FINANCIAL REVIEW ARTICLE

[Movieguy]

Thank you, Jdeo. Much appreciated, but then where's my + ?

[jdeo1969]

I'm so used to arguing here anymore, it didn't occur to me. Jk. Done.

[jft310]

Hession addressed valuation on the Bernstein call . He stated each T is worth a Billion dollars . Ten T's is Ten Billion market cap etc. Divide the market cap by the current 50 million shares for a price per share estimate.This is another way for valuation in the range of Bernstein's $200 a share estimate with more T's getting us to Bernstein's $300 a share.

[Palm]

That's all post FID though. Comment above stated pre-FID for discoveries which Bernstein has already given us; 7 Ts assumed by OSH gives us $60 valuation. That's about $8.50/T. A very aggressive assumption of 24 Ts would get us to about $200/share. But let's go one well at a time and keep it real.

[jft310]

Palm- agree my Hession quoted numbers are post FID . Bernstein numbers are right before the plant opens.
The actual T count is a tough one . I think our short term goal is to firm up Phil's , Henry Aldorf 's ,
Schlumberger and Holland's estimate of Elk/Antelope. Range is more than 10 T's to 16 T's at Elk/Antelope alone . Nice icing when Raptor and Bobcat get announced.

[Movieguy]

That's all post FID though. Comment above stated pre-FID for discoveries which Bernstein has already given us; 7 Ts assumed by OSH gives us $60 valuation. That's about $8.50/T. A very aggressive assumption of 24 Ts would get us to about $200/share. But let's go one well at a time and keep it real.

Thank you for pointing out my estimate, $15/T, was pre-FID, and Hession's, $20/T was post FID.  However, my estimate was also based on a takeover price, not the current, thinly traded market price, so also not apples to apples in regard to your $8.50/T above.  I know you feel we should not focus on a takeover, Palm, but that is what this thread was about, so what do you (or anyone else) think of $15/T in regard to a near-term takeover price?

[jft310]

That's the heart of why there will be no takeover soon. Listen to Laurie Browns talk about what's to be found T wise. A buyer of Interoil would say less T's and Interoil would say more T's and thus no deal .

[Movieguy]

You may well be right, Jft, yet many deals are made based on the future potential of what is being bought/sold being uncertain. The parties meet somewhere in the middle, if they really want to make a deal.

It seems to me it is really all about what number Chandler would accept, as I would think under his leadership he could gather another 30% to vote with him to accept. Would 50%, not including him, be able to agree on a number Chandler considers unacceptably low? It is certainly possible, but a much more difficult undertaking.

[Palm]

If you want a "near term" number and are saying you think that's $360/share I think we have visions of Cove still dancing in our heads. There have been none of those since, and there are lots of reasons for that. A big one is that projects have proven to be much more expensive and/or many have been cancelled; as well $/mtpa has come down. The LNG industry is maturing as reality hits. Value will be most realized once a plant has been built and shipments commence.

It's nice to think that just drilling one well will get us a certified # or Ts, but we know with Ant that's not the case. A buyer of raw gas is paying the approximate $8.50/T as they have to look at costs/well (which I figure is at least $3/T for IOC's share of drilling 6 wells at Ant to prove up the estimated 7 Ts). Hession can say $20/T but where has he done that to date? That's more of an after cash flow starts amount. Again, read the Berenstein report where they say it could hit $200-$300/share. It's after a plant is built and starts production. Not near term. When I run numbers of what someone might pay near term and assuming what costs would be to delineate and get certified numbers of Ts I come very close to what Bernstein says their price target is; $90-$100 if all goes according to plan near term.

Bernstein Page 2:
"Our valuation of US$90/share is based on the net asset value of a two-train LNG development with a 25% discount to NAV. Using a DCF model of a two-train development (8.5TCF reserves) and a 25% discount to NAV implies InterOil is worth US$90/share. Benchmarking to Oil Search's recent acquisition of Pac LNG implies a minimum value of US74/share (inc. cash), which is above where IOC is currently trading (US$56/share). Blue sky upside by 2022, using a P/CF multiple of 7-10x (where LNG peers are trading) and a cash flow of US$30 per share implies a value which could ultimately reach US$200-300 per share."

[mikesioc]

It's always been $120. Enough to pay for what is expected plus a little premium for undiscovered assets. A nice profit for all and not so high that the buyer walks away. The longer we wait for WBR the more it tells me Hession knows the results won't add much value and he realizes a conforming bid will follow. A conforming bid will result in a vote, not a unilateral decision by Hession. If the board decides to trigger the poison pill they can provided the bid is deemed non conforming. By way of example a conforming bid at $60 with the poison pill triggered takes it to $120 if every shareholder turns down $60. On the other hand a conforming bid at $100 makes a lot of people think twice and eventually gets negotiated to $120 and approved by a vote. Done deal and no 8 years of waiting for 2 birds in the bush.