With two opposing articles, no less. One is easily identifiably better though…

Here is the pro-IOC article, here the contra-IOC one. Now, some quotes from the latter and our comments, the quality of the article leaves quite a bit to be desired…

[“So these pools of oil and gas, if they even exist, may be not be technically recoverable or commercially viable.”]

• No doubt these “pools of oil and gas” exist and are technically recoverable, per GLJ, the independent resource auditor
• Whether they are economically recoverable see Deal time for InterOil

[“yet it keeps moving on from one field to another, with no production to show for all this exploration. Over three years ago, the CEO claimed that gas flow was so strong that controlling it “was sort of like trying to stop the Mississippi.” So … where’s the gas”]

• NONE of the fields prior to Elk/Antelope had productive gas or oil, so there was logic to keep moving from “one field to another”
• Only now has IOC amassed enough gas and independent verification as to embark on production, although it needs to construct large facilities (infrastructure, condensate stripping plant, LNG plant) to be able to do that
• The Mississippi quote referred to a situation in which InterOil was not prepared for the pressures they encountered during drilling  Elk1 in 2006 (which was several magnitudes larger than anything they encountered before and much larger than any well from OilSearch) and as a result, they almost lost the well. They had to embark on significant efforts to control the well and as a result, there was even an insurance pay-out

[“The refining results are enigmatic. InterOil runs a simple hydroskimming refinery. According to one analyst, similar operations throughout the industry ran a negative crack spread of close to $5 a barrel. Somehow, InterOil averaged $8 a barrel of profit.”]

• The author seems blissfully unaware of InterOil’s IPP (import parity pricing) with the PNG government, which allows InterOil to charge the same prices for refined products in PNG as it would cost them to import from Singapore.

[“There is also a reasonable possibility that the stock is being manipulated. For instance, on Jan. 20, 2010, this simple press release caused an 11% rise in the stock: “InterOil Corporation today announced confirmation of indications of oil in the Antelope-2 well in Papua New Guinea. The Company is continuing to test whether the zone contains commercial quantities of oil and will announce the results of these tests when the evaluation has been completed.”]

• Petromin came first with that oil show PR, InterOil had to clarify, which they did by stressing that testing the zone hadn’t yet proceeded so one could not conclude they found commercial oil
• Nobody disputes the oil-shows and only testing can provide an answer to whether it was a commercial find. Until those test results came in, not even InterOil could answer that question

[“InterOil hypes its gas fields as “world class,” even though the resource is officially “undiscovered” … that is, the company does not really know how much gas or oil is in its main property”]

• Undiscovered doesn’t mean it’s not there.
• World-class refers to the flow-rates, which set two consecutive world records (and the size of the vertical pay-zones are world-class as well)
• No, appraisal is not finished (although the instant pressure recovery, the distance between the wells and the similar pressure regimes in the wells, as well as GLJ’s report, are all good omens)

[“The fraud investigator Barry Minkow has eloquently outlined both the misleading press releases and downright bizarre behavior on the part of InterOil’s investor relations officers.”]

• Which “misleading” PR’s? There was an ibiz article (a website sponsored by Barry’s FDI) which listed these (without any explanation of why these were “misleading”, but that article was of even more laughable quality.

And one should also note what is ABSENT in this article, amongst others:

• George Soros a big holder, it’s one of his top ten holdings
• Four research firms, Morgan Stanley, Nataxis Bleichroeder, Raymond James, Monness, Crespi, Hart & Co all argue the company is substantially undervalued.
• Nataxis and Morgan Stanley explicitly give the LNG facility a 100% and a 90% probability respectively
• Minkow’s past and short position

We were far from the only ones noticing the holes. And it seems he runs a one person hedgefund.