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Yes. It doesn’t look like much is on the horizon. Really disappointing.
You don't drill, you get punished, but enjoy your dividends.
50m capex is exactly as predicted. It is giving an 8% increase from today. I3e being punished in the market by old news (lack of spend in 2023). If company can sustain 8-10% growth each year then that is okay.
I would be very interested in what the Simonette well pad in 2025 looks like. How many horizontals are planned. That could be the accelerated growth.
Unfortunately 2024 performance will be driven by oil and gas prices rather than drilling. Fingers crossed for AECO.
Markets can be irrational at times, bb posters sold out early in day on mis reading rns, sp plunges, others follow selling their holding on an sp fall, broker reports follows later stating target price raised as business metrics look better going forward...guess it's what makes a market 😉
@stas hope so because Ive just topped up :)
Me too. Like the approach of the new CFO who seems to me to have steadily undone the mess left by the last one over the past year. Now on a more secure basis and seems to me to be taking a conservative approach, so more likely to surprise the market to the upside over the next year. Plus not many places where I can get this kind of dividend!
I think it is and have bought a small holding 50,000 @ .107732 worth holding for that divi.
Massively overdone! It’s retail herd following the masses.
Too many in this group play the audience with positive words while waiting for news to take a profit and then drive price down to buy back in. Seen it many times now.
Is this drop now overdone?
If you go to their November 2023 Presentation - they have a pie chart that gives the production break down for the different areas. For Central Alberta:
55% Gas
27% NGL's
18% Oil & Condensate
This is an average well an of course this varies across the acreage with some wells having a higher gas weighting and some a higher liquid weighting.
They describe Alberta acreage as Liquids Rich Gas with EMERGING OIL. So it seems in the last year or so they have found areas with much high Oil Weightings so even though they appear to be targetting Central Alberta - I would imagine their looking at Liquids Rich wells.
I3E still look like an inviting value proposition and with a 9% dividend forecast for the year ahead is there going to be a better time to buy?
Tony, I am sure you have better information than I have regarding well costs across the various types. Also, I didn't see any NGL hedging in their plan? Do you have a feel for the typical Gas/NGL split on these wells?
Its not the assumptions that concern me in some respect, but the units of measure used, at least if they used the same it would make cross referencing and understanding why figures are not compatible understandable.
I had spoken to Graham Heath about this before when WHI had screwed up a few reports particularly the numbers for SG&A where if they had spoken to i3e they could have plugged much more accurate numbers into their models.
Of course WHI do have access to i3e and i'm sure talk from time to time - but as far as Oil & Gas prices and other assumptions - i3e leave them to make their own projections.
Thanks tony, yes I have looked at the tables, wow WHI confuse everything, I note they use for 2025e
$3.18 CAD/mcf, perhaps Majid could do well to talk to them so that their broker reports at least align with i3's reporting or vice versa!!!
I agree Vista except for the economics of the wells - if gas prices more to where they think they might - the Central Alberta Gas wells have vary favourable economics particularly if they have high liquids weighting.
I think its interesting that there is only a couple of wells slated for Clearwater - these are nearly 100% Oil - a question for the upcoming meeting me thinks.
Also your assumption on the price used for gas is incorrect - for some reason WHI use Henry hub as the bench mark presumably because they think it is a more visable number for investors - but if you actualy go into the tables and look at "realized prices" - you can see that they use the correct CAD AECO pricing in their number crunching
I think its nonsense because it actually confuses investors . They use to quote Brent as the bench marl for oil but thankfully have changed to WTI but even WTI is not stictly correct - it would be better if they stuck to the applicable bench marks which are WCS & Edmonton Light Sweet.
Thanks Tony, yes the discrepancy between volume and revenue is important which I overlooked, thank you.
May I ask, what are your thoughts on the gas price that WHI has used when converted to CAD/GJ particularly against gasalberta forecasts?
Stas,
There's no doubt that the projected increase in gas price is having a significant impact on their valuation but its not all of it. Its also got to do with the significant capital program and associated production and better Oil & NGL prices and better liquidity due to the refinancing.
whilst gas is 52% of production - its only about 14% of revenue in April and even in December where I have plugged in CAD 3.00 for AECO - its still only 21% of revenue. So their valuation is underpinned by more than just a projected increase in AECO.
Welloil, of course I would like that to be the case, however it takes one hell of a leap of faith to believe that current gas prices at just over a $ , that it is acceptable to then forecast on over 4 times this, I'd be happy to be wrong, can someone show me forecasted gas prices of this level, https://www.gasalberta.com/gas-market/market-prices is not showing this.
I think everyone was hoping for something more in terms of production / NOI but probably unrealistically so. I3E are sill undervalued versus peers and according to broker estimtes.
As the drilling is very much back loaded we will only see it reflected in year end production rate. Some will say even that is only +3% but then you have to remember that there was no new production coming on-line in Q1 24 due to the limited 23 capital budget so they have a full years decline to overcome.
Regarding the drilling of additional gas wells - I think if they did not drill some gas wells it would have been very difficult to show a headline increase in production by year end. The high BOEPD / lower capital cost of the gas wells relative to Simonette was probably a factor here. I know the economics would favour Simonette drills but not sure why they wouldn't drill them until 2025 other than for the above reason .
Just my opinion.
Stas, have you considered why the consensus across the Canadian gas sector is so bullish on pricing going forward? Could it be that an army of professional analysts have more insight than your good self? Could it be a masterstroke that i3e are going after low cost gas to sell into a rising market coupled with the ability to pivot to oil if required? I trust Majid and the board to make decisions in our best interests, I suggest you do the same.
I3E shares are 9% down in early trading as the market takes profits on the back of lower y/y production guidance, which was due to i3’s slowdown in investment over the recent winter period in response to falling commodity prices. This follows recent improvements to i3’s balance sheet strength and liquidity position (and stock price) over the last few weeks following the $25m sale of a non-core royalty package and a new $75m credit facility by a major Canadian Bank.
This enables i3 to significantly expand its fully funded capex programme as it targets a ramp-up in drilling activity that balances growth, financial discipline, and a sustainable long term-dividend, all while positioning the Company to commence its high-impact Simonette Montney pad development drilling early next year.
Additionally do note that WHI have used the price for gas being $US 3.50/mmbtu whereas i3e used the value of CAD/GJ.
If I am not mistaken, then that would work out at $5.05 CAD/GJ using;
- the current exchange rate of 1 USD = 1.36786 CAD
- 1 mmbtu = 1.05506 GJ (approximately)
thus
Convert USD to CAD:
3.50 USD/mmbtu x 1.36786 CAD/USD = 4.79201 CAD/mmbtu
Convert mmbtu to GJ:
1 mmbtu = 1.05506 GJ (approximately), we can multiply the CAD/mmbtu by this conversion factor.
4.79201 CAD/mmbtu×1.05506 GJ/mmbtu = 5.05109 CAD/GJ
So, the forecasted AECO gas price of $3.50 USD/mmbtu would be approximately $5.05 CAD/GJ. what world does WHI live in to take $5.05 CAD/GJ as forecasted AECO gas and being the house broker Majid should be all over this.
I think, the foundations are decent, however doubts remain on management ability to unlock value through organic growth. Seem intent on status quo rather than growth.