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Strategies & Market Trends : Value Investing
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From: Dale Baker11/5/2010 11:09:28 AM
   of 78687
 
From: CommanderCricket 11/5/2010 10:40:12 AM
1 Recommendation of 141655

For those who haven't followed the IOC story I want to mention how important today's event is.

The naysayers and shorts have been telling anyone who would listen that IOC would not have enough capital to develop Elk/Antelope (if it even exists - LOL). The only way IOC could develop the field was by selling off a significant percentage, thus limiting the upside for the stock. This is my Cliff Notes version of events.

Over the last 6 months, IOC has turned their entire argument upside down.

They got Mitsui to pay for the condensate stripping facility by offering options on the field (up to 5%) and 50% of the profits run through the plant. They got EWC to commit to building the modular LNG facility downstream of the stripping plant for 14% of the NG produced in the facility.

IOC responsibility for the above is covering the capital costs for the roads, pipelines, jetties, etc.

With today's offering at $75, (which has been mentioned to have been 4x over subscribed) IOC now has enough to monetize Elk/Antelope without doing anything else. They don't need to sell anything and get to start booking the reserves by the end of year. This is dependent on the FID's being approved by EWC and Mitsui which should be a done deal now that IOC has the capital.

Got to hand it management, they did differently and haven't had to give away the goodies.

Still some timing issues but IOC had made it through the toughest part of the monetization process.

Michael
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