New Update from Bernstein

[DixieDog1]

A 20+ page update report following their 3 day trip to PNG was just issued tonight.  Haven't gotten through the whole report yet but it appears to be very positive and well done.

[Petrovale]

Hey DixDog, you don't have to proof read everything before plugging in some headlines here.

Please feel free to do a minor dumpling...

[Petrovale]

Headline: InterOil: Rumble in the Jungle.

Three Days In Papua New Guinea Hunting Down Mega LNG Projects.

Outperform US$90

The outcome of the arbitration dispute with Oil Search over pre-emption rights could be clear by the end of the year.

While PNG would benefit from having two (rather than one) super-major oil companies involved in the long-term, there is little evidence of a preference, and indeed a greater focus on pace of execution than partnership. Although this is a major source of uncertainty for investors, the downside for InterOil seems limited given that Oil Search will have to match the Total deal. Indeed, if the commercial synergies are as favorable as Oil Search believe there could be upside in the case of an Oil Search win.

Bring it on!

If this goes to arbitration, I'm going to stick my finger in a dyke.

[Tree]

"...Although this is a major source of uncertainty for investors, the downside for InterOil seems limited given that Oil Search will have to match the Total deal. Indeed, if the commercial synergies are as favorable as Oil Search believe there could be upside in the case of an Oil Search win."

The above makes no sense.

If there is truly upside for IOC with an OSH arbitration win then wouldn't we demand IOC to negotiate for better terms with OSH and then drop arbitration defense?

It cannot be true that their is no downside for IOC with upside only with an OSH win.  

LT it is clearly beneficial for IOC/Shareholders to have TOT as a partner, competetive bidder, for future development of future IOC resources.  

[jft310]

The govt wants 2 Super Majors not sure see what happened to Phil M when he went against the govt . OSH is not a Super Major . Exxon was not a party to the sale .

[2126]

[quote='DixieDog1' pid='51822' dateline='1415674278']

A 20+ page update report following their 3 day trip to PNG was just issued tonight.  Haven't gotten through the whole report yet but it appears to be very positive and well done

Can you post a link to it?

[ArtM72]

"...Although this is a major source of uncertainty for investors, the downside for InterOil seems limited given that Oil Search will have to match the Total deal. Indeed, if the commercial synergies are as favorable as Oil Search believe there could be upside in the case of an Oil Search win."

The above makes no sense.

If there is truly upside for IOC with an OSH arbitration win then wouldn't we demand IOC to negotiate for better terms with OSH and then drop arbitration defense?

It cannot be true that their is no downside for IOC with upside only with an OSH win.  

LT it is clearly beneficial for IOC/Shareholders to have TOT as a partner, competetive bidder, for future development of future IOC resources.  

You're answering your own question, Tree.  The upside/downside is whether you are looking long or short term.

Most here seem to have the long term view where we believe future IOC discoveries will hold higher value when there are competing LNG plants.  Short term OSH at least has to match Total's offer which at least guarantees IOC will be, short term and by definition, at least as well off as it would be with Total.  I still can't quite see how that happens without IOC ownership of new trains at PNG LNG .  That of course could move cash flow forward and be beneficial.

With government preapproval  OSH would presumably then sell its added shares to other PNG LNG partners and the project moves forward immediately, perhaps staged with the first train supplied by the existing transmission pipe while the second pipe gets laid.

It will be interesting to see the gamesmanship undoubtably to be played with release of the A4 drilling results.  Lots of competing interests there.  With spudding having occurred mid September we are approaching 8 weeks which should have put the bit into if not through the reservoir formation.  After all, this is familiar territory and drilling at E/A should be if anything faster than slower.

Hession has done a pretty good job resetting my expectations on the conference call.  While there should be a ton of new information provided with at least five well sites active we will do well hearing about anything more than Safe Harbor.

[Gator]

PDF attached

[Palm]

Thanks Gator

[2126]

Thanks very much, Gator!