What We Know

[admin]

First, TA should make sure he's not being used by the short contacts that rely on "spreading fear", but every time have eventually been proven not true, by my dd.

I understand what you are saying trans but this information about the shorts is coming from the same people who told me that TOT was involved in the sell down prior to the annoucement. They were very positive about that situation at the time.

I'm just trying to convice some of the longs that the drill bit will not solve our share price issues and that the company needs to get much more aggressive to win the battle with the shorts. But I am done making this point here.

I've asked you a simple question. If the drill bit doesn't matter, if it doesn't matter whether EA contains 5, 10, or 15 Tcfe, or if we find 1, 2, or 5 other EAs, if it's just the shorts controlling the price no matter what, then what makes this situation so much different from:

• Tesla
• First Solar
• Herbalife
• Netflix

And a host of situations in which the shorts have been defeated by good company news.

You say good company news doesn't matter with IOC.

My simple question is why?

[Getitrt2]

admin, you certainly make some valid points, but I think some of them are getting a more negative assessment than they should.

1. I agree there is a strong impression among most that the apparent likely $/mcf is lower than expected, but I think several factors are making that impression more negative than it should be and than the result may actually turn out to be. One is that expectations were too high to begin with for any buyer, including Exxon, perhaps mostly because of impressions from previous management. Also, there is so much potential variability in what the overall price will actually be just from the pricing structure relative to the resource appraisal that it is impossible to say what it will be. Most, including some now burned professional analysts, are unwilling to make estimates on other than conservative resource estimates, although RJ (regarded as being conservative in the past) is pointing out that the stock currently reflects a very low resource assumption relative to the previous certified estimates. However, management apparently believes there is very significant potential upside to current estimates, and achieved a no-cap price structure that could yield a much higher average price at the $1.29/mcf rate on all resource above 6.5 Tcfe, with deal terms that give them maximum opportunity to achieve higher resource certifications, including a second recertification beyond the initial recertifications in 2015, plus an exploration bonus in PRL 15 they seem to think will be significant.

Furthermore, this is a partnership deal with a mega-major which provides IOC with 30% ownership in an LNG project that almost certainly will be built, by Total, with two trains and probably expansion beyond that, which I think has huge value to IOC well beyond the so-called price per mcf that most people seem to be exclusively focused on. Westlake Securities did a thorough analysis using a wide variety of resource and other assumptions and risk levels, and assuming a two train plant is built with GLJ resource levels, arrived at a PRESENT VALUE for IOC of $131 per share, something most people are probably not even aware of. I also think something else people need to consider is that if IOC had done a deal with Exxon for 4.6 Tcf at a supposedly higher price per mcf, but for only that amount, and probably with less if any IOC plant ownership, it probably would have been difficult to find such a partner for the rest, if at all, and certainly at higher risk and significantly lower price.

2. I was thinking this and bothered by it, also. However, now I'm seeing references by Santos to PNG LNG expansion to four trains by about 2020, and I'm wondering whether that would have been all that much sooner than a Total/IOC two train plant. Furthermore, in the deal with Total, IOC is expected to get most of the payments for the gas resource in 2014 and 2015 anyway; and we have a sale and project NOW for ALL of PRL 15, not just 4.6 Tcfe.

3. I don't see how this deal leaves any more uncertainty about "the size of E/A and GLJ's assessment of it" than an Exxon deal would have. That also would have required additional wells and "delineation" of E/A involving probably no less uncertainty and maybe more, and probably would not have provided for the same exploration of other PRL 15 prospects, not to mention the potential bonus. Furthermore, we probably would not have a partner like Total standing ready to monetize ALL of PRL 15.

I agree with you about the drill bit. "Drill, Baby, drill," as expeditiously as possible.

Like all longs, I am hugely disappointed and angry about the stock, but I believe it is unjustified and that it will recover and eventually make new highs. I wish we had been able to accomplish the original plans or reached a similar deal a long time ago; but I like this deal. I believe it was the best available and really will be transformational for IOC, in an extremely positive way. I think it is probably time for us to put behind us the forensics about what happened to the stock and why, while trying to make sure they go after the shorts, and focus on what we have and why, and moving forward toward what should be a bright future, with financial resources and management for that future unlike anything the Company has ever had before.

PS: I've been writing this off and on most of the afternoon as I could and have not read any additional postings yet, although I see it's to three pages!

[SamAdams]

First, TA should make sure he's not being used by the short contacts that rely on "spreading fear", but every time have eventually been proven not true, by my dd.

I understand what you are saying trans but this information about the shorts is coming from the same people who told me that TOT was involved in the sell down prior to the annoucement. They were very positive about that situation at the time.

I'm just trying to convice some of the longs that the drill bit will not solve our share price issues and that the company needs to get much more aggressive to win the battle with the shorts. But I am done making this point here.

I've asked you a simple question. If the drill bit doesn't matter, if it doesn't matter whether EA contains 5, 10, or 15 Tcfe, or if we find 1, 2, or 5 other EAs, if it's just the shorts controlling the price no matter what, then what makes this situation so much different from:

• Tesla
• First Solar
• Herbalife
• Netflix

And a host of situations in which the shorts have been defeated by good company news.

You say good company news doesn't matter with IOC.

My simple question is why?

CREDIBILITY.  At least in the case of HLF, which I know well, that is the difference.  HLF mgmt has significant credibility withboth  the buy and sell side, has prodigious free cash flow and ROIC in the high 40s.   The Icahns et al came late to the game butdid come because of CREDIBILITY and a flawed and concentrated and public short.  The IOC shorts, the big ones lurk in the shadows.   MH has yet to change that issue.

[tarulestheday]

I've asked you a simple question. If the drill bit doesn't matter, if it doesn't matter whether EA contains 5, 10, or 15 Tcfe, or if we find 1, 2, or 5 other EAs, if it's just the shorts controlling the price no matter what, then what makes this situation so much different from:

• Tesla
• First Solar
• Herbalife
• Netflix

And a host of situations in which the shorts have been defeated by good company news. You say good company news doesn't matter with IOC. My simple question is why?

For all I know, Tesla, FLSR, etc. all spent real money and took the shorts on legally and otherwise.  There are concrete steps that a company can take (divi, split, buyback, etc.)  to battle the shorts but I don't see IOC doing anything but hoping they will cover on the fundamentals.

IOC cash flow and timing are much more difficult to measure than with the above companies. Valuation is more more difficult with IOC. Where were the above companies trading before real cash flows?

Phil M made alot of enemies in the industry and investment circles. For some shorts, it's personal.

You are using the above examples as evidence that shorts can be overcome with fundmentals. Sadly, there are hundreds of companies that were driven out of business by shorts and some survivors that were permanently damaged by shorts (Imergent, Dendreon, etc.).

I didn't mean to imply that good company news doesn't matter with IOC, it just matters alot less when you are carrying around 12-20 million short shares on your back. The fact that that IOC shorts didn't cover on a 40% drop to the fifties should tell you that they are serious about trying to destroy the company.

[admin]

CREDIBILITY.  At least in the case of HLF, which I know well, that is the difference.  HLF mgmt has significant credibility withboth  the buy and sell side, has prodigious free cash flow and ROIC in the high 40s.   The Icahns et al came late to the game butdid come because of CREDIBILITY and a flawed and concentrated and public short.  The IOC shorts, the big ones lurk in the shadows.   MH has yet to change that issue.

Thanks Sam, we could do with a few more people with substantial background butting in here.

Credibility. IOC let Phil go, apparently the shorts had personal issues with him. We finally have that elusive deal, a credible deal with a very credible partner. Within a quarter or so, we have more data on EA and one or two other structures, perhaps another discovery.

But then Tarules say nothing of that matters to the David Loeb's, the SAC's and the Milleniums of this world. They want to destroy the company, just because they can. Arguments are just a thin semblance of legitimization and fundamentals are for sissy's. Welcome to the financial markets.

[sydbod]

....  Wood MacKenzie as to cost of Hides wells: http://shareholdersunite.com/mybb/showthread.php?tid=3974 ; .....

Hi Tree,

There is no issue about some of the wells costing north of $100,000,000 in the highlands. I agree it is a shocking number.

It is just that Hides is already a developed site with drilling rigs already at the site. It is the cost of helicopter rig transport and site preparation that make the drilling so very expensive in the highlands. These expenses are not such an issue anymore at Hides. I do remember (I think it was  in one of the OSH news releases) that they were quoting around $30,000,000 as the cost for a well in the highlands when rig is on site and site development already exists. Just sorry I cant find it at the moment.

I must say, I am more of a "glass half empty" kind of a person as can be seen from my various posts. I was actually thinking the PPS woud get /stay at around $100/$120 a share, but that is not the case and it supprised me a bit. No matter what the price happens to be at the moment, I am always a long term investor and I did plan to hold the IOC shares untill first LNG shipment. Another 7 odd years is not all that long when one thinks of the potential rewards.

[jft310]

Hey Syd, You say: "We should not get peoples hopes up too high until we get firmer information otherwise it can again lead to disappointment." I agree, that is why we need to focus on what we know. Wood MacKenzie as to cost of Hides wells: http://shareholdersunite.com/mybb/showth...p?tid=3974 and an Upstreamonline article from Dec. 13th: http://www.upstreamonline.com/hardcopy/n...346372.ece Bottom line is PNG LNG still needs gas and Santos is reported to consider E/A gas an option, a full week after the TOT/IOC lash up. My conclusion is E/A gas still is PNG LNG's best option for gas based on availability, speed to market and cost. How is this getting peoples hopes too far up??

Assuming the Total deal closes which seems a safe bet than the best place for Exxon to get gas is Triceratops . Remember that

T in the Exxon pipeline. At the Roadshow it was said that  Exxon needed 2.5 T's for expansion and that most likely one well

placed new well at Triceratops could provide that for them . Not sure who would supply the rig , or when but we have

no Exxon deal today .PRE could drill that well for IOC . The wells not drilled but Exxon/triceratops situation was discussed at the

roadshow .