-train LNG facility.  Therefore, neither Total nor anyone else is going to commit to a separate facility under those circumstances.

$120 per share for IOC is about $6 billion, which is NOT "less than the remaining interest in PRL 15", as you say.  IOC cannot be bought for less than shareholders, including mostly very large and smart investors, are willing to accept, and "shown the door", and also has a Shareholders Rights "poison pill" agreement.  Press reports and Company sources confirm that IOC and Total are the primary ones "talking" now, and you cannot "be certain" that competitors "Total and Exxon have been talking without IOC in the room" and conspiring against IOC.  We will see, hopefully before long.