InterOil (IOC) Jumps as Investors Regain Confidence in PNG NatGas

Michael Teague  |

Shares for Australian oil and gas refiner InterOil Corporation (IOC) had added over 6 percent in Thursday trading, hitting $74 per share amid ongoing talks of a deal to sell liquid natural gas to ExxonMobil (XOM) .

While based in Australia, the $3.4 billion market-cap InterOil is what could be called a pure Papua New Guinea play, as the company’s operations are limited to that country alone. InterOil is currently trying to tap some 10 trillion cubic feet of gas off the coast of the island-nation in order to bring it to market.

There has been a great deal of speculation concerning ongoing talks between the firm and its larger peer Exxon. While few details have been made available outside of simple confirmations on the part of both companies that such talks are indeed moving toward some kind of agreement, ExxonMobil is reportedly building the infrastructure that would eventually export the product.

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Given the location, most if not all of the gas retrieved by InterOil would be destined for sale throughout the Asian continent, where countries are for the time being paying the highest LNG prices in the world.

All the same, it has been a rocky year for the company, as can readily be seen in the volatile performance of its stock. InterOil has been under pressure to produce results from the government of Papua New Guinea, and has been shaken up by internal problems, with the resignation of the former CEO back in April after one of his close associates was indicted by the Securities and Exchange Commission for fraud.

Furthermore, the new CEO has recently said that the company should be making new discoveries and have the natgas project running in the next five years, which is quite a ways off given all the money that has already been invested into the Elk-Antelope field.

InterOil’s stock, despite the challenges the company has encountered throughout the year, is not doing all that bad. While shares have lost some 25 percent of their value since hitting a 52-week high of over $106 in late May, the company is still up over 25 percent so far in 2013.


[Image: Port Moresby, Papua New Guniea, Courtesy of Wikimedia Commons]

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