Oil Search Resource Press Release

[ArtM72]

Wow we have been deceived not surprising. The way to make money off of this stock is to write a book. It is a compelling novel with twists and turns every year. And you could probably turn it around like Wicked and have all sorts of characters MH as the evil wizard, Phil as Glenda the good witch of the north, Botten as the Wicked Witch, the Board of Directors as the Flying Monkeys, Total as the tin man (no heart), need selections for the scarecrow, lion, and dorothy..... I am sure this Board can figure that out. Hope it is not as bleak as Botten's BS. Are there any crimes here?

WE are Dorothy.

[Kaliboo]

3 years, 3 wells and the GCA 2C number goes down.  Wow!

It doesn't make sense that wells drilled since then have proven connectivity and extended the lateral size of the reservoir.  This suggests that the appraisal companies disagreed with IOC's assessment of the results of the more recent wells.  In other words IOC management overstated the results to be better than they really are.  Consulting companies can only analyse the data they are provided.  An important question is what data does OSH have that was NOT given for the appraisers to use and WHY?  And what data does IOC have that was not shared with OSH for this purpose and WHY?

Also, this is the average of two appraisers.  An important question is what were their individual numbers?   I would never abide to such an agreement unless there was a provision to obtain additional appraisals if the two are not within X% of each other, where X is a methods based value derived on the amount of data and wells available as well as the nature and location of the deposition.  Heck, years ago when my company offered a corporate buyout of my house when I moved, they got 3 appraisals and used the highest 2.  Why only 2?

[jft310]

Appears after Ant 7 we get 2 new appraiser's .

[SupaSage2003]

3 years, 3 wells and the GCA 2C number goes down.  Wow!

It doesn't make sense that wells drilled since then have proven connectivity and extended the lateral size of the reservoir.  This suggests that the appraisal companies disagreed with IOC's assessment of the results of the more recent wells.  In other words IOC management overstated the results to be better than they really are.  Consulting companies can only analyse the data they are provided.  An important question is what data does OSH have that was NOT given for the appraisers to use and WHY?  And what data does IOC have that was not shared with OSH for this purpose and WHY?

Also, this is the average of two appraisers.  An important question is what were their individual numbers?   I would never abide to such an agreement unless there was a provision to obtain additional appraisals if the two are not within X% of each other, where X is a methods based value derived on the amount of data and wells available as well as the nature and location of the deposition.  Heck, years ago when my company offered a corporate buyout of my house when I moved, they got 3 appraisals and used the highest 2.  Why only 2?

Kaliboo - Check the new thread I just started titled "Analysts' Take on the Oil Search News - UBS, Bernstein and Citi" for the detailed numbers.

[Crippsfl]

This proves that that a NO vote is the correct decision to make on the OSH deal. It is obvious that one of two scenarios are in play here.

1. The previous presentations and testing results given to us by IOC were grossly exaggerated or just plain false. This would have been occurring for years, even when Phil was running the show. I believe this is unlikely.

2. That Total, OSH, and the board at IOC have colluded to steal the company from the shareholders. They hand picked their consulting companies to basically present the numbers that THEY want to see for resource certification. This seems a lot more likely to me.

I have stated, as Stavros has, that you could see this scenario#2 playing out from the beginning. All this talk by management of an "Unlimited Upside" was total rubbish. They knew exactly what they were doing and think we are too stupid to figure it out. Given the relatively small increase they are projecting for Ant 7, it would not be surprising if they decide to forgo it completely.  So now the cat is out of the bag.

The best scenario now is for XOM to put a superior bid (which certainly isn't difficult now) out there with a stock exchange equal to about $50 and a CVR payment to be issued after XOM gets to pick who they use for the appraisal. Since, XOM would be getting the certification payment from Total, it would be in THEIR interest to find a company that would give an honest appraisal, something Total an OSH were not interested in. The current resource estimate becomes a non issue. This put pressure on Total to step in try to outbid XOM. This scenario is the best on for IOC shareholders.

I cannot imagine why anyone would vote for the current deal on the table - unless your name is Michael Hession!

[MartiniStocks9756]

The fix was in and now we need to turn the tables and win.

[Stavros]

My guess, Martini, is that the "Concerned InterOil Shareholders" will now get to work and make some suggestions on how to get maximum value.

So far, Phil Mulacek has funded all the efforts himself, and we have benefitted.

We should now consider how we can support the CIS with some CA$H.
Even $0.10 per share of our holdings will bring us high %age returns.

Crowd Funding is a way to go I think.

[Kaliboo]

For our experts here; have you ever seen such a disparity in estimates such as we are seeing in GLJ and GCA?

  Not an expert but see my posting on "5 ways to shave a reservoir calculation."  There's your answer as to the possibility.

[Indoreservoir]

From Page 4 of the press release:

GCA and NSAI satisfy the ASX requirement of qualified petroleum reserve and resource evaluators as required by ASX Listing Rules Chapter 5 and have consented to publish the resource estimates in the form and context presented in this announcement. These resource estimates are based on, and fairly represent, information and supporting documentation prepared by GCA and NSAI.

The Certifiers were provided with a full set of available data at commencement of the process and new data as it has been received from the operator. The Certifiers have utilised results and data from all appraisal wells up to, and including, Antelope 6. The Certifiers were provided with the same data and information, with Oil Search providing such data or information (including raw, analysed and processed data and interpretive data and assessments) as the Certifiers reasonably required and requested and Oil Search reasonably believed would assist the Certifiers.

It is quite possible that both certifiers used OSH maps, verified them as reasonable, and then prepared the estimates.  That is likely based on the nearness of the results.

It is also unusual that they have some 80% C1 (C1 is about 80% of C2) which is very high.  They appear not to have given much upside and the spread from C1 to C2 to C3 is quite tight.

Will have further comments later – I just saw this information as haven’t been following things – too heavy in US natural gas at present!

But for now:

1. I was wrong when I thought GCA’s numbers would move towards GLJ

2. I do not think either reserve certifier did their own mapping based on what was noted above 'interpretative data and assessments'.  This reduces the certification cost and time considerably.  I don’t know how else to explain the close agreement between them.  The fact OSH internal numbers were very similar before the additional wells and seismic processing smells funny.  May be wrong on this; dunno.

3. There should have been reasonably broad ranges for porosity and water saturation and net thickness, which in turn would have made C1 to C3 range larger.  C1 being 80% of C2 is a big flag, ESPECIALLY in a carbonate.

4. PacLNG might have no rights to dispute the numbers – I guess.  Anyone who enters these agreements must insist on raw data only to the certifiers, with processed seismic being the only manipulated information presented, and the certifiers do ALL the work from scratch.  Costly/time consuming but necessary.  XOM will have done this.

5. OSH personnel involved in the certification would have been answering questions and commenting on both certifiers work.  As will all professionals, geophysicists, petrophyscists, geologists, and engineers are generally hesitant to criticize other’s work.  Especially when your firm is getting paid by OSH and want further work.

6. Wonder what Dave Holland will say about this.

More later.

[Northoil]

[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!

___________________________________________________________________________________

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.