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3 Reasons to Buy InterOil

The following video is part of our "Motley Fool Conversations" series, in which energy analyst/editor Joel South and consumer goods editor/analyst Austin Smith discuss topics across the investing world.

With record disparity between natural gas prices throughout the world, liquid natural gas exportation is in vogue, with investors buying into the main players. Cheniere Energy (NYSE: LNG  ) has appreciated 40% so far this year on its future potential of exporting up to 16 million tons per annum of LNG by 2018. The incredible arbitrage opportunity has a number of oil and gas firms moving into LNG, including InterOil (NYSE: IOC  ) . Check out the video below for three reasons investing in InterOil could be extremely beneficial for your portfolio.

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Austin Smith has no positions in the stocks mentioned above. Joel South has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend Chevron. Try any of our Foolish newsletter services free for 30 days. 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 Motley Fool has a disclosure policy.

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  • Report this Comment On June 26, 2012, at 3:55 PM, stratacapital wrote:

    InterOil is likely the next Cove Energy (currently the target of a bidding war between PTT and Shell). InterOIl is in the final stages of negotiating a massively profitable sell-down of one of its resources. Upside is 200%+ from current levels. Next catalysts will be the finalization of the election in PNG and the completion of the partial sell down. Speculation growing that a super major will step in and buy 100% of the company at a huge premium. See my recent Seeking Alpha article.

  • Report this Comment On June 26, 2012, at 6:05 PM, KeepThemHonest wrote:

    I cannot believe this continued 'hype' of this company! I was thinking of investing in it before I read that the claimed gas deposits have not been proven, that the New Guinea Government doesn't believe that Interoil is capable of developing the project on its own, and that it will take 4 or 5 years to make a profit even if it had a partner. The person interviewed claims that this company is doing the evaluations of prospective partners such as Shell.That is felacious! If anything, Shell would be doing the vetting concerning its involvement with a small and unproven company.

    Frankly, I think this interview is irresponsible and a disservice to the readers. In view of the above, I now know where the expression "a Fool and his money are soon parted!"

  • Report this Comment On June 27, 2012, at 1:13 PM, stratacapital wrote:

    KeepThemHonest - Clearly you know little or nothing about InterOil and apparently less about oil and gas investing. InterOil has long-term leases on 3.9M acres in PNG. Under SEC rules, in order for there to be "proven reserves" there must be a binding agreement in place to monetize the resource. This is commonly referred to reaching FID (final investment decision) on a development project. InterOil's Elk/Antelope resource is 9.2 Tcfe (massive) and the company is in the final steps of the process of selling down 25% - 32.5%+ of this resource to a super major or Kogas/Japex/Mitsui. The process is being run by 3 investment banks, and yes, Shell is involved in the bidding. So....yes...InterOil is selecting among the bidders for the best deal. The expected deal structure will include a significant upfront payment to InterOil. Hence, as an IOC investor, you will not have to wait for years to see the results of this deal. Of course, it is also quite possible that InterOil gets acquired before the conclusion of the bidding process. You are either an ignorant short basher or a novice E&P investor. Either way, your sophomoric posting is silly, at best.

  • Report this Comment On June 29, 2012, at 11:57 PM, KeepThemHonest wrote:

    Your comment makes my point even more relevant! It is pure hype designed to draw investors "in" by parroting claims of enormous value for "massive" reserves that will catapult the stock to multiple times it's price! As an 'ignorant' and 'novice' investor I can only say BUYER BEWARE!!

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