Why InterOil's Shares Jumped

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 energy explorer InterOil (NYSE: IOC  ) jumped 12% today after the company released earnings.

So what: First-quarter revenue rose 3.6% to $350.3 million and topped the $331.5 million estimate from Wall Street. Net income fell 58% to $4.0 million, or $0.08 per share, but analysts were expecting a $0.12 loss per share.

Now what: The Gulf LNG project is also moving forward with bids to partner received in early March. This is the next big step forward for the company and we should see results of the bidding shortly. I'd like to see profit move significantly higher before getting too excited. This is still a highly speculative play but this first quarter was progress for the company nonetheless.

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  • Report this Comment On May 14, 2013, at 4:08 PM, shirtbrigade wrote:

    Mr. Byker plainly stated the bids are for a sell down of assets, which has been the case all along. However, he also identified that the major oil bidders are supermajor, which has been a bone of contention for the shorts. He also identified that PNG Government is aware of each bidder's identity and local pubs have been saying its Shell. (the successful sell down proposal). The sell down can potentially bring 4-6 billion to IOC overnight. Then, they can drill any number of wells and increase the known reserves by 400% or more. They even stated they are not drilling now to let the partner get in, and get involved in that process. Every theory the shorts have used to short the stock, just caved in. Your waiting for more revs makes no sense at all and has nothing to do with the real catalyst here. How can revs double or triple from here without "unstranding" their massive reserve? There is no local buyer and it has to be processed, sold into ASIA. Your analysis is flawed and would seemingly date back to square one. Do a proper DD. Its PNG. Not mainstream continental play...it has to be exported. How? The question as to how is about to be answered.

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