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.
So what: Total is buying a gross 61.3% stake in InterOil's petroleum retention license 15 in Papua New Guinea, including the Elk and Antelope fields. Fixed payments for the purchase will include $613 million on closing, $112 million in final investment decision for a new LNG plant, and $100 million at first LNG cargo from the proposed plant.
Now what: This is a lot for InterOil to give up and investors clearly aren't impressed with the price. But talks with ExxonMobil had slowed and Total was a logical partner because of its interests in the area. There's upside if production exceeds 3.5 Tcfe, but we're a long way from that paying off for investors.
The bottom line today is that investors feel that InterOil gave up too much for too little from Total and that's why shares fell like a rock.
Stocks you can buy in energy
Not every energy stock is as high risk as InterOil and The Motley Fool is offering a comprehensive look at three energy companies set to soar as the industry finds new sources of energy. To find out which three companies are spreading their wings, check out the special free report, "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free.