London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
You will only have one login account. Registering with multiple accounts is not allowed. Any user found to have more than one account on this site will have all, and any future accounts suspended permanently.
Your email and password must only be used by you. If a post is made under your account, it will be considered that it was posted by yourself.
Your account nickname must not be the same, or contain, listed company names or board members' names.
While debating and discussion is fine, we will not tolerate; rudeness, swearing, insulting posts, personal attacks, or posts which are invasive of another's privacy.
You will not;
discuss illegal or criminal activities.
post any confidential or price sensitive information or that is not public knowledge.
post misleading or false statements regarding the share price and performance. Such posts are deemed as market abuse, and may be reported to the appropriate authorities.
post any private communication, or part thereof, from any other person, including from a member of the board of directors of a listed company. Such posts cannot be verified as true and could be deemed to be misleading.
post any personal details (e.g. email address or phone number).
post live price or level 2 updates.
publish content that is not your original work, or infringes the copyright or other rights of any third party.
post non-constructive, meaningless, one word (or short) non-sense posts.
post links to, or otherwise publish any content containing any form of advertising, promotion for goods and services, spam, or other unsolicited communication.
post any affiliate or referral links, or post anything asking for a referral.
post or otherwise publish any content unrelated to the board or the board's topic.
re-post premium share chat posts on regular share chat.
restrict or inhibit any other user from using the boards.
impersonate any person or entity, including any of our employees or representatives.
post or transmit any content that contains software viruses, files or code designed to interrupt, destroy or limit the functionality of this website or any computer software or equipment.
If you are going to post non-English, please also post an English translation of your post.
If you are going to post non-English, please also post an English translation of your post.
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium and Verified Members
Premium Members are members that have a premium subscription with London South East and have access to Premium Chat. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Good news though, regardless if the numbers might be a little bit off, and good timing too. Will help to calm SH’s worries with the sharp drop a bit and provides some further external validation of the value gap which Doc and many others on this board (but not yet the wider market) have identified.
Remember that many of these Analysts moved across from Mirabaud to Tennyson so essentially as far as I know, the same guys making the report .
Put this report side by side with the November report and compare the numbers - it looks like a different report - different number for SG&A, Oil Production, OPEX. Needs some further study but initial impression is you better running your own numbers than paying attention to Mirabaud / Tennyson.
Dividend update: In March, i3 announced that it had allocated C$2m (c.£1.16m, or c.0.16p/shr) in relation to its maiden dividend payout. The company had committed to announcing a special dividend in Q1, before moving to a regular biannual policy, to be announced with the interim results in September. This regular dividend will be set at up to 30% of free cash flow, implying a payout of up to c.US$3.3m (0.34p/shr) with respect to H1 operations (paid in H2), and implying a 7.7% running yield going forwards.
Dividend update: In March, i3 announced that it had allocated C$2m (c.£1.16m, or c.0.16p/shr) in relation to its maiden dividend payout. The company had committed to announcing a special dividend in Q1, before moving to a regular biannual policy, to be announced with the interim results in September. This regular dividend will be set at up to 30% of free cash flow, implying a payout of up to c.US$3.3m (0.34p/shr) with respect to H1 operations (paid in H2), and implying a 7.7% running yield going forwards. Payment of the initial dividend has been delayed somewhat due to the requirement of balance sheet restructuring to create distributable reserves. This administrative process requires formal judicial and shareholder approval, and a court date and EGM are expected to be announced imminently, in time for payment most likely early next month. The dividend in relation to H1 2021 activities will be announced and paid in H2. Financial forecasts and valuation: Based on an average Brent oil price of US$60/bbl and Henry Hub gas price of US$2.75/mcf, we forecast 2021 EBITDA of US$22.4m, pricing the company on an EV/EBITDA multiple of just under 5x. In line with the company’s stipulated policy of 30% of free cash flow to be returned to shareholders, we expect c.US$3.3m to be paid out in relation to H1 2021, equivalent to c.0.34p/shr and placing the company on a healthy running yield of 7.7%. On DCF, we value i3 at a Core (2P) NAV of 16.4p/shr (NPV10), at which we set our target price. Inorganic growth opportunities: With the two acquisitions successfully bedded-in, i3 is now actively scoping fresh opportunities for growth alongside its organic growth strategy in the Clearwater play. We estimate that the company started the year with around US$8.5m of cash, and forecast a further c.US$9m of FY21 free cash flow (net of dividends) which can be used for acquisitions. With net debt/EBITDA at a forecasted 1.1x (FYE21), there is also the potential to use debt finance for new transactions, providing options other than just new equity to finance larger deals. Any transaction priced below 5x EBITDA will be incrementally accretive to cash flow and dividend yield per share (assuming like-for-like funding structure), illustrating the growth potential through M&A. We initiate coverage on i3 with a DCF-derived (2P NAV, NPV10) target price of 16p/shr. Note that this does not include any value for the Serenity discovery in the North Sea, worth an additional 5p/shr risked on our numbers. Our target price currently offers some 93% upside, with additional upgrades likely in the event of success with the ongoing farm out process on Serenity, and further M&A activity in Canada. Accordingly, we carry a BUY recommendation.
Clearwater growth: i3 has earmarked the Clearwater oil play in Alberta as a major growth region and has recently consolidated its position with the acquisition of c.50 sq km of new acreage. A key attraction here is the inexpensive drilling costs, and the pure oil play offering far greater margins than gas (for reference oil currently accounts for c.16% of i3’s production but over 35% of current sales). Approximately 20 sq km of Clearwater acreage was acquired through a recent Crown Land Sale, for a total consideration of under US$300k, and c.30 sq km (net) will be earned through a farm in agreement with a local operator. i3 will acquire a 50% stake in the latter, in return for paying 75% of the costs of two development wells and committing to paying its pro rata share (50%) of a further seven optional wells. The total firm work programme is expected to cost US$7m, net to i3, and with gross initial production per well of around 150 bopd (75 bopd net), wells pay back in around one year. The first well is expected to spud later this month, providing a steady stream of drilling newsflow over the next 12 months or so.
i3 Energy has enjoyed a good start to life as a full-fledged producer. The company has successfully completed the integration of c.9,000 boepd of Canadian oil and gas production purchased over the course of 2020, and announced its maiden dividend in Q1 2021 as promised. Since taking ownership, the assets have outperformed CPR expectations by over 10%, and the company plans to bring a new well onstream before the end of this quarter with c.500 boepd of net production. Oil prices have also outperformed expectations – we forecasted 2021 Brent oil prices of just US$45/bbl at the time of the acquisition, versus our current forecast of US$60/bbl, vastly improving i3’s entry price (to just 1x FY21 field level cash flow). With the stock already offering a 7.7% running yield (c.2x covered by FCF), and further accretion possible on the back of organic and acquisitive growth, we initiate coverage with a BUY recommendation and a 16p/shr target price.
Strong operational performance: Over the three-month period ending 31 March 2021, production averaged 8,856 boepd (c.40% liquids), which was some 10% higher than CPR expectations, despite inclement weather conditions over the period. Production is expected to receive a near-term boost with the imminent tie in of the Noel Falher well in Northeast British Columbia. i3 expects the well to come onstream at sustainable rates in the region of 500 boepd, with first gas expected next month. This will boost group output by nearly 6%, and illustrates the potential for organic growth within i3’s portfolio.
Hedging policy initiated: i3’s recent update included confirmation of the company’s new hedging policy, with contracts acquired covering in excess of 50% of near-term production. Almost 70% of gas production has been hedged through to 31 October this year at an average price of c.US$2.3/mcf, bridging the summer months when gas pricing tends to be weaker. Meanwhile a further 750 bpd of oil and 200 bpd of condensate, equating to roughly a quarter of total liquids production, has been hedged until year-end at an average US$56.7/bbl and US$26.4/bbl respectively. Going forwards, i3 plans to hedge 50% of oil volumes, and 50-70% of gas volumes in order to protect the dividend and maintenance capex.