Morgan Stanley Positive on InterOil After Sell-Down
Morgan Stanley has published a research report on InterOil Corporation (NYSE: IOC) after the company's sell-down today.
In the report, Morgan Stanley writes, "Today's sell-down relates to PL237, including the recent T-2 discovery, as the Elk/Antelope sell-down continues. The sell-down is important to IOC for three reasons: (1) it establishes the value of IOC's upstream resource in Block PPL237 at potential value over 4x what is currently implied by the share prices for Elk/Antelope resource, (2) solves potential funding gap in 2012 (cash/carry), and (3) provides leverage in on-going sell-down and operator-ship negotiations. Today's sale price will be $2.65/mcfe for 2C resource after final appraisal is complete, above the $2.41 implied by the Mitsui off-take in 2010 for Elk/Antelope, which compares with the implied price for resource in IOC shares estimated at $0.51/mcfe (IOC current 2C gas resource (9.4Tcfe * 58.6%) /public market cap as of Friday ($2.8Bn))."
Morgan Stanley is currently Not Rated on InterOil, which is currently trading up $2.08 from Friday's $58.35 closing price.
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