What Happened to InterOil?

By Dan Caplinger | More Articles
December 14, 2011 | Comments (5)

As 2011 comes to a close, it's a great time to look back at what happened to the stocks that interest you. By making sure you know the important things that a company accomplished -- as well as the setbacks it experienced -- you can make a better decision about whether it's a smart investment for your portfolio.

Today, let's take a look at InterOil (NYSE: IOC ) . With its operations squarely focused on the booming natural gas industry, InterOil has looked poised to benefit from efforts to increase demand. Yet the stock has still suffered throughout 2011. Below, I'll take a closer look at the events that moved InterOil's stock this year.

Stats on InterOil

Year-to-Date Stock Return	(28.5%)
Market Cap	$2.21 billion
Revenue, Trailing 12 Months	$1.02 billion
1-Year Revenue Growth	24.5%
1-Year Profit Growth	NM (loss of $31.4 million over past 12 months)
CAPS Rating (out of 5)	*

Source: S&P Capital IQ. NM = not meaningful.

What happened to InterOil this year?
The biggest event for InterOil in 2011 has been its ongoing controversy over its planned liquefied natural gas project in Papua New Guinea. Initially, InterOil had planned to do a relatively small project, but the Papua New Guinea government rejected InterOil's plans and demanded a larger plan. That sent InterOil to Morgan Stanley (NYSE: MS ) and UBS (NYSE: UBS ) to try to find a partner for the project.

The fact that George Soros is a major investor in InterOil has also caused some ups and downs. While the backing of the investing giant is obviously a vote of confidence for the company, Soros is planning to return outside capital in his fund to investors, which could require sales of his position in the stock.

Still, although natural gas prices remain depressed, the appetite for LNG appears to be rising. With companies including ConocoPhillips (NYSE: COP ) , Dow Chemical (NYSE: DOW ) , and Cheniere Energy (NYSE: LNG ) working on LNG projects that won't be ready until 2015, the race is on to make importing and exporting liquefied natural gas a viable option.

Currently, the stock's weak performance reflects concerns not only about the LNG project but also about whether the company's gas fields in Papua New Guinea will pan out as well as expectations. For now, though, pessimistic investors have won out in 2011, but the future may be much different for InterOil.

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Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.

Read/Post Comments (5) | Recommend This Article (3)

Comments from our Foolish Readers

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Report this Comment On December 14, 2011, at 1:16 PM, rockymtn9 wrote:

Soros was also a big investor in Apex Silver mines, a speculative natural resource play which eventually went to zero. Soros is far from a sure thing. The fundamentals in both this case and Apex are highly questionable.
Report this Comment On December 14, 2011, at 2:09 PM, 2timfoolery wrote:

Did you write much of this 2 years ago? You have missed the "kiss and make up" session between IOC and the PNG government a month ago. You have not mentioned the current political turmoil that has tanked the stock much in the last two days, which might be your real news. You have not recognized that Soros has added to his stock position as well as many call options throughout the year, even as he has announced closing out private investors from his fund. You make no distinction between the US NG industry and its LNG drivers and the very high demand for LNG in Asia, as well as its high prices. You make no mention of Asian governments moving to lock up LNG. You do not mention the tsunami-nuke disaster in Japan and its moves to LNG to replace nukes. You do not mention the several agreements in place in the last month with various partners to take and sell the LNG. You left out another investment bank in its bid for a major. You left out the fact that the company and prospective partners are finalizing bids now, with final decisions on various fronts due in weeks or months. You have left out the facts that it has the two largest NG wells in the world-- its Antelope wells, and that the Elk/Antelope field is likely 9 trillion cubic feet of natural gas. You left out that the company has paid for seismics showing a great many reefs and deep payzones of many hundreds of feet. You left out the fact that the Bwata/Triceratops field may be bigger than Elk/Antelope.
So in summary, your article is mostly pointless, most generally incomplete, sometimes misleading, and certainly short on germane facts. Not a real analysis at all.
Report this Comment On December 14, 2011, at 4:17 PM, TMFGalagan wrote:

@2timfoolery -
In an article of this length, I necessarily have to pick highlights and leave some things out. I appreciate your filling in some recent events, although I'd still argue that the stock's poor performance shows that most investors aren't as optimistic about the company's outlook as you appear to be.
best,
dan (TMF Galagan)
Report this Comment On December 18, 2011, at 4:29 PM, lovesstocks2 wrote:

An article should not be about how most investors feel, it should be an accurate analysis of the pros and cons of the stock as balanced as possible so that investors can weigh the pros and cons for themselves. This article states one conclusion after another while missing many of the major facts that have been and continue to affect this company.
Conclusions should be left up to the reader, information and where to find it is always the key.
Report this Comment On December 21, 2011, at 6:47 AM, rodessa wrote:

I fully agree with rockymtn9 : a very speculative natural resource play which could eventually fall down to zero in the coming months. Soros is far from a sure thing. The fundamentals are highly questionable according to australian geophysicians.

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