Raymond James - Great timing of 1st ever IOC buyback....Given that the stock is trading 30% below our base case NAV estimate, we think the timing of this announcement is excellent from the standpoint of stabilizing the share price and creating accretion.
InterOil Corp. (IOC/$54.45/Outperform) announces $50 million buyback. After recent weakness in the stock price - giving back essentially all of its year-to-date gains over the past month, largely due to a longer-than-expected timeframe for the exploration program - InterOil has announced a $50 million share buyback authorization. This equates to 2% of shares outstanding. The authorization is valid over the next 12 months. We are big fans of this decision - which marks the first-ever buyback in InterOil's history. Following the resource selldown in March and last month's sale of the refinery and retail marketing assets, there is close to $800 million in cash on the balance sheet, or one-third of market cap.
Given that the stock is trading 30% below our base case NAV estimate, we think the timing of this announcement is excellent from the standpoint of stabilizing the share price and creating accretion. Once the additional Elk/Antelope resource payments are received in 2015, there is room to materially upsize the buyback as well.
