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Thanks for the info guys. Frustrating that we're having maintenance at a time when gas prices are exploding globally. Having said this we're doing pretty well across the board. Just need confirmation of some stonking quarterly results and a Serenity drilling date to get the countdown clock ticking. GLA
https://twitter.com/Energy_Tidbits/status/1516605934809731072/photo/1
Provided to me by Rock Creek Freak on twitter. He has lots of good stuff on his twitter feed including on Clearwater and occasionally on i3e. Check him out.
https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/natural-gas/071122-west-canada-spot-gas-prices-plummet-as-production-soars-to-16-year-highs
Record production and annual maintenance on the transcanada pipeline compressor stations hampering export to the US.
Pipe lines are under maintenance and cannot cope with volumes being produced. Temporary problem.
Does anyone have a view on wtf is happening with AECO gas prices?
"I’m not saying sell I3e to buy into EOG, I’m saying it’s worth a punt"
- possibly however, what it does demonstrate is we all have our own thoughts about the investing game, the only thing that is universal is good luck to us all, the one thing that is true is, its always nicer seeing the PI make some money than it is them losing it, particularly as it so often seems like its the PI vs the market, my support is always on the side of the PI, nothing easy about investing.
Stas,
I’m not saying sell I3e to buy into EOG, I’m saying it’s worth a punt to turn 1k into 5k or more with a small downside of £250.
You are correct, EOG will have to raise cash if they want the full benefit, they do have options however, they could sell outright, sell with a royalty or part sell to a large producer, who knows I3e may do the same, both could sell the 100% if the price is right, let’s hope that option is open when the result of the drill is published.
isdeer
The way I see it, the grass is not always greener on the other side and why chase new rainbows when we are already on the downside curve of our own one in i3e, serenity may be a boost to the SP here, however I do not see that in isolation and I expect ALSO a boost here from Canadian reporting.
I3 is safe, it has hedges in place, huge cash reserves, hundreds of well site and multiple wells so no one well can break us, quality and proven management and a dividend to boot, supported by long standing, faithful and supportive institutions
Long term i3 is where my money is and I expect or hope for a double boost from serenity AND Canada, however assuming the former comes in, then yes I can of course see a case for a small trading punt in EOG, but we chose how much risk we take. i3 is undoubtedly the lower risk.
One further point, assuming serenity comes in, EOG will then have to think about how it stumps up its share of production drilling, will that be another placing?
Stas,
Maybe they will, however imo this is only short term, they have partners like EDR who are roughly same mcap, and same % of wressle, they don’t have a serenity to drill and they have less cash than EOG, as they had to borrow 1m with interest from UJO, they paid it back with cash from wressle. EOG also have some other valuable imo exploration assets in Ireland and Morocco. Currently 23m mcap with wressle providing c£7m a year cash and lots of upside on that figure, it may drop 50% at worst short term, it will settle and return 25% it’s certainly worth the risk at todays price and mcap when you could get 5 x your money and more.
Imo the sp will also increase as we build up to spud, not like the old days though but it could happen if the market has confidence in serenity and news flow is positive, there is also the slight chance that buying now will give you the option to sell and make money and not risk waiting for the drill results or sell down some shares before the results are published.
It’s a risk but imo that’s what we do when we buy shares, we all want to land the big one, EOG could be it.
isdeer, I think you are mistaken if you don't think EOG will drop much if serenity is not a success.
If Serenity were to fail (which I hope will not be the case obviously) EOG shares would imo plummet like a stone.
They have just had the largest placing for years and sunk the lot into Serenity, they are, as some may say, pretty much 'all in', a failure at serenity will be devastating for EOG, whereas i3e has hardly any value to its name in the share price for UK full stop.
i3's value currently comes from Canada and will remain so for the foreseeable. I still see Serenity as a cherry, a big cherry I grant you but Canada is where its at.
Also to add in the fact EOG isn’t really going to drop much from current price given it has c£5m in cash and its currently picking up over £500k every month from wressle oil sales.
UJO has 40%, EOG and EDR with 30% each, the partners are also looking at gas extraction from field and expanding operations, it seems to be a good earner over the longer term, buying now and not delaying would be an option given it may rise into the drill and even if it all goes wrong I can’t see it dropping much below current price, basically we have a free shot at a 5 to 25 bagger in EOG imo.
Thanks Tony.
I was just wildly fantasising that if all goes really really well and say 400m proven barrels.
100m to EOG x say $5 in the ground value equates to $500m with a mcap circa £20m.
That’s a near 25 bagger. We can all dream.
300m to I3e would equate to $1.5b
We are in dreamland if serenity is as good as we all hope.
wouldn’t that be beyond all our wildest
for ease of calculation - I used the market cap i.e 100m/23m = 4.34 and likewise for i3e 300/323. The ratio of the two numbers is almost 5:1.
This ratio will be the same if you calculate on a per share basis - my point being that since the market cap of eog is only 23m - you get 5x the potential exposure to serenity.
Tony,
I read it, I don’t understand the concept, can you explain how you derive the £4.34 number for EOG.
In the mean time I just bought more EOG after it dropped slightly today.
Awfully strange AECO drop - does anyone have an idea about what caused it a few days ago? I've been googling but can't find a reason. Quite sudden, sharp, and bizarre given global gas prices.
I think quite a few of us have invested in i3's junior partner.
I think you need to re-read the post and understand what you are reading.
I think you need to recalculate EOG.
map circa 20m and price is in pennies 2.4p not pounds
Just realised that article is from last August, apologies. Might be annual maintenance I suppose?
The AECO drop seems to be maintenance work driven and prices will rise once completed, probably by tomorrow.
https://www.nasdaq.com/articles/canada-natgas-prices-drop-at-alberta-aeco-hub-on-pipe-work-2021-08-12
Cheers Tony.
No reaction that AECO is really falling right now, currently AECO gas is $3 CAD over the weekend. Thats less than 15 dollars per BOE…
Currently the hedges are positive for us
Justbe,
Lets say they prove up £400m worth of reserves - 300 to i3e and 100 to EOG. Divide by the respective market caps and calculate the value per £ of market cap attributable to each company.
it works out at 89p for i3e and £4.34 for EOG
tonynorstrom1.
Could you give a layman's explanation to EOG - it has nearly 5x the torque on Serenity?
https://blog.gorozen.com/blog/the-global-natural-gas-crisis-is-coming-to-north-america
A great read and explains why the Authors think North American Gas Prices have to rise and coincidently for the same reason why Oil supplies are very likely to remain tight (US shales best years are over)
In addition Canadian LNG will be online within the next couple of years . Can you think of any Gas Producers in Canada that might benefit?
As an aside - took most of my dividend and decided have a little wager on EOG - it has nearly 5x the torque on Serenity.