UPDATE: Morgan Stanley Reiterates on InterOil as More Clarity is Needed

In a report published Friday, Morgan Stanley analyst Evan Calio reiterated an Overweight rating on InterOil IOC, but removed the $105.00 price target. In the report, Morgan Stanley noted, “IOC met its year-end guidance and announced its anticipated asset sell-down last night. The sell-down provides IOC with $825MM cash plus contingent considerations based upon appraisal drilling and a Super Major LNG operator to monetize its Elk/Antelope discovery. The agreement also provides for a broader strategic arrangement between the parties. Total appears to be acquiring a 47.5% interest (post Gov't farm-in) in PRL15 for a gross consideration of $1.5Bn to $3.6Bn based upon a three-well appraisal of Elk/Antelope. TOT carries the appraisal well costs and expects that process to be complete in 2015. Given IOC's 58.6% pre-sell-down ownership, the implied value from the deal of IOC's PRL interest is $1.8Bn to $4.4Bn. IOC retains 30% interest in the PRL. The deal value excludes value of IOC's other assets (R&M, Triceratops and exploration) and any returns TOT expects on its investment imputed to IOC's 30% interest. GLJ's P-50 estimate is 9.8Tcfe vs. 5.4Tcfe, the lower end estimate.” InterOil closed on Thursday at $88.63.