Denintex on IOC from Yahoo - interesting way to look at IOC
WS loves big. It does not spend big for small with no prospect of becoming prosperously big. Each report is showing IOC getting bigger: 1) its discoveries are bigger well to well; 2) its oil prospects are bigger and better well to well; 3) its condensate levels are bigger well to well; 4) its LNG plans are bigger -- now, not one plant, but two; 5) its bidding attraction is bigger, Mitsui at the door, nations reportedly wanting in.
The Bakken "Big" is an oil play carved among many players. WLL sells at $70, but it is only one of many players in the Bakken. The PNG is a "Gas-Bakken," perhaps an "oil- Bakken," and multiple fields may connect to Elk/Antelope. Unlike the Bakken which must be shared with many companies, the "PNG Bakken" has only player, IOC. Yet, WS values WLL as one of many Bakken players at $70, and IOC as the only "Bakken PNG" at $78. Yet, WLL has: ) no stripping plant, 2) no LNG prospects,3) no Asian Pacific bidders 4) no Asian Pacific presence, 5)no refiner. By comparison, WLL is small and priced big; IOC is big and priced small.
If the Antelope-2 well were produced at the test rate, it could supply two LNG trains with no help, and five such wells could beat the output in Barnett Shale, the hottest US gas play. Combine the share prices of all Barnett producers you need to get to the gas production IOC now has from just three wells, then assign that share price to IOC. Do you get $78 a share? Should the PNG be priced less because PNG gas is cheaper than it is priced in the Barnett, or because the PNG is a less attractive geographic play? PNG gas is priced higher than US gas; IOC's gas will service a far bigger region with far bigger demand: China, India, Korea, Japan, Indonesia, etc. Barnett adds to a US gas glut. IOC provides to a gas-starved Asian Pacific. By comparison, Barnett producers are small, priced big; IOC is big, priced small.
To cite another example, AEZ sells at $4 in the Bakken with not a single discovery, while IOC sells at $78 with two world-class record breaking discoveries, on an inter-connected canvass of operations growing bigger and bigger: 1) 4 million acres of gas/oil treasure that has one player, IOC, so large it may extend out into the sea; 2) PNG condensate has one player, IOC; 3) PNG has one refiner, IOC; 4)the PNG oil play has one company, IOC; 5) the most cost-effective Asian LNG plant is with one player, IOC; 6) the cheapest resource gas finding costs are with one player, IOC.
WS has a long ways to go in understanding just how BIG IOC is. In failing to assess the bigness of what IOC has as its bigness extends from one operation to another, one big bidder to another, one big Asian Pacific market to another, one big discovery to another, IOC, a growing and healthy giant, is being priced as though it is a midget.
I don't think that even as investors we have a handle on just how rich our gold mine is -- $200 a share? Dirt cheap |
