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From SP Angel this morning:
3 Energy* (I3E LN) 10.95p, Market Cap £132m: Solid start to the year
• i3 reported average 1Q24 production down 5% q/q to 19.4kboe/d generating $39.8m revenues, $16m net operating income and $8.7m adjusted EBITDA to end the period with $21m net debt as at 31st March.
• The Company subsequently sold the majority of its royalty assets (388boe/d) for $24.8m and its non-core Hangingstone asset (115boe/d) for $0.3m, which has moved the balance sheet back to a net cash position.
• I3 reiterated average FY24 production guidance of 18-19kboe/d (53% gas), which is based on a $50.9m 2024 capital budget to deliver 15 gross wells (10.5 net) with drilling operations weighed to 4Q24.
• The Company commented the financial restructuring supports delivery of production growth in 2025 and beyond and the continued payment of a stable quarterly dividend of 0.2565p/sh (9.5% annualised yield).
I3 first set of quarterly results show it was able to limit sequential production declines and post strong free cash flow of $15m, despite a slowdown in investment over the recent winter period in response to falling commodity prices. The Company’s balance sheet and liquidity position has subsequently been strengthened 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 ramp-up drilling activity going into 2H24, which sets up the business to provide funding next year to a high-impact Simonette Montney pad development drilling programme.
We think structural changes to North American natural gas prices and delivery on the objectives of its capex programme over the coming 12M should allow i3 to narrow the discount on its valuation multiples to closer in line to peers.
All in all I think this was quite a good update. The issue is the market simply sees the short term numbers, and has no appreciation of the turnaround happening later in the year. It's for this reason I think the sp is going to stagnate in the 10's for another 3-6 months. And why it could drop to the low 10's (and maybe 9's) after the next quarterly update.
The further drop in production for Q2 won't be a surprise for the more knowledgeable posters, but it will read worse than this update. There's also wildfires risk. And gas prices will decrease from these already historically low levels. All in all it will look bleak and people will react accordingly. The green shoots will be obvious for all to see in the Q3 report, with a significant step-up from Q4 report onwards. All going well it will be a stupidly cold winter, pipelines will be operational, and fires will have been minimal. The last point is the one that concerns me the most, as it will coincide with the Q2 update.
Still keeping a core holding and have some cash at the ready should we move toward 10p. Def. see 2025 being the start of the re-rate back to 15p range providing commodity prices improve and the fires aren't worse than last year. Any further drops in the sp over the next 6 months should be no more than 10%. Another joker in the pack is a couple more asset sales that are non-core holdings. I'm really happy they've started to look at their portfolio and starting trimming. They have more reserves than cash to exploit. Better to find a nice balance between the two. AIMHO GLA
This is what WHI had to say:
i3 Energy
Q1 Results – Better than forecast
i3 Energy’s Canadian shareholding has increased beyond 10% and as such it has started to
provide quarterly reporting in accordance with Canadian securities laws. Today, i3 Energy
reported its first quarterly results. Production for Q1 2024 at 19,410 boe/d was a touch
better than our 19,331 boe/d forecast. The cash margin per barrel of oil equivalent (“boe”)
came in ahead of our expectations at $US 6.99/boe compared to our forecast of $US
6.31/boe. Details of the beat are provided in Table 1 below. Broadly, our take away is that
the Q1 results again provide confidence in the delivery of i3 Energy’s assets and
management team. We reiterate our 21p fair value estimate for i3 Energy. As a reminder,
our fair value estimate is premised a 5x EV/2025 expected debt adjusted cash flow (“DACF”)
multiple. We believe the company’s solid operational results combined with rising
commodity prices will further support the positive trajectory of i3 Energy.
Need a concrete update on planned drills. Results largely expected. However, expect MS to now properly update us on drill results actual flows vs expected and same for costs and expected recoveries for the well duration.
"I’m not impressed, the cut in capex last year means production is down around 15%"
What are you not impressed with - they cut the capex because they had to ! i.e. protect the balance sheet (pay down debt and build cash) while at the same time maintaining the dividend.
What were the options - maintain capex, increase debt and run out of cash - that doesnt sound like a senible option. I think WHI referred to 2023 as a "reset" for i3e. They've done it, put the ship on a more sustainable path and the skies appear to be getting brighter!
I’m not impressed, thecut in capex last year means production is down around 15%. A much larger capex this year should fill the gap but there will be a time lag and I can see this drifting down again through the next quarter.
What investors need to keep in mind is that i3e have only drilled 3 wells since Q1 2023 and these were in Q4 2023 - so three wells in 14 months.
thats a double edged sword - production down since the entire portfolio declines at 15% in aggregate, but extremely low capex expense which means they have been able to shore up the balance sheet, pay down debt and fund the dividend. Now i3e have zero debt and are in position to fund a significant drilling program which will kick off in the coming weeks.
Free Cash flow was also pretty decent due to limited capex spend and it should also be noted that whilst overall production is down compared to Q4 2023, Oil and Condensate production is actually up around a 100 bopd. As everyone here knows - Oil & Condensate is by far the highest proportion of revenue.
Investors should expect a similarly unexciting Q2 update as production will be down on Q1 due to the absence of any new wells. Q3 is where things should start to tick up.
The other small positive in the report is the small reduction in ARO's
I suspect the market will react slightly negatively due to profit - but this should be old news and in large part due to non-cash charges ! It will be interestng to see what WHI have to say - they may even big it up and say "Solid Execution". And as others have noted here already - brokers have already factored this in and SP forecasts have actually moved higher !
Its a good update, if read properly. Much happier with quarterly reporting.
Fot those who were not follwing the story in the last year, production was reduced early due to falling gas prices etc as the company cut costs, protected reserves and ensured very good fiscal management....hence broker has raised target to 21p from 16p on the forward plans and ramping up production. Hope that helps.
Free cash flow (FCF) for Q1 2024 was $15.0 million compared to $9.9 million for the same 2023 period, elimination of all bank debt...broker has increased target to 21p.
https://twitter.com/surprised_trade/status/1790635709444792792
Some good news but mostly down on all metrics. Not sure the market will like this much as not showing organic growth.
Still nicely set up for later in the year.
“ Free cash flow (FCF)(1) for Q1 2024 was USD 15.0 million compared to USD 9.9 million for the same 2023 period.”
Well positioned (no pun) for strong drilling program H2.
Looks like mixed news. Production down on last year and prices reduced, leading to a loss making quarter.
Committed to a healthy dividend, still plenty of cash, albeit reduced.
Paid off debt, great news.
Looks balanced to me.
GLA
Had similar thing yesterday for 50000, did get them in the end but only after the trade request was rejected three times.
Results due tomorrow.
Certainly weird share price shenanigans going on today,tried to buy when it was 10.6 and was quoting 11.5 to buy on 100000 shares,then in the last few mins of trading it shot up.Didn't get my buy.
Nice holding. Try to hold up to 18p. :-)
Both 3LBs. I've still got 3m shares here.
GGG
Are you still in or waiting and hoping for a lower entry point?
Trades of less than 100 shares are moving the price up / down by the silly amounts. Real sp range is 10.80-11.05p, which can be seen when anyone wants to buy / sell in excess of 10,000 shares.
Yes. I noticed some strange sp action. Maybe somethings up in the background.
I’ve been accumulating again.
What's going on with the SP this week ?
It's just had a jump to 11.48 on very little volume prompting a few biggish sells and then back down again, the same happened yesterday.
It's behaving like the Canadian market.
Can someone explain if I'm reading it right?
So I3e in 2024 will have capex of $53mn but the production uplift by year end or after is going to be similar to what the current production is I.e. Around 20k-21k boepd. So essentially doubling of capex from 2023 levels just to stay more or less flat in terms of production. Does that imply the decline rates are big? How much would the production have been if capex was kept flat vs 2023?
"· £23.2 million capital expenditure in 2023 delivered 12 gross (8.0 net) wells, which were completed on budget in a high inflationary environment."
Reckon Vista is on the wrong board and that was meant for PTAL - we are talking about GTE NYSE listing over there.
Nyse listing?