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An interesting piece on Surge Energy which was identified in a recent graph as a peer to I3E. Some interesting points relevant to I3E
1) 32 well drilling program adding +/- 3000 boepd of production for $39m. Just over $1m per well all tied in.
2) Sold on 2700 boepd for just over $106m. Valued at 5 x forward cash flow. By my calculations - that values us at between UKP 100 to 120m. (another metric $39,000 / flowing barrel - in my opinion CF is a better use since Surge Energy's production is about 85% Oil / 15% Gas v I3E 59% Gas, 25% NGL, 16% Oil)
3) SP went up over 30% on announcement of above
https://ca.finance.yahoo.com/news/surge-energy-inc-announces-corporate-100000925.htmla
https://ca.finance.yahoo.com/news/surge-energy-inc-announces-corporate-100000925.html
TSX did touch 40 cents 2 weeks ago. Lets do your maths on potentiality for short and medium terms.
piohc1,
It touched 40 cents but that was on about 11 shares - hardly any sort of indication.
I do agree that as volume on the TSX picks up as it has - the price correlation should become closer. Majid talked about Canada improving price recognition. Lets see what happens on Monday after the 14% rise on the TSX on much improved volume.
Next week could be a fairly big week for I3E - I think they have to issue a Shareholder circular if they are to declare a dividend this quarter as stated
Are you including the serenity farmout in the 16p fair valuation?
If not, what are you anticipating? (Based on a decent deal)
There's no time line on it - but you would expect one sooner rather than later. As someone already mentioned - it should'nt take long to update a spread sheet. I would think there is a chance we may see one this coming week. Probably WH Ireland first and then possibly one from Tennyson a little later. I think I3E's last RNS will provide a reference point and an opportunity for the Brokers to fine tune their estimates.
Tomhuk2000,
I took the Cashflow multiple from the Surge Energy update which was 5.3 x forward cashflow so it would exclude Serenity. How much it adds to the SP now obviously depends on how good the deal is and the time to first oil.
When its a producing asset - it could add 20-25p or more to I3E but that is a minimum 2 years down the line assuming it happens. Right now its a risked valuation based on oil in the ground and estimated 2C reserves. I think WHI assign a current value at around 4.9p per share. My guess is it will add a couple of pence to the SP maybe more if the terms and timing are better than expected and then incrementally more as the find is developed. Hopefully we will find out soon enough.
Thanks Tony.
Iโm holding at least until the FO news is released. Even if I do sell then Iโll probably hold onto a proportion of my total for when itโs producing.
Have a good weekend
Surely we will get millions from below:
Serenity Appraisal Drilling Farm-out
Discussions continue with a potential farm-in partner for the Serenity discovery and terms are being negotiated. The recent strength in commodity prices has reinvigorated activity within i3's virtual data room, and additional parties previously contacted during early 2020 have now re-engaged with the Company. The market will be updated if and when an agreement is reached.
JAdam,
You are correct - I have mixed up Mirabaud with WHI - it is indeed Mirabaud that have ascribed a risked valuation to the North Sea Assets of 4.9p which is what I was referring to.
It is worth reminding ourselves of the resource definitions you have referred to below. Serenity which is classified as 3C which means:
"Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations by application of development projects, but which are not currently considered to be commercially recoverable owing to one or more contingencies."
You have quoted the "high" estimates for the valuation which is a P10 estimate meaning "There should be at least a 10% probability (P10) that the quantities actually recovered will equal or exceed the estimate"
Prospective Resources are valued lower than Contingent Resources and are defined as "are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects." Again the valuations you have quoted are based on a P10.
I'm just highlighting that the North Sea assets are not a slam dunk and market obviously agrees at the current time. Hopefully we take a step forward in the coming weeks.