Goldman Sachs Adds InterOil (IOC) to Conviction Buy List

(Updated - September 15, 2015 10:18 AM EDT)

Goldman Sachs upgraded InterOil (NYSE: IOC) from Buy to Conviction Buy with a price target of $45, suggesting upside of 33%. Analyst Mark Wiseman thinks recent M&A highlights unrecognized value in PNG. He also pointed out strong flow test results and share price weakness.

"We add InterOil (IOC) to our Conviction List with a 12-mt PT of U$45.00/sh, (33% potential upside) given strong flow test results (Antelope-5 well), share price weakness and the recent takeover approach from Woodside for Oil Search (highlighting industry M&A interest in PNG gas assets)," said Wiseman.

"We expect further well data, resource certification and a major payment from Total SA (GSe US$715mn) in the next 6-12mths. While the market has concerns with LNG & oil market weakness, IOC’s liquidity and uncertainty around resource size, we believe this is overplayed and see 95-105% risked upside in bull scenarios (9Tcf) vs. 15-25% risked downside in bear scenarios (6Tcf)," continued Wiseman.

Wiseman said the key task for InterOil is commercializing its 36.5% stake in the Elk- Antelope gas field in PNG, and the analyst pointed out several catalysts including its ongoing drilling program at Antelope (Sept-Dec 2015), resource certification (1H 2016), and certification payments from Total SA (2Q 2016).

For an analyst ratings summary and ratings history on InterOil click here. For more ratings news on InterOil click here.

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