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Stas, spot on. For me at the moment i3 are an easy hold. Next six are going to be very interesting and I believe rewarding.
Stas20 - Good post with some interesting thoughts.
Canetoad, I think you are wrong, this 'sell off' as you call it needs greater analysis. You need to ignore the sheep's view that events of the past always predict events of the future.
Today's future is one that is both unknown and currently unexperienced. In standard stock market cycles, sell off are conducted as protectionist measures often moving stock to cash, however this time around, due to a number of unknow / unforeseen activities in the world, the standard can no longer be relied upon as being the 'standard' .
Take for example a shareholder that wants to protect funds and sells for example i3e, where do they put their cash, in a bank? well there is no interest there. Plus whilst doing that his capital is now being eroded by high inflation - all that person has done has ensured a way to devalue his capital and have exited a company on a growth cycle, thus maybe ensuring that past route that they already had access to could pull away. Granted, one might consider the price might drop and the past shareholder re-enter lower, however that is a risk that is created due to past sale action and could have been avoided - it takes the logic of investment decision (based on thorough proper research) to one of gambling, as one can never predict price movement with any certainly to ensure the action is anything other than a gamble, it goes against all the logic for staying in the stock in the first place, a risk that one doesn't need to take to ensure safety.
Commodity prices are expected to stay high, and if many economists are to be believed they are expected to get higher and who would want to bet against it, not me;
- War in Europe - huge sanctions on the largest oil producer AND refiner outside of the Middle East
- Cost of living crisis bought about by above and other factors pushing up inflation
- Returning Demand as pandemic status eases by many country's
- Supply issues brought about by under investment, with many smaller companies that added to the whole not even in business anymore after going bust in the last crash of 2020. Add to that the difficulty in obtaining tubulars for drilling means unless you are already there cost to re-enter now is high.
A term often used, but not really explained by some, we are in a perfect storm for a change in the norm, granted just about every other sector in a falling tide will be hit, however energy, particularly those paying a dividend where the yield is a protectionist measure against low interest rates and high inflation will be attractive - I think you need to step back and see the world with more modern eyes, just my opinion of course and I could be wrong, but surely that's what investing is, you do your own research and analysis and make financial commitment based upon it. My commitment is my money is currently better of inside i3e than outside.
Toad - blah blah blah
"The bottom line is, all the talk about fundamentals is a silly waste of time during a selloff" - what a silly comment !
"Be fearful when others are greedy and greedy when others are fearful" - Warrent Buffet !
Fundamentals are nearly everything - its one of the reasons that i3e seem to be holding up better than a handful of Canadian peers I cross checked. If you're overly concerned by a recession / short term price volatility - have you thought about putting your money in premium bonds or a post office savings account ?
Also - what is your interest here - are you still invested - if not (and more interestingly if you still are) - why are you posting an oil futures prices for 2025 !! Seems a little odd if not irrelevant.
The bottom line is, all the talk about fundamentals is a silly waste of time during a selloff. That's the other half of investing that you're missing...
@Tony. Blah Blah Blah.
A share price is not a company. All oil/gas companies are dropping steeply, rightly or wrongly. Fundamentals count for nothing during a selloff as you will have noticed if you look at even one other energy company.
lol just had this as a headline on ii
"In early UK corporate news, oil major Shell expects to book an impairment reversal of up to USD4.5 billion on an improving commodity price outlook"
I3E is now oversold big time, but I will be ready to buy more shares if the MM want to drop the SP again, but I have a feeling we will go up today
Chances of a recession are put at 38% by Bloomberg economics so the odds seem to be in our favour.You cant even predict the oil price for 6 months with all the varibles never mind 3 years pure nonsense.
Funny if the price of oil in 2025 is affecting our value today…
Seeing that our reserves then are not even accounted for.
Our value is current production + 2 years.
Serenity is free, expansion is free and reserves for free
Tony also do not forgot that i3 continually look to their hedging program on a rolling 12 months forward basis. Thus should be well covered. Outside of ensuring sufficient funding for safe operations and protection of the corporation itself, protection of the dividend is a high priority. This will be an attractive feature for many, it is for me.
I thought Toad said a month or so back that he had written his last post on this board ? I agree picking out a random number in 2025 - does it mean anything ?
We're at around $100 Oil - if you go back and look at the charts - it was about the end of February when the POO broke through this level. If you look at the i3e chart - the SP was around 23p. What has changed since then:
1) i3e have doubled their Capital Program and are forecasting year end production of 23-24k boepd
2) Announced the Serenity Farmin
If the thesis of a structural supply deficit plays out - it could still be a very good few years for i3e. I think the dividend is well covered even at lower oil prices than today. If Oil prices do go down significantly - my guess is that they would cut back on Capex but possibly spend on maintenance capex to hold production and pay out a healthy dividend even beyond the current guidance of up to 30% of FCF.
I'm expecting a pretty decent update by the end of this month.
"Long-dated oil futures are now at $68. I expect this will lead to significant downgrades to target prices by brokers, which the market is reacting to:"
Claptrap - long dated why not just say you took the lowest furthest out you could find on that site which showed $68.52 Out at Dec2025 and the average for all months prior to that averaged over $80.
Notwithstanding that predicting what the oil price will be on a monthly contract out 3.5 years ahead is just ridiculous. I suggest you look at what the banks are using for Reserve based lending which is even closer to $90.
Why are PI’s panicking, oil dropped slightly, so what, it’s not like we dropped to $60. We are still about the $100 range, this is still a strong oil price.
We have serenity around the corner with 200 million barrels of oil, we have all the other oil fields in Canada and we have Q2 update shortly.
I will only say the foolish pI’s are selling and the smart PI’s are buying.
Most oil companies are basing future SPs at $68s - see partner EOG’s presentation of tonight. Plenty of money to be made at this level if it turns out to be accurate - and god knows given are increasingly unstable world how accurate any prediction can be. In my view only of course can’t see this is a problem
Long-dated oil futures are now at $68. I expect this will lead to significant downgrades to target prices by brokers, which the market is reacting to:
Very interesting discussion between Tony and olderandwiser - I sit somewhere in the middle, where I think Nuttall may underestimate how low oil and oil stocks could go in the recession that looks like it is coming, but in the medium term I think he's absolutely right that supply/demand dynamics have never been so tight - even saying that oil is still approx $100 and that is on the back of a supremely strong dollar and with releases from strategic reserves and OPEC producing at near capacity - Russia will continue to decline as it no longer has access to the full range of equipment provided.
As others have highlighted recessions don't usually result in substantial demand destruction - I do feel there is a risk that the coming recession could be very deep, especially in Europe which looks in terrible trouble with industry as electricity prices are utterly insane, but the US will be a big beneficiary of any european downturn and I would expect an US recession to be relatively shallow, so I don't see sustained demand destruction even if the recession is deep in places and even that will only bring supply and demand back into line in the short term and then the pressure comes back immediately - and OPEC can of course act to support prices.
I'd say in the next 2 years don't underestimate a chance that oil could dip to $40 and I3E could still go substantially south of here, so I wouldn't be gambling money need in the short to medium term or expecting quick gains, nor would I be going all in at this level thinking its the bottom, but I do agree with Nuttall that there is a generational opportunity here to accumulate good quality stocks with long term cash generation potentially through steady accumulation through the current cycle (as I am doing) as the other side of any recession supply looks very tight - and frankly if a recession is so deep it does lead to substantial demand destruction, I think we'll all have bigger problems as it will be much wider than just low oil prices.
Agreed, this is just a general sell off in line with the oil price which has now dropped 13.83% in the last 48Hrs. The issue for many is missing the realisation of where we have come from and how your cup is viewed.
At $65 oil i3e is doing well, at $70 its comfortably able to increase its capex budget and pay an attractive yield, @ $80 they are truly raking it in and even after these decreases wti is still at a whopping $95.
Some will appreciate this and look to average down, or just buy more at what might be seen as a temporary pullback to avail themselves of an increased divi and greater exposure to serenity, and the current drilling programme.
Others will run with the nervous or even not be nervous but just decide they have a lot of profit and will protect some. This is after all investing, its not risk free, and each make their own decision based on circumstance.
For me, I'll take more at this price as ultimately, and that being the key word for me, I expect this is now very cheap for where the Oil price is expected to go.
Demand destruction may account for some downward pressure, however when you take into account supply destruction, which I believe is greater due to many factors such as under investment in new wells and exploration in general, the war in Ukraine, inability of OPEC to increase supply etc. and a whole host of other factors, I am a buyer. Each to their own, no decision is a wrong decision if made with conviction and integrity of your research, in which case, good luck to all.
Nuttal never mentions I3E, even after repeated requests via Twitter.
Nothing unusual about I3E. Many of the Nuttall picks have been dropping even faster, along with almost every other energy stock.
sit tight, I3E is a steel at these prices, they are paying a divi. I just swapped my last TLW for another 60k here. TLW are carrying too much debt.
tony - tried hard to hold this up with two tranches at 24 and 24.2 but have got a bloody nose for my trouble. There is surely more to this persistent drop than oil price, and I am now looking down the barrel of a £20k loss here. Any views on the immediate and mid term picture?
No chance of getting cheaper petrol the pound keeps falling to the dollar its now1.18 to the pound.Its gone up again
Older and very wiser
Points noted on uber bulls which is why I said you should read / follow various analysts and form your own view. I'm not sure I agree with your comments on Silver and other PM's - you cannot fill your tank with Silver !
If Eric and a growing chorus of other analysts are correct - this could be a generational opportunity for O&G Investors. I'm not hearing many bearish views at present which is unusual - normally for every Bull theirs a Bear. About the only bearish views i've seen recently is from Citi Group and their still talking about a POO of $70.
Even at this very depressed Oil Price of $100 - were still making pots of money. I've had a request to post my spread sheet again - Ill do it shortly with forcasted FCF and Dividend. Both measures I think are stiil pretty healthy even at Oil prices significantly lower than present.
Tony - Talking of Warren Buffet he is using these dips to add to his already huge positions in Occidental Petroleum and Chevron.