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InterOil Shares Plunged: What You Need to Know

By Travis Hoium | More Articles
October 4, 2011 | Comments (5)

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of InterOil (NYSE: IOC  ) fell 12% today as pressure on the company’s liquid natural gas, or LNG, project continues.

So what: Last week, InterOil’s shares plunged after Papua New Guinea’s government said the current LNG project the company is planning doesn’t meet their previous agreement. Today, shares are sinking after the company hired Morgan Stanley (NYSE: MS  ) and UBS (NYSE: UBS  ) to find a joint partner for the LNG project.

Now what: InterOil almost certainly needs a partner for the project simply based on the size the government of Papua New Guinea is requiring. The question now becomes how good, or bad, the terms of that venture will be for InterOil. LNG is attractive when oil prices are high, but with oil sinking it’s hard to see why experienced LNG operators will bid attractive prices for the project.

Interested in more info on InterOil? Add it to your watchlist by clicking here.

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Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 04, 2011, at 4:18 PM, foolsrushinwhere wrote:

    IOC will be back!

  • Report this Comment On October 04, 2011, at 4:34 PM, foolsrushinwhere wrote:

    Thre's some shorts out there that will regret it!

  • Report this Comment On October 04, 2011, at 6:36 PM, Ventureshadow wrote:

    This is about NATURAL GAS and NOT OIL. Japan pays FOUR times what the US does for natural gas. Japan is now paying $16 per MMBtu, the UK pays $8, and the US pays $4. IOC is all about shipping to Japan and China, where nat gas prices are so very high. All Japan's nat gas comes from Alaska right now.

    Motley Fool guys, do you just make up this stuff as you go along or do you actually investigate before posting?

  • Report this Comment On October 06, 2011, at 4:20 PM, twicefooledagain wrote:

    Obviously the fool has done more research than you think. There is a significant relationship between the spot price of oil and the price of Natural Gas. That is clearly what the author of this piece is referring to. Don't just the gun on your analysis of the writing here just because you jumped at the word oil without reading the context.

  • Report this Comment On October 09, 2011, at 3:49 AM, rodessa wrote:

    Why 10 years to buid again the old refinary transported from Alaska, why have to wait until 2015 to begin the production, why australian geophysicians and perhaps the PNG government not trusting in the reserves, as not proven for now, as no report NI43-101 to prove the reality of these reserves.If some hedge funds are shorting massively IOC, they must have good reasons ! $259 millions of cumulated losses as of march 31,2011... can be another good reason, more the big annual increasing of the number of shares diluting the results (generally losses!)

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Related Tickers

5/25/2012 4:02 PM
IOC $64.42 Up +2.09 +3.35%
InterOil Corp (USA… CAPS Rating: *
UBS $11.56 Down -0.14 -1.20%
UBS AG (USA) CAPS Rating: **
MS $13.25 Down -0.06 -0.45%
Morgan Stanley CAPS Rating: ***

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