Mr. Phil Mulacek Releases Presentation to Shareholders of InterOil Corporation and Media, Schedules Conference Call.
HOUSTON, July 25, 2016 /PRNewswire/ --
- InterOil shareholders will forego billions of dollars of value, including the five (5) cash payments TOTAL, S.A. has already agreed to make under its existing 2014 agreement with InterOil, unless the current proposal from Exxon is modified.
- Presentation offers detailed analysis of the CRP portion of the XOM Proposal and presents constructive suggestions that would be fair to all shareholders.
- Exxon urged to improve the fairness of the CRP for InterOil shareholders.
- Conference call scheduled for 8:15 a.m. EDT on Tuesday, July 26, 2016.
In his presentation, Mr. Mulacek outlines the potentially multi-billion shortfall for InterOil shareholders if the contingent resource payment ("CRP") part of the XOM Proposal, as announced on July 18, 2016, proceeds as currently structured. "I believe the XOM CRP is vastly inadequate for InterOil shareholders. InterOil shareholders give up (i) all material payments InterOil was to receive from TOTAL, S.A. ("TOTAL"), under its 2014 agreement with InterOil, (ii) the value of the remaining 36.54% interest in PRL 15 that InterOil holds, and (iii) InterOil's exploration acreage and other resources, in exchange for the XOM stock and a potentially manipulative and structurally flawed CRP that fails to properly account for the value of the five (5) agreed cash payments from TOTAL and enormous upside potential of the Elk and Antelope resource."
"The recent certification of the Elk and Antelope resource, which Oil Search Limited ("OSH"), recently conducted in connection with its purchase of a minority interest in PRL15 in 2014, shows an average estimated 2C resource of only 6.43 tcfe. This is materially below the 10 tcfe estimate OSH suggested during a recent conference call on that transaction, and provides strong support for our view that the CRP as proposed by XOM would have only a minimal value unless modified. For example, if the Oil Search estimate were applied to the XOM CRP, it would yield only about US$1.62/share."
"Our main concern is that the XOM CRP is based only on a single resource estimate performed after Antelope #7 and before any gas or LNG is produced, which will not fully reflect the true resource size. To correct this, the XOM CRP must provide for recertifying the resource after production is underway and for supplemental payments based on the recertification, in each case back-to-back with similar recertifications and payments under the existing TOTAL agreement with InterOil. This is reasonable and fair to both parties," he said. "Not modifying the XOM CRP in this matter will damage the InterOil shareholders by hundreds of millions to over 1 billion dollars," Mr. Mulacek continued.
Mr. Mulacek commented that the proposed modification is also very similar to Exxon's proposal during discussions in 2013, and would allow both InterOil and XOM shareholders to capture a fair portion of the value of the five TOTAL cash payments while still leaving significant upside for Exxon.
Mr. Mulacek also noted his concern about the lack of input by InterOil shareholders in the certification process that underlies the CRP, which will be managed by Exxon and TOTAL. "InterOil shareholders have no effective advocate for their position in the current XOM Proposal. InterOil shareholders must have the opportunity to interact directly with the certifiers to protect their interests," he said.
"Exxon is a well-respected company, and we urge them to amend the XOM CRP and certification review process to provide a fair outcome for InterOil shareholders as well as Exxon."
The presentation also questions the abusive amount of stock recently taken by IOC board and Management and the cash compensation over the past 2 years while shareholders have lost billions of dollars.
"According to our information, retail shareholders largely opposed the 2016 InterOil Stock Plan while certain institutional shareholders largely supported it, but perhaps without fully understanding that the InterOil Board would issue all of the newly authorized shares within 2 months. Combining these shares with break-fees paid to OSH and excessive cash bonuses and salaries paid to the Board and Management, you get approximately US$4.25 per share of waste. How can approving such outright waste be in the best interests of the institutions or their stakeholders?"
Finally, the presentation points out some questionable trades by members of the current Board and management of InterOil that were made during January and February, 2016, while the previously announced OSH/TOTAL proposal and an early offer from Exxon were under active consideration by the InterOil Board but had not been publicly disclosed.
Please review Mr. Mulacek's presentation, to be available at www.ConcernedInterOilShareholders.com.
This press release contains forward‐looking statements. All statements contained here that are not clearly historical in nature or that necessarily depend on future events are forward‐looking, and the words "anticipate," "believe," "expect," "estimate," "plan," and similar expressions are generally intended to identify forward‐looking statements. These statements are based on current expectations of Mr. Mulacek and currently available information. They are not guarantees of future performance, involve certain risks and uncertainties that are difficult to predict, and are based upon assumptions as to future events that may not prove to be accurate or may be under the control of unrelated third parties. Mr. Mulacek does not assume any obligation to update any forward‐looking statements contained in this press release.
For additional information on this press release please contact Mr. Mulacek at +1 (832) 510-7028, or by email at firstname.lastname@example.org.
SOURCE Petroleum Independent & Exploration, LLC