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It has been over a month since InterOil (NYSE:IOC) reported receiving final bids for its asset selldown, and many shareholders are wondering why it's taking so long. A month is a suspiciously long time to choose a winning bid, especially since the company reported that it had already negotiated with the parties for awhile.

On March 1st, InterOil released a PR that said:

InterOil Corporation is pleased to announce that its advisors have informed the Company that several bids to partner with InterOil in its Gulf LNG project have been received. Our advisors are now evaluating the submissions.

The company gives no indication of what size or type of company submitted the bids to partner with InterOil. For all we know, Bozo the Clown was one of the parties who submitted one. What the company should have said, is: "several bids from supermajors to partner with InterOil have been received".

People who are familiar with InterOil know that the authorities in Papa New Guinea (PNG), where InterOil's gas wells are located, demanded that it partner with a supermajor to make sure the gas gets extracted and sold properly. Therefore, people assumed that the bids were from supermajors. But InterOil's management has never specifically said that the company has received a bid from a supermajor.

Supermajors Are "Involved" With Bids

The question about language was brought up in the comments by Seeking Alpha readers regarding a recent article about InterOil from PNGindustrynews.net. This article said: "At least two supermajors are involved with bids for an operating stake of the Elk-Antelope field which underpins InterOil's Gulf LNG project."

Companies and publications use specific wording for a reason. Reading between the lines, one can come to the conclusion that no supermajors made bids for InterOil, but they simply are "involved" with the bids. Otherwise, the article would say: "At least two supermajors made bids for an operating stake". The article was written from an interview with InterOil's CEO, Phil Mulacek, so he could have made it clear to the publication that InterOil has received at least one bid from a supermajor. But he didn't, so I believe that there were no official bids from supermajors, otherwise he would've made it clear.

What exactly does "involved" mean? Does it mean the supermajors are giving advice to the bidders? Does it mean they are partnering up with the bidders, but aren't actually the bidders? Or does it mean that they merely discussed the bids? InterOil executives should shine more light on this.

InterOil's head analyst cheerleader, Raymond James (which gets investment banking dollars from InterOil) seems to not know any more than we do. In its recent report on Friday it said:

To review: the company has previously disclosed receiving at least four preliminary bids: two from major oil companies, one from a national oil company, and one from a utility (known to be Kogas.)

This analysis by Raymond James leads to more questions than answers. How much were the "preliminary" bids, and what were they for? How is a preliminary bid different from an actual bid? I've never seen a company giving more vagaries than InterOil does.

It's easy enough to find out if a supermajor has made a bid to InterOil. Simply ask InterOil's management: "Did any supermajor actually submit a dollar amount proposal to purchase one or more of your assets?" Then at least we can pin the company down for some information. If InterOil won't or can't give out this info, then I think the answer is clearly "no". If the company says "yes" but won't give more information then it means there might not necessarily be a deal in the works, but at least it will have to eventually verify what the bid was and from which supermajor.

Source: New Evidence Questions Whether InterOil Actually Received A Bid From A Supermajor For Its Asset Selldown