Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.
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IBB_Invest,
No fee of GORR Lands recorded for Clearwater or Wapiti. For Cental Alberta:
"320,000 net acres with 171 net booked locations" plus "Additional 181,081 acres of fee and GORR lands"
For the Montney:
">10,500 acre GORR across active competitors lands"
I doubt they will raise the dividend until the prices stay elevated for a while yet, but this deal does allow them to return to monthly payments if they choose to, as it was the debt deal that forced it to become quarterly, so the barrier is now removed and they know it was popular, reduced volatility and short sellers. It really would add a unique appeal again, which worked wonders last time.
Either way, this was a great deal. I hope they dont waste the headroom on Serenity though, with Labour looking likely to raise the already ridiculous communist windfall tax, why take the risk?
Well done G.G.G on your buying
Looks like 2024 is going to be your year and mine.
G.G.G. 15p
18p more likely by year end.
Let’s see how well our CFO has done in acquisition s first and quarterly profit.
Wondering why management did not provide clarity on exactly what acreage was part of this disposition. According to the company's last report (2023 H1):
"Royalty Interest production averaged 386 boepd in H1, which was in line with the same period of 2022. The
Company remains focused on maximizing third-party activity on its extensive portfolio of 198,040 acres of royalty
interest lands. During the first half of 2023, third-party operators drilled and brought on production 3 wells within
the Company’s royalty interest properties."
Today's RNS indicates that 16,160 acres of Montney royalty land was kept which indicates that approx. 182K acres have been sold for the $35M. This could also be a great deal for the buyer depending on the quality of those lands.
i3' last investor slide deck is no longer on their website. Does anyone have any info how their Royalty Interest land was recorded within the total acreage? Was it part of the total that the company reported as total drilling acreage or kept separately? Another question for management would be whether this sale impacts the "total gross booked locations of 391 (254.4 net) across the Company's four core areas, for a total Company inventory (booked and unbooked) of greater than 950 gross (550 net) undeveloped locations." per the 2024 Reserve Report...
Looks to me like they’re on the prowl for low hanging fruit. Export markets opening up in the coming 12/24 months should be extremely accretive if we can pick up assets now while AECO is in the gutter.
AIMHO
GLA
Unless they have a deal lined up already I'd like to see them utilise this cash and debt to start drilling some oil wells that are safe earners, and provide reserves upside. Both will add to our value and provide us with on-going high margin income. Divi is safe. Hopefully improved gas prices / outlook at year end will provide some scope to increase payments in 2025. Certainly good value at this level and has another 15-20% (15p) this year if they play their cards right. Will be interesting to see their development plans in the coming days. GLA
My previous message did not post correctly...
Wow, what a great deal. On the face, it looks fantastic. i3 itself was trading at less than $9K USD per barrel and they just sold 370 production for $64K USD per barrel. Wow. This management team does it again.
The devil will be in the detail howover. Royalty deals are about the LAND not the PRODUCTION so we really need to find out what and how much of their acreage is part of this deal. Does anyone know this detail? It looks like the Simonette was all or mostly excluded which confirms that this is THE core area for i3 which they will grow from reliable cashflows from their older Central Alberta assets. This is a copy of the new Crescent Point Energy business plan which is doing the same. Drilling banger wells and growing their Montney funded by the reliable cash flows of their older Saskatchewan assets. Coincidently, i3' Simonette is next to $CPG' Montney. Will i3 become a little brother of $CPG? Likely.
The clean balance sheet is a game changer. AECO is almost $1 and there are some 100% gas producers that have a lot of dent and no hedged and fully AECO exposed. There very likely will be very stressed gas assets coming to the market soon just like 2020 and Majid & co will be keeping an eye on these like vultures. They have done this before and will repeat it.
The nearly $20M CAD in debt principle and interest annual savings provides huge flexibility to drill oil wells this year. I would not be hoping for a dividend increase as with gas prices, they simply do not have the cash flow to increase the dividend. It would need to come out of the balance sheet (debt) and management wont repeat this mistake again. Expect management to be going on the offensive and drilling oil wells here.
Tony, any thought on what land was part of this sale?
Wow, what a great deal. On the face, it looks fantastic. i3 itself was trading at
Spectacular deal making. Go Majid and Ryan.
JV Simonette with a target to double production surely next up.
"The increased liquidity on the company's balance sheet combined with its stable cash flows, will support both its organic and inorganic initiatives, as we actively look towards a dynamic 2024
https://www.proactiveinvestors.co.uk/companies/news/1045520/i3-energy-clears-debt-with-canada-royalty-sale-1045520.html
BUYBACKS, BUYBACKS, BUYBACKS!!!
Especially at these stupid prices down here.
(Rather than upping dividends again)…This still seems the missing piece in our total returns strategy.
I understand a simonette well costs around $12m and will come online at 750-1000bopd? This sale allows for two of them. Can replace the lost production and then some!
Excited for the 2024 programme.
Thanks Tony good points. Let’s see!
"If I were a betting man I think this may also contribute to a dividend increase to be announced. Or back to monthly dividend?"
Personally - I dont see them increasing the dividend at this point:
1) Gas is in the dumps
2) Production is now apparently somewhere between 19,000 & 20,000 - I was modelling slightly higher so will have to adjust when they provide the actual numbers
3) If I was in i3e's shoes - I'd be wanting to pay a sustainable dividend out of cash flow and not debt or one off asset sales. Because of 1) & 2) above cash flows are a little lower than some think. Still sufficient to cover the dividend and capex but not sufficient yet imo to be bumping up the dividend which contemplating growing production either via M&A or a significant capex program.
I could be wrong - thats just how I see it !
Surely we're now net cash +ve as well...? I thought we had circa USD$20m in debt? Either way there's close to USD$60m to pump into development opportunities. That's going to generate a hell of a lot more than 380bopd. Plus they'll be able to prove up more acreage. One would hope they can squeeze 2-3kbopd of liquids from $60m. Add improving gas and oil prices over the next 12 months and this could get back to 20p quite easily.
You are a betting man.
Nice timing of the RNS just before the Canadian exchange opens :-)
Tony, how do we know what the breakdown of liquids and gas were in the assets disposed of, I note i3 talk of boepd not bopd, thus I assume this is not all oil assets?
Wow thats a beauty
For those that didn’t read past the headlines
1) A little bit disappointing to see that production has slipped below 20,000 boepd
2) Looks like the announcement of the capital program may have slipped a week or two – but I’ll accept this RNS in lieu – it looks like they have been busy.
3) M&A still looks to be on the cards!
4) They lose about $3.61m in yearly revenue from the sale – but this is more than made up by savings on Interest and capital repayments and the loan is now completely retired! Great deal.
“……..all while preserving a substantial, low decline, production base exceeding 19,000 boe/d (~48% liquids). The increased liquidity on the Company's balance sheet combined with its stable cash flows, will support both its organic and inorganic initiatives, as we actively look towards a dynamic 2024."
“The Company now looks forward to updating the market later this month with its capital programme for 2024.”
“The Royalty Disposition, involving most of the Company's royalty assets, but not its core Simonette Royalty, provides substantial capital and will allow i3 to accelerate value associated with its extensive inventory of high-return drilling locations, while jointly pursuing accretive inorganic growth initiatives.”
“The Royalty Disposition is comprised of i3 fee royalties, i3 gross overriding royalties, along with certain newly created royalties on a minor subset of previously unburdened lands, and is expected to average 388 boe/d in 2024, while delivering USD 3.61 million in royalty income based on strip pricing (as at 3 April 2024).”
MB I don't think you can just say divide by 2 or 3, how do you get to that?
My understanding is that royalty assets represent a form of ownership interest in oil and gas properties that entitles the holder to a share of the revenue generated from production, without bearing any of the costs associated with exploration, development, or operation. So I think you need a far greater understanding that just throwing out divide by 2 or 3.
As others have said - you can absolutely not value the Company on this metric for several reasons:
1) Oil weighted stocks attract much higher multiples than Gas weighted - in the order of 2 to 3 times or more depending on the actual weightings
2) Overiding royalties dont incur decomm, capex or opex costs hence much more valuable on a boe basis than production barrels - revenues with no costs !
If I were a betting man I think this may also contribute to a dividend increase to be announced. Or back to monthly dividend?
Increased reserves yesterday etc. thoughts?
Divide by 2 or 3 perhaps? There are no hard and fast rules, except that oily production is generally worth more than gassy.