- · What the company said: “There will be staged payments before and after production commences to compensate for resource revisions.”
What I think it really means: Nobody knows how much natural gas (if any) InterOil actually has so, again, ExxonMobil will only agree to pay InterOil anything material if it actually has a major find.
- · What the company said: “The purchase of an interest in PRL 15 is not contingent on resource recertification.”
What I think it really means: ExxonMobil will take a stake in InterOil’s resource now, prior to resource recertification, most likely in exchange for a de minimis amount of money.
- · What the company said: “The resource recertification will be used to determine the economic interest in the license and to allocate upstream capital costs.”
What I think it really means: There will definitely be a resource recertification and all of the economics of the deal will be contingent upon what it shows.
Overall, this makes it clear that ExxonMobil has little confidence that InterOil has discovered anything, but is happy to get a nearly-free call option in the (very small) chance that InterOil really has discovered a huge resource.
Appendix B: Endless False Promises from InterOil and Its Founding CEO, Phil Mulachek
- · We are in discussions, a vast number of companies on at least three continents have expressed interest joining our acreage following the Elk-1 discovery and flow test.
– Mulacek April 4, 2007
- · “Strategic industry partner… who has extensive LNG experience” will deposit $42.5mm for 5% of LNG project.
– InterOil Press Release May 24, 2007
- · Over the next quarter, going forward, we look to close the farm-in of our first strategic LNG partner.
– Mulacek Aug. 14, 2008
- · Detailed discussions continue with potential strategic investors as we target a sale of 20% to 25%.
– Mulacek Feb. 25, 2009
- · European partners have been talking to us.
– Mulacek Feb. 25, 2009
- · A number of Japanese companies approach[ed] us, and we are in discussions… over the next two to three months.
– Mulacek May 20, 2009
- · We [gave] access to 30 companies interested [in the project]. We are now trimming [them] down to a few groups.
– Mulacek July 9, 2009
- · We are now in the final qualification and final scoping phase of our LNG program with strategic partners.
– Mulacek Aug. 9, 2009
- · It [InterOil] aims to find a partner to back the project “over the next couple of months” and to make a final investment decision in about a year.
– Wayne Andrews via Bloomberg Dec. 24, 2009
- · We have a number of options in place or under discussion on financing, most of which are tied to our strategic partnering process.
– Mulacek March 2, 2010
- · We expect (to) start construction this year after FEED and FID are agreed.
– Mulacek Aug. 4, 2010
- · We target FID on the condensate plant by the end of the first quarter of 2011 and the LNG plant by mid-2011.
– Mulacek Nov. 16, 2010
- · The current LNG schedule is aiming for FID to occur simultaneously for both the proposed LNG plant and condensate stripping plant by midyear with a proposed combined startup of both operations approximately 30 months thereafter.
– Mulacek March 23, 2011
- · The LNG project schedule for FID is prior to year-end, and all the proposed LNG plant and condensate stripping plant activities.
– Mulacek May 12, 2011
- · The investment banks have also updated the transaction to a large number of community ministers and department heads here in PNG and we are all on track to achieve our transaction goals by the end of this year.
– Mulacek Nov. 15, 2011
- · Most bidders are in the final stages of due diligence and we see the culmination of these bids during the second quarter of this year.
– Mulacek March 19, 2012
- · We are now set to engage with a shortlist of significant LNG industry participants with a view to concluding discussions and entering into an agreement this quarter.
– Mulacek May 13, 2012
- · With the sound backing of the new administration in PNG, we are continuing to work with our advisors to finalize selection of an LNG equity partner.
– Mulacek Aug. 14, 2012
- · We expect to finalize our LNG partner agreements immediately after we conclude with the state.
– Mulacek Nov. 15, 2012
- · Now that the Government’s position has been clarified, InterOil anticipates being able to conclude an agreement for a sale of an interest in the Elk and Antelope resource in Petroleum Retention Licence 15 and the first 3.8 million tonnes per annum Gulf LNG Train to a partner or partners in the coming weeks.
– Mulacek Nov. 16, 2012
- · We’re now in the final stages of our partner selection.
– Mulacek Feb. 28, 2013
For more on IOC, see the following (in chronological order):
• InterOil (IOC): “Major Momentum” Or Just A Castle In The Air? (www.businessinsider.com/interoil-ioc-major-momentum-or-just-a-castle-in-the-air-a-new-investigation-2010-4?op=1)
• Presentation by Lakeview Investment Group (www.scribd.com/doc/114045553/LakeView-Investment-Group-Short-InterOil-Presentation andwww.scribd.com/doc/114045806/IOC-Lakeview-Investment-Group-Invest-for-Kids-2012-Speech-11-7-12)
• InterOil: Three Strikes, You’re Out, And A Beanball To The Head On The Way Back To The Dugout? (http://seekingalpha.com/article/1664602-interoil-three-strikes-youre-out-and-a-beanball-to-the-head-on-the-way-back-to-the-dugout)
6) The Value Investing Congress starts on Monday (Sept. 16-17 at Rose Hall in the Time Warner Center, with my Pre-Congress Workshop on the 15th; for more info, see www.valueinvestingcongress.com, and contact me for a discount code if you want to attend). I’m especially looking forward to hearing Jeff Ubben of ValueAct, which recently got a seat on Microsoft’s board – a remarkable step forward for activists in general. Here’s a WSJ article about it:
Microsoft Corp. MSFT +2.16% is giving a board seat to an activist investor for the first time, a landmark move that comes only a week after Chief
