Multiple Questions Remain Unanswered at This Company

Companies in the oil and gas space have been posting performances that beat analyst estimates quite often this quarter, and InterOil (NYSE: IOC  ) is part of that growing list. While its recent performance and the company's prospects for exporting LNG to the Asia-Pacific market may sound tempting, there are a couple reasons why you may want to hold off just a little bit longer before making a decision on InterOil.

With so much of the company's success pinned on picking a partner for its LNG export facility, and with founding CEO Phil Mulacek recently retiring, there are still some questions about this company left unanswered. In this video, Fool.com contributor Tyler Crowe details why these lingering questions should offer enough reasons to hold off on InterOil just a little bit longer.

While waiting to see how InterOil addresses these open questions, energy investors would be hard-pressed to find another company trading at a deeper discount than Chesapeake Energy. Its share price depreciated after negative news surfaced concerning the company's management and spiraling debt picture. While the debt issues still persist, giant steps have been taken to help mitigate the problems, such as choosing a new CEO. To learn more about Chesapeake and its enormous potential, you're invited to check out The Motley Fool's brand-new premium report on the company. Simply click here now to access your copy.


Read/Post Comments (6) | Recommend This Article (3)

Comments from our Foolish Readers

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  • Report this Comment On May 21, 2013, at 3:30 PM, jmu1986 wrote:

    If you wait until they announce a partner the price will be well over $200 per share. It may go higher based on Triceratops but we will see.

  • Report this Comment On May 21, 2013, at 4:32 PM, kencooksam wrote:

    When you figure out the answers its to late on Wall Street. The market looks ahead. The CEO decision was discussed on the CC and they are seperate to the sell down. If anyone thinks the 3 Super Major bidders will care about an IOC CEO when they will control the project is quite naive to the IOC story. I think to write about a stock one should be required to listen to the companies Conference Calls and to read the Management Discussion for the quarter and to review the IOC slides. This writer fails that minimum Due Diligence. Sorry to say.

  • Report this Comment On May 23, 2013, at 10:11 AM, dcgatlanta wrote:

    No proven reserves, no partnership announcement yet, and the founder / CEO jumps ship. There may be a lot of downside to IOC.

  • Report this Comment On May 24, 2013, at 9:09 AM, stretpasin wrote:

    Well, this analysis could not have been further off the mark. The CEO's departure actually removed a roadblock - while the company is an amazing story he was not realistic about the project and his ability to deliver - he held out for too much I think which held the project back for years. International desk analysis the misses local subtleties, context and on the ground knowledge.

    Governance and disclosure could have been better but look who's laughing now. Exxon is now in exclusive negotiations. If they add the Interoil resource to their existing project with most likely another 2 trains the economics of the combined projects will drastically improve from their already strong position. It looks like the short sellers are really going to get wiped out now. The thing is they had no evidence that they were right with all their allegations. Pity the fool who thinks he knows better.

  • Report this Comment On May 24, 2013, at 2:11 PM, dcgatlanta wrote:

    The exclusive negotiations with Exxon are a major red flag. No partner stepped up to build an LNG facility. I believe that is the story today. Exxon already has an LNG facility, so Exxon can make a “no regrets” deal to process IOC’s gas (if it exists) through Exxon’s existing infrastructure. I believe any deal will bring very limited upfront cash to IOC, and may carry onerous financial terms since Exxon’s facility is the only available option to IOC. I think today is a great day to sell IOC.

  • Report this Comment On May 28, 2013, at 9:38 AM, stretpasin wrote:

    Wrong dggatlanta this is no red flag. If Exxon does a deal it is to expand the LNG plant they have 80% built from 2 trains to 3 or 4 trains. Exxon and their partners including Oilsearch want to expand this LNG plant as the economics are compelling and Exxon has now realised that despite the challenges the economics of LNG in PNG are much better than in Australia.

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