Monness, Crespi, Hardt & Co IOC update 2/03/08

Since we’re at it, here is the next analyst update..

Monness, Crespi, Hardt & Co. 3/02/2009
R. S. Ilacqua, Oil & Gas, 212-838-7575

IOC Update

Interoil Corp (IOC ? BUY ? $22.10): Interoil announced the first test of the Antelope 1 well flowed 382 million cubic feet of natural gas per day with 5,000 b/d of condensate for a total of 68,700 barrels of oil equivalent per day. By all industry standards, this is an unusually large flow rate and a record for any well ever drilled in Papua New Guinea. The test was performed before a large delegation of government, media and industry observers who were air lifted to the remote Antelope 1 location.

We believe the test results confirm that the Antelope structure could hold a huge volume of natural gas and condensate reserves and should set in motion real progress for a strategic partner to join in the proposed LNG facility. Based on the limited data available to date, some technicians are speculating the Antelope structure could be larger than the Arun field, a 1978 Mobil discovery in Indonesia which generated major earnings for Mobil over many decades.

Interoil also announced the company has settled its legal dispute with Merrill Lynch and issued 652,931 shares of IOC stock (subject to a balancing payment at closing) for Merrill?s interest in the proposed LNG facility. We believe Interoil, which will now control two-thirds of the LNG facility will be in a much better negotiating position to bring in a viable partner to help provide financing for the project.

Investors should recognize that the two items Interoil announced today are very important in the development of the company as a fully integrated oil company. We can envision several strategic partners in both the processing of oil and gas and a  larger, more aggressive exploration program on IOC?s vast acreage interests.

Interoil has always been short of cash and we look forward to considerable new capital flowing into this situation which would finance the LNG plant, perhaps a NGL stripping plant and finally an acceleration of the company?s exploration program. We continue to believe the long term investment potential here is open ended and suggest investors continue to accumulate the shares.

2 thoughts on “Monness, Crespi, Hardt & Co IOC update 2/03/08”

  1. Stats from Arun
    For those who don’t know here are a couple stats from Arun.

    * Arun Field is located in the northern part of
    Sumatra, Indonesia.
    * Very large retrograde gas reservoir (G≈20 tcf).
    * Arun Field has 111 wells:
    * 79 production wells
    * 11 injection wells
    * 4 observation wells
    * 17 wells have been abandoned
    *6 Train LNG plant:
    * The first 3 trains were completed for the 1978 startup
    * An additional 2 trains were added in 1984
    * A final 6th train was added in 1986

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