InterOil’s increasing value proposition

Interesting times..

Disclosure: I am long IOC. (More…)

The three investment banks assisting InterOil (IOC) in selling a part of their Elk/Antelope resource confirmed last Friday that they received several binding bids from parties wanting to participate in the project of monetizing the gas (and possibly the liquids, although InterOil already has an agreement with Mitsui of Japan for this in place, the outcome of which depends on the conclusion of the present deal).

The simple but near inescapable reality of this is that InterOil will have an LNG project partner in the very near future. There are several important conclusions to be drawn from that simple fact. Even a “disappointing” deal would result in:

  • De-risking the whole LNG project substantially
  • Setting the clock ticking towards first monetization of gas and liquids
  • InterOil will receive funds for greatly enhanced exploration and appraisal of other, already discovered resources.

But we’re sure the deal will not disappoint. These investment bankers have been busy for more than a year. Any short-infused doubts about resource continuity has been blown out of the water by the results of the Antelope 3 well. There are at least two supermajors bidding, according to CFO Colin Visaggio:

[Read on here]