the hype is in the pipe, page-15

Hi Shamish,

There could be a number of reasons for the 33% drop in Interoil share price yesterday, including the following:
1. The deal with Total is extremely complex and depends on a great many variables.
2. A great many years may pass before Interoil receives up to approx. US3.6billion from Total.
3. Certification of gas reserves may take well into 2015.
4. FID on lng plant not expected before 2016.
5. Total and Interoil may also want to attract another strategic partner (sell down of about 20%). Interoil’s CEO referred to another conference call being held in the not too distant future.
6. Total and Interoil press releass were not consistent, allowing for ambiguities and uncertainty.
7. (Some) shareholders may have expected a ‘better deal’.
8. The market does not understand the new CEO’s strategy (Interoil to focus on being an exploration company) and/or the deal.
9. Shorting may have exploited all this as this would increase the chance of a hostile takeover of Interoil prior to the Total/Interoil deal being formally completed by March 2014.

As far as any implications for EWC are concerned, I was of the opinion that, since the shipment of all four modular trains in mid 2012 from the USA/Europe to Sengkang, that EWC’s focus is on Sengkang and that PNG Gulf is well and truly on the backburner (ie. EWC would not put all its four modular trains into Sengkang if they thought there was still a realistic chance to be involved in PNG). Since then, the 2013 AR did not refer to PNG Gulf project at all. Hence, most investors should be able to have put 2+2 together.

As you say, once the market starts to factor in EWC’s present projects (Sengkang 2mtpa lng plant, lng hub Pagbilao and 600MW Pagbilao power station) the share price will reflect the earnings generated by these projects.