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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: Jacob Snyder who wrote (180101)8/17/2013 6:48:07 PM
From: teevee1 Recommendation

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InvestLikeAChamp

  Read Replies (1) of 206330
 
Jacob,
Exxon has a very high internal rate of return thresh hold. This alone will make it difficult for IOC to accept Exxon's best offer. Considering that and the time to drill off reserves, then develop, then build pipelines to Exxon's LNG trains, the NPV of IOC's png gas must be very low. I suggest you calculate what IOC is worth without the png "blue sky". That is where the stock price will go. What is holding it up is a combination of a low share capitalization and lots of tightly held stock. I believe the share price will correct, but the timing is anyone's guess. The share cap is only 48 million outstanding and 11.8 million are short. Institutions hold about 70% so there is a p*ssing contest between the longs and shorts. Assuming Exxon is planning very long term, the simplest route for them would be to just make an offer to buy IOC. Figure out what IOC is worth without the png gas projects and then guess at a premium to that price and that is what IOC could probably be bought for if Exxon really wants it. I wouldn't try valuing the png asset at the discounted NPV is probably close to zero.....
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