Even More KISS Valuation of IOC

[cybersssss]

Per WA today IOC has 1 Billion BOE.

Using that number you can extrapolate about 30 dollars per BOE.  This equals to a 30 billion dollar market cap. This equates to roughly 615 dollars per share of IOC.

Numbers that make you go hmmmmm.....

[Spartina]

I love simple.

[TxPm]

Cybersss, while I would love that valuation "Gas" companies have had their valuations destroyed by the market due to the perceived "negative market environment" for gas in the US. If you look at a company like DVN they have roughly 3 Bill BOE & their market cap is $22Bil roughly. Based on this IOC should be about double the PPS that it is today but I think the "perception" of the gas market here in the US will have to turn around some before we begin to see these companies "Valued" where they should be. Just my opinion though

[johnwgrant]

Per WA today IOC has 1 Billion BOE.

Using that number you can extrapolate about 30 dollars per BOE.  This equals to a 30 billion dollar market cap. This equates to roughly 615 dollars per share of IOC.

Numbers that make you go hmmmmm.....

Great point.  Another way of looking at this same issue:    If a bidder offers $1.00 per mcf of natural gas, it would be the energy equivalent of offering to buy oil at $6 per barrel !!! (the energy equivalent of 1 barrel of oil is 6 mcf of natural gas).    Can an oil company make money in the spread between $6 and $100 ?!?!

PS: I know you have to make the natural gas into LNG and then ship it, but, still....    the margins are huge !!!

[cybersssss]

Good point TxPm. The difference is this is the Asia Pacific market. If you would like to compare to Oil Search then per their website they have about 500 mm BOE . Then IOC has double that and that equates to a market cap of 20 billion and a PPS of 415 dollars a share.

Still makes you go hmmmmmm....

[Palm]

Agree Cyber, you can't use US pricing for an Asian based asset. We'll see that when bids are revealed and as things move toward FID and production.

[TxPm]

Cyber and Palm, I agree that being in Asis is a huge benefit the difference btw IOC & Oil search is that Oil Search is considered an "Australian" company as far as Wall St is considered from a coverage standpoint and IOC is a US company. I'm not saying that's how it should be I'm just saying the reality is when ppl compare IOC to other NG companies do you ever see research reports put out by big firms comparing it to Asian pacific companies or companies in the US. I've stated on the board several times that from a asset/balance sheet standpoint IOC should have an equal or greater market cap than Oil Search and I actually believe with 5-7 years we will but right now unfortunately the "Street" hasn't discovered our little diamond in the rough. One perfect example of this is that currently Bank of America/ Merrill Lynch doesn't cover IOC but their Asian Pacific team does cover Oil Search. When I inquired into why they didn't cover IOC when they were right next door their only answer was "Well IOC is a US firm so that would have to be covered by the domestic O&G analyst." And guess what if that analyst does start covering it I'd be willing to be he uses US Nat Gas prices as his baseline scenario. Once again this all just my opinion though and I do believe we are massively undervalued and in the next 5-7 years we will surpass Oil Search from a market cap standpoint