It’s a little older (17th of September), but still quite interesting..
Monness, Crespi, Hardt & Co. – 09/17/09
Sal Ilacqua, Oil & Gas, 212-838-7575
InterOil Corp (IOC – Buy – $34.39): InterOil announced the Antelope 2 well has encountered reservoir rock at 6,007 feet, some 345 feet higher than pre-drill expectations. The target structure based on seismic data has been some 2,000 feet from about 6400 feet to total depth at about 8300 feet. Pending further drilling, the Antelope structure could have a thickness of as much as 2300 feet, a depth largely associated with the huge Middle Eastern reservoirs. The well is currently being cased and we suspect drilling will be resumed within the next two weeks.
While it is very preliminary to discuss potential oil and gas reserves, it now appears that the reservoir between the Antelope 1 and Antelope 2 wells could be over two miles horizontal and over 2,000 feet in depth, a major structure that should contain many trillion cubic feet of recoverable natural gas. Beyond the potential for natural gas, there is a strong possibility of significant reserves of condensate and or crude oil at the bottom of the Antelope structure. IOC has ordered equipment for horizontal drilling that could be used to produce any liquids and at a minimum we presume some type of natural gas liquids stripping operation will be developed around the Antelope structure.
We suspect that today’s announcement will induce those strategic investors biding for participation in InterOil’s proposed LNG export facility to accelerate negotiations toward an attractive financial arrangement and could well be finalized in the next few months. Today’s news should also have a meaningful impact on the IOC common shares which should easily surpass the 50 level in the next few months with an open ended upside potential pending additional drilling results. We would not minimize the potential impact from any future indication of potential reserves of condensate or crude oil at the bottom of the Antelope 2 well. Finding additional liquids would add an entirely new dimension to InterOil and to the IOC common shares.