Some necessary history..
A certain poster called Bostonkenmore (now in his fourth iteration as Yahoo has removed many previous message from him) has a habit to show up and spew a host of innuendo and outright lies with a remarkable quantity. Yet he has no position in InterOil. Here his motivation in his own words:

• I made my money shorting the stock from the mid 20s to $11 a share and have not shorted since. The problem with shorting a fraud is that the lie can continue longer than you can stay solvent. My interest is uncovering the fraud and making sure that Mulacek, Civelli, and stpioc spend many years in jail for what they have done. I can’t say exactly when the fraud will be uncovered but my guess is that by Christmas 2010, Mualcek will be led away in handcuffs. When that happens I don’t see how Interoil can survive as a viable entity.[Bostonkenmore]

Well, is writing lies and twists a credible way to uncovering “fraud?” We’ll let you decide. Here is a small fraction of his writings (we can’t be bothered to go after all of the misleading postings by him, that would take a full working day).

Lies about the liquids

• [Boston: Secondly, as I have stated research shows that their claims of condensate are physically impossible.]
• [Boston: There are no condensates here. Look at the flare.]

Look at the flare for liquids??! Huh?!

• [Boston: Lex to repeat myself. It is physically impossible for there to be condensate in the well.]

The liquids are confirmed in multiple third party executed DST results and GLJ has quantified them (P2) as 156.5MMbbls. So if Boston is right, IOC must have falsified ALL of these DST results. I put that ten times to him, yet he would not say that. In fact, he previously argued IOC hasn’t falsified DST results

• [Boston: for the record I do not believe that the fudged the DST test]

Lies about the dolomite

• [Boston: In fact, there is considerable evidence that Interoil is lying about the dolomite.]
• [Boston: Dolomite is only found on the surface of the limestone and when its found its found in abundance. If it were there you would see it just walking around the area. Plus that’s the first place you’d drill, because its an excellent rock. What you propose, is that Interoil after five years of owning the licence and drilling many other holes, is just now finding something that they could have found just walking around. I call BS on that.]
• [Boston: Dolomite is the only thing that makes their thesis plausible.]

Now, according to Bertoni, the geologist hired by Barry’s Fraud Discovery Institute:

• [the upper 746ft (227m) consist of dolomite reservoirs with porosities of 13% up to 30% while the lower part is composed of the same limestone reservoirs previously found in other wells drilled in the region (Elk, Puri and others) with an average porosity of 7%.]
• [The Antelope structure consists of a large reefal construction, structurally higher than the adjacent Elk gas discovery, which was exposed to extensive dolomitization during periods of subareal exposure; this led to the formation of the upper dolomite sequence, which is unique to the Antelope prospect and has not been observed in other wells in the area.]

And of course, Antelope 2 has an even larger section of dolomite with 14% average porosity

Porosities of 13-30% not high?

• [Boston: It is completely untrue that Antelope has “some of the highest porosity or permeability known”. Besides, the size of the veritcal payzone has ZERO to do with the sustainability of the flows.]

So a vertical payzone of 1 centimeter would flame out as fast as one of a kilometer? Eeuhh…

• [Boston: It is also completely false that Bertoni did not present any evidence that the flow rates would deplete after a couple of days. Such depletion is characteristic of the type of geology at Elk/Antelope and is exactly what has happened to every well drilled in the area.
• [Boston: Why would Interoil get different results than a well drilled right next door on the same rock?]

Euuh, well, because it’s another resource altogether? Even two wells in the SAME resource can give vastly different results. And every other well in the area?

And read also this, from Bertoni the geologist paid by the shorts [p.13]:

• [The Antelope structure consists of a large reefal construction, structurally higher than the adjacent Elk gas discovery, which was exposed to extensive dolomitization during periods of subareal exposure; this led to the formation of the upper dolomite sequence, which is unique to the Antelope prospect and has not been observed in other wells in the area.]

“UNIQUE to the Antelope prospect and has not been observed in other wells in the area” yet Boston compares it to the Puri-1 well in a different, MUCH smaller and shallower resource altogether and argues Elk/Antelope should behave like that… Hmm…

Extensively explored?

• [Boston: the company is drilling in an area that has been extensively explored by major oil companies over a period of forty years. None of them have found anything and all of them have stopped drilling in the area.]
• [Boston: Most importantly, the company is drilling in an area that has been extensively explored by major oil companies over a period of forty years. None of them have found anything and all of them have stopped drilling in the area.]

In his own words, it’s his most important argument that IOC is a fraud

• [Boston: No matter who invests in this company, it doesn’t change that fractured carbonate of Eastern PNG has been heavilly explored over a period of fourty years. It has been explored by almost every oil company that you could think of, from Horizon Oil, to British Petroleum. Despite this exploration, no one has ever found a thing. Neither will Interoil.]

InterOil not having found a thing?? What about Elk/Antelope? Not any of the previous license holders found that (let alone drilling, testing, coring it..)

From the Oil and Gas Investor Magazine

• lnterOil entered Papua New Guinea in 1999 when no other cornpanies were drilling the Eastern Papuan Basin. Operators had found gas in the basin in the 1950s and 1960s, but, without ready markets, drilling faded. Except for the lnterOil wells, only two wells had been drilled in the basin since 1970. During the same period, 39 wells were drilled in the rest of the country. InterOil has tallied a series of firsts for the country: It was the first to run Falcon gravity and magnetic surveys and the first to use a Chinese built drilling rig that could be moved by helicopter and had the capacity to drill horizontal wells. It was the first to use downhole-deployment valves so it could use managed-pressure drilling in the producing carbonate section that ran some 2,400 net feet of pay in the Antelope-1. The dolomite was so permeable, the company lost fluids to the formation while drilling. Managed-pressure drilling helped solve the problem. It even used two downhole-deployment valves on the well. It also was the first to take sidewalls cores under pressure.

So:
– only two wells were drilled previously
– previous license holders haven’t discovered Elk/Antelope, let alone drilled and tested and cored it
– IOC discovered it by using novel seismics methods

By the way, Boston announced this ‘fraud’ (without wanting to give any details) ON THE EVENING before the FDI came out with the Bertoni (a geologist) report. Coincidence? You decide..

That geologist report is so general that Morgan Stanley argued it’s “not meaningful” (in a September 18 2009 report), and in a recent (March 29 2010 report) they rubbish the FDI’s claims some more. One might also wanna consider

• what Minkow made of the Bertoni report (it ain’t pretty)
• and the supposedly main ‘risk’, pressure depletion
• Consider also that after the Bertoni report, the resource has been proven out 2.2miles by the successful Antelope 2 well

And some more Boston “realities”…

• [Boston: Interoil claims that their wells are cheaper to drill than Oil Search’s. This claim is in fact true.
• [Boston: The wells will collapse if they are drilled deeper. Why do you think they are so inexpensive to drill? Its not a theory.]
• [Boston: Isn’t it strange that Interoil would show two nearby wells as zeros, yet a short time later suddenly have the world’s largest natural gas find on the same PRL? Any geologist you talk to will tell you that its impossible to have as large a hydrocarbon find as they say they do, yet have wells right next door that were zeros.

The middle one is especially hilarious, it’s a new version of his “collapsing well” theory (see below), now wells “collapse” if you drill them deeper (but why should they?)

Boston lying about resource

• [Boston: “Does labelling gas in the ground resource, rather than reserve change, in any way, the assessment of the QUANTITY that’s in the ground??” Yes it does. It makes it much more likely that the quantity is ZERO. That’s why the SEC doesn’t allow you to book a resource as an asset.

Put this into context by the following characterization from a petroleum engineer:

• [Petengr1: “Proven Reserves” is a term defined by the SEC. In order to meet the definition established by the SEC there has to be plan in place to monetize the reserves. I will take an FID (Finial Investment Decision)to go forward with the LNG plant and pipeline to call the natural gas resources “Proven Reserves”. The same is true for the condensate reserves so an FID for the stripping plant would allow IOC to call the condensate resources “Proven Reserves”. Regarding the “Certified Resources” this is the number determined by a third party Reservoir Engineering Firm to be the actual recoverable gas and liquid reserves based on all of the technical data available i.e. cores, logs, tests, seismic data etc. So the “Proven Reserves” and the “Certified Resources” are exactly the same number, they just can not be referred to as “Proven Reserves” until there is an approved plan to monetize the reserves.]

• Another geologist (expat) blasts him for his geological distortions (see the first 8 links in the article)

Advance knowledge?

• Boston seems to have known a day in advance about the upcoming Bertoni report
• Not for the first time he seems to be in tune with the FDI campaign

Some more funny stuff

• Boston denies they’ve done a DST at Antelope2
• A Bostonkenmore Special Moment
• Boston typed by other poster (seems very well on the mark to us)
• Interesting post about Boston on other board

We earlier covered a trail of a certain Bostonkenmore, literal quotes with links to the original posts (an honour which he would rarely bestow on us). He has a habit of calling reminding him of his past posts as ‘personal attacks’. Here is our earlier history on this nefarious person:

1. They didn’t measure the pressure at Elk1 and argues the well can collapse to zero over dinner
2. His hero put a a price target of $0-$3 in… 2006 and has a go at Wayne Andrews
3. Falsly Argues that Clarion’s supposed sale of a 7.5% stake in Elk (a deal that never materialized) implied a valuation
4. He attacks InterOil’s geological model (but even Ross Smith Energy Consultants had to ultimately agree that it was right) and argues the wells can ‘collapse’ (and one only have to phone OilSearch to find out!)
5. Using hilariously false definitions of matrix porosity (but nevertheless using them to slam the company, which can only be bad intent)
6. “Off course there is an incentive to keep drilling in an area where they know there isn’t any gas”
7. Denying naked shorting exist
8. For a year he argued Elk1 was a dry hole but now calls it a ‘mistake’