"If you wish to be a success in the world, promise everything, deliver nothing." Napoleon Bonaparte
With a market cap of over $1 billion, InterOil Corp is attracting much attention as being an interesting oil and gas play in the remote region of Papua New Guinea. Yet, Stocklemon believes that profits for InterOil will be as remote as the region in which they operate. InterOil as has associated itself with stock operators of questionable character and has yet to deliver on one promise or meet an expectation. It is the opinion of Stocklemon that InterOil is a lemon because of its history of promotion and its lack of fundamentals that would support this lofty stock price.
What Is InterOil Corp?
InterOil is an odd corporate beast. Its home exchange is Sydney, but the ASX only trades its chess depositary instruments, which convert into shares at the ratio of 10:1. The main shares in InterOil are traded on the Toronto Venture Exchange and most recently traded on the American Stock Exchange.
As a business model, InterOil claims to be vertically oriented, bringing together exploration, refining, and distribution assets in Papua New Guinea. However, we will see that each of these business units is far less than it has been made to appear.
Meanwhile, a number of individuals of dubious repute are involved with the financing and promotion of the company. Stocklemon is a believer in the Cockroach Theory: if you find one, there will be many more. This report exposes enough cockroaches to warrant a call to an exterminator.
Analyst Coverage
The only major firm that has current coverage on InterOil Corp is Raymond James. Analyst Wayne Andrews rates IOC a "strong buy" as stated in his report dated September 30, 2004. In his report Andrews projected InterOil would lose .02 cents a share during the preceding quarter. Yet, on November 15, InterOil reported a quarterly loss of .12 cents..THAT IS A 500% MISS IN EARNINGS and Raymond James upgraded the stock on what they called a "good quarter" and never mention the companies earnings miss.
Raymond James Research Report
Could this possibly be because Raymond James managed the convertible debenture offering that was announced only 4 weeks before this analyst report? Or could it be that the debenture holders just last week converted the debt to common stock? Where is the "Chinese Wall" that is supposed to exist between research and banking?
Another brokerage firm used to cover InterOil. This was Jennings Capital (Canadian Brokerage Firm). Jennings estimated InterOil's 2004 net income at $56.9 million with an EBITDA of $69.4 million. These projections could not have been further than the results that we are seeing .another major disappointment from InterOil.
Jennings Capital Research Report
Something is Rotten Here
In the company's most recent F-10 filing, we read of a $4.5 million dollar loan that was dated June 23, 2004. Yet, nowhere in the filings in either the US, Canada, or Australia do we read of the terms of the loan. Why would a company the size of InterOil need a loan for $4.5 million? What is most interesting is to see who facilitated the loan...none other than Carlo Civelli's Clarion Finanz.
Carlo Civelli, the mysterious Swiss Financier has been involved in some of the most notorious natural resource stocks in the past decade. Most notable was his involvement with Delgratia Mining, which was the second largest mineral scam ever (after Bre-X). The collapse of Delgratia wiped out $750 million worth of stock market value. Mr. Civelli's involvement was best described in the below article from the Financial Post.
CIVELLI DELGRATIA
Mr. Civelli was also involved in Pinewood Resources which was supposed to find oil in the Gambela Region of Ethiopia. His involvement is described in the below article from Stockwatch.
CIVELLI PINEWOOD
Pinewood now trades on the pink sheets under the symbols PWROF at the price of .19 cents.
It appears as if every stock Civelli has been involved with has taken a major turn for the worse. This is a list of the stocks that Civelli has been involved with over the past 10 years and their current trading price. This list does not include those stocks which have been delisted or those that trade only in Canada.
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