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Msg  5018 of 13357  at  5/11/2010 1:57:56 PM  by

nygatoron


My notes from the MS call

The following is transcribed from my personal notes from the Morgan Stanley “InterOil Liquid Niugini LNG Project” conference call hosted by Evan Calio with Henry Aldorf on May 11, 2010. 

 

A word of caution, when I write fast my lousy handwriting is only surpassed by my atrocious spelling, so this is not a complete transcript; rather a recap from the highlights as I took notes.  I used quotes when I was able to write exactly what was said.

 

Evan kicked off the call with reason for this call was to explain how IOC will monetize the 9.1Tcf of natural gas.  He introduced Henry as someone who has run both a start up LNG operation where it never existed and someone who has been with a major exploration company.

 

“This is absolutely NOT stranded gas”   Henry’s opening line.  He had taken a project from nothing to both a stripping plant and an LNG facility in 5 years.  IOC’s current attempt to do this will be easier because there is more gas and more liquids than on his other project”.  There could be over 11Tcf and once it gets underway “additional trains could be added ever 9 months”.

 

“Liquids drive projects.”  PNG is proving to be a very good place to be with low cost, stable government (vs. Middle East or Africa) favorable tax treatment (now vs proposed Henry Tax).

 

“This is not stranded gas, it is very advanced gas”.  No one in Asia that can compete with that.

 

When he was first asked to look at the log results (Antelope 2) he estimated IOC could have as much as 13Tcf.  That is what helped convince him to take this job. 

 

Mitsui partnership: not preliminary agreement, but a development deal to fund the preliminary study.   This is a normal process. Matsui was also the partner with his prior project setting up a stripping plant then LNG with Marathon Oil.

 

Vision is important.  Very profitable to have the right amount of gas and to be able to add (up to 6) plants.  With that you are on par with Qatar for low cost, but only 8 sailing says away from the two largest LNG (premium) markets in the world.  Two countries that rely almost exclusively on importing energy. 

 

‘We don’t have a problem; other should have a problem with us.”  At a cost of $.12 before it hits the LNG plant we are very low cost.  Some others will be over $5. 

 

Henry currently has three people from his MRO team.  LNG plants are a lot easier to operate than a refinery.   IOC has had a refinery for years with no problems.  On his prior project it is easy to cross train refinery workers to run a LNG plant.

 

When asked is IOC would need other companies to complete this project, he said that if needed we could do it all ourselves.

 

Re the Henry Tax review.  It would make some already expensive projects to costly.  IOC already is going to be one of the lowest costs available.

 

Biggest surprises since joining the company: 1) IOC was underestimating their strength to compete because of the low cost advantage. 2) How much the shorts try to manipulate the stock.  How much complete nonsense and garbage they throw when they have no experience in the exploration field.

 

There is a huge misunderstanding regarding IOC stock price.  Once the market starts to understand that, it will be a good day.

 

Evan asked how certain he was they would have a strategic partnership for the LNG this year.  “Pretty certain.  VERY certain”

 

This was just from me listing live once.  I will try to catch the replay tonight to see if I missed anything (or misrepresented anything)

 

Good luck
Gator


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5019 Re: My notes from the MS call CommanderCricket 5 5/11/2010 2:11:58 PM


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