InterOil down 10%+, what’s going on?
You could consider the following:
- The shares had a big run-up and technically they were (rather heavily) overbought. We always find it difficult what to advice when shares are technically overbought but a substantial amount of potentially very good news is still likely to come. With today’s sell-off, that problem has been solved.
- Comparable energy stocks like ATPG and SGY are also down rather a lot, so it does not seem to be IOC specific. The excess fall in IOC is probably related to the strong recent run-up and the technical picture.
- The trigger seems to be related to bullish dollar comments out of China, with ramifications for the oil price (which had been rising on the back of the weakening dollar)
- The company is still very cheap. Raymond James NAV of $48.5 is based on very low resource figures (2.3Tcf) which are essentially pre-Antelope1 (and proven, rather than the more current proven + probable P2 figure of 3.43Tcf)
- We cannot exclude some further weakness in coming days, but picking some shares up seems a good idea to us as there is a lot of potential news possible in the coming weeks and months.
- the size of the vertical payzone
- DST and open hole test
- new significant analyst covering (I’m pretty sure of that)
- liquids info (read this mornings RJ report on how sensitive the economics are to the liquids/gas ratio and how they use the ratio from the top of Antelope2, we all know that can only improve downwards)
- Possible oil flow
- Yes, it can happen: PNG official agreement. Why not..
- Other deals (take-off, farm-out, resource sale, etc.).