It’s an interesting question that is now hotly discussed. We asked around a bit, and we don’t claim to have the definite answer, but we do provide a new angle into the discussion…

One cannot go wrong with the SEC filings, one would say. However, the funny thing is that in this case, these might still not be conclusive enough.

That is because there might be a subtle distinction that could have been overlooked. The original investors who paid up the $125M drilling fund for eight wells (for which they picked six of the locations, InterOil the other two) are exploration wells.

However, exploration wells are not the only type of wells InterOil drills. The rights of these individual investors seem to be limited to the eight exploration wells. Whether they have rights to returns from any other wells, well, we didn’t receive any definite answers to this, to be honest.

Reflecting on this, it seems a bit odd. It opens up the possibility that InterOil discovers a resource in one of these eight wells, but choses to drill another couple of wells in the same resource (which they will do anyway, as appraisal and delineation efforts) and produce the resource just from these wells, in order to annul the rights of the IPI holders.

Odd indeed. But it’s one way to reconcile what Phil Mulacek said on an institutional investors day last year, and the SEC filings. And usually very well informed people are backing Phil’s statement up (which indicated that InterOil would own all of the liquids, but that would be after deduction of the 22.5% government claim).