Run The Other Way

Interoil (ticker symbol : IOC) dropped sharply on Friday on accusations that the company is a fraud. I have not done any research on this company other than looking at the accusations and the companies response. The following statement stuck out from the companies press  release:
The article was timed to benefit recent short selling activities.  The "short" interest in InterOil increased to 3,548,056 shares in mid-March.
My experience is that anytime a company attacks the short sellers one should run as far away from the company as one could.

Another funny passage from the press release  is:
Operations conducted by the company which were evaluated by independent engineering evaluations consultants, GLJ Petroleum Consultants Ltd., resulted in an increase in our gross best case contingent resources estimate by 889 million barrels of oil equivalent resources, to a revised total of 8.2 tcf of natural gas and 156 million barrels of condensate, in the past fiscal year.
What in the world is "gross best case contingent"?

3 comments:

PJ said...

Good catch.

Obviously the consultants gagged at lying about the reserves as management wanted them to, but agreed that "contingent on extravagant assumptions, and assuming the best possible case, and neglecting oil that is unrecoverable or lost during recovery" your reserves might be X. When you've got nothing else, that's worth a press release.

jarda okurka said...

on the contrary, most small oil and gas profesional investors I know are siding rather with IOC.
IOC discovered on of the biggest gas wells(measure in gas flows) in the past twenty years worldwide.

there is a group who is trying to attack IOC for more then four years...

Tsachy Mishal said...

I am not an oil and gas investor so I cant speak to your points. The main point I was trying to get through is that when companies attack short sellers it is generally a warning sign. Please note that I said "generally" and not always. It is enough for me to stay away from the company.