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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.
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.
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 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.
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.
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?
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?
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.
Is this drop now overdone?
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.
I think it is and have bought a small holding 50,000 @ .107732 worth holding for that divi.
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!
@stas hope so because Ive just topped up :)
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 😉
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.
" I3e being punished in the market by old news (lack of spend in 2023). "
Weird. It's like they are paying that money in the form of dividend to folks who got the shares for free.
Well that was an interesting day, some bargains available. We just need to now pop back up after Majid has given his presentation and the current 9.35% dividend sinks in and what that might mean once the total return model is factored in, assuming we get some capital appreciation also.
"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."
Clearwater is not proven out yet.
Concerns are showing up in the futures market re gas prices. The contracts for next winter are the most expensive on the curve.
https://twitter.com/surprised_trade/status/1783539479178776630
@surprised interesting post thanks
I3e is now a safe boring divi stock. A solid buy but nothing to get excited about especially with party pooper Majid at the helm.
I was expecting some m & a to accompany the capex. Undeniable that Majid is playing a long game. It's a healthy yield.
And wti touching 84$
Stas20,
CAD 2.21 /mcf CAD 3.18 /mcf - These are the numbers that WHI use in their forecasts for 2024 & 2025
For a bit of context, the actuals in April and YTD are CAD 1.47/mcf and CAD 2.23/mcf (AECO)
In my own spreadsheet which I Update monthly with actuals and a reforecast for the remainder of the year – I come up with CAD 2.37 for 2024
So, in short, as things sit right now – WHI’s numbers look reasonable Imo but could change significantly in either direction. May is typically the weakest month but I’m using the same number as for April and progressively strengthening month by month until I get to CAD 3.17/mcf in December (CAD 3.00/GJ).
Its anyone’s guess where gas will be in December – will Canada still be oversupplied with record storage and production or will demand increase with Oil sands and LNG Canada boosting prices significantly higher? My pricing assumptions are based on the later.