03-04-2012, 11:42 PM
I did not see a discussion here of the "motley fool" piece on Soros, Tilson, etc. and IOC.
Here, for your enjoyment, is a rebuttal on that article in the comments section of the article:
On March 04, 2012, at 1:33 PM, 2timfoolery wrote:
The article almost looks "fair & balanced," but is not:
1. One might think Tilson's views are accurate, unbiased and well based. Wrong.
Explanation: Tilson apparently shorted IOC at $51, and has seen it at $81 and in the 70s several times since. He is desperate to push down the price of the stock to cover his short, and to defend his thinking, esp. given his recent dismal record with this and other shorts.
2. Tilson knows the difference between "reserves" vs. "resources," but prevaricates. The author may well not.
Explanation: "Reserves" according to Canadian regs. applies when the company can move the oil or gas to market. As of yet neither pipelines nor the LNG plant are in place, so "no reserves"-- an accurate but limited status report. However IOC has est. natural gas "resources"-- gas in the ground-- of over 5 Trillion cubic feet, perhaps much more, as determined by respected 3rd parties.
3. IOC's current refining and retail petrol business is small, its losses come from EXPLORATION, which always costs a lot, but can have fantastic returns.
Explanation: Over a decade IOC has spent almost $500M USD buying leases, drilling wells, building roads, running seismics, buying construction equipment. This is what you have to do to find oil & gas in the jungle. It knows where to drill next, again & again. Look at its current wells below.
4. The details on IOC's resources are greatly lacking. Those details are why many are attracted to the stock.
Explanation: IOC has leases on 4.4 million acres of land. Its Antelope-1 and Ant-2 wells are the world record largest NG wells, according to Guiness records. IOC is drilling its Triceratops well now, and it may uncover even more vast resources. With its current resources, its net asset base per MCF is about 40 cents. While US NG sells for only $2.5/MCF, we cannot ship it to Asian or global markets. LNG sells in Tokyo for about $17/MCF. IOC is accepting bids for all steps up to commercial LNG. Major players are attracted. Mitsui is already involved. The potential is great. There is no cheaper NG in Asia, and none closer to Tokyo or China.
5. Soros had other reasons to sell.
Explanation: Soros has closed out his Millenium hedge fund to his former big investors, making it only a Soros family fund. He had to liquidate some assets to do this. Reportedly his portfolio manager for IOC left the company, too, a real imptus to sell.
6. Other institutions have bought Soros's stock. Explanation: There have been very big buys, too, as Soros was selling. Several other biggies already held sizable positions-- 5-10% of the stock. These included the parent of well respected American Funds, Wells Fargo Investors, Fidelity, and JP Morgan.
Disclosure: I have owned IOC stock for years and still own its stock and options, and may buy more on reduced prices.
Here, for your enjoyment, is a rebuttal on that article in the comments section of the article:
On March 04, 2012, at 1:33 PM, 2timfoolery wrote:
The article almost looks "fair & balanced," but is not:
1. One might think Tilson's views are accurate, unbiased and well based. Wrong.
Explanation: Tilson apparently shorted IOC at $51, and has seen it at $81 and in the 70s several times since. He is desperate to push down the price of the stock to cover his short, and to defend his thinking, esp. given his recent dismal record with this and other shorts.
2. Tilson knows the difference between "reserves" vs. "resources," but prevaricates. The author may well not.
Explanation: "Reserves" according to Canadian regs. applies when the company can move the oil or gas to market. As of yet neither pipelines nor the LNG plant are in place, so "no reserves"-- an accurate but limited status report. However IOC has est. natural gas "resources"-- gas in the ground-- of over 5 Trillion cubic feet, perhaps much more, as determined by respected 3rd parties.
3. IOC's current refining and retail petrol business is small, its losses come from EXPLORATION, which always costs a lot, but can have fantastic returns.
Explanation: Over a decade IOC has spent almost $500M USD buying leases, drilling wells, building roads, running seismics, buying construction equipment. This is what you have to do to find oil & gas in the jungle. It knows where to drill next, again & again. Look at its current wells below.
4. The details on IOC's resources are greatly lacking. Those details are why many are attracted to the stock.
Explanation: IOC has leases on 4.4 million acres of land. Its Antelope-1 and Ant-2 wells are the world record largest NG wells, according to Guiness records. IOC is drilling its Triceratops well now, and it may uncover even more vast resources. With its current resources, its net asset base per MCF is about 40 cents. While US NG sells for only $2.5/MCF, we cannot ship it to Asian or global markets. LNG sells in Tokyo for about $17/MCF. IOC is accepting bids for all steps up to commercial LNG. Major players are attracted. Mitsui is already involved. The potential is great. There is no cheaper NG in Asia, and none closer to Tokyo or China.
5. Soros had other reasons to sell.
Explanation: Soros has closed out his Millenium hedge fund to his former big investors, making it only a Soros family fund. He had to liquidate some assets to do this. Reportedly his portfolio manager for IOC left the company, too, a real imptus to sell.
6. Other institutions have bought Soros's stock. Explanation: There have been very big buys, too, as Soros was selling. Several other biggies already held sizable positions-- 5-10% of the stock. These included the parent of well respected American Funds, Wells Fargo Investors, Fidelity, and JP Morgan.
Disclosure: I have owned IOC stock for years and still own its stock and options, and may buy more on reduced prices.