Sapan Ghai, CCO at Sovereign Metals, discusses their superior graphite test results. Watch the video here.
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Thats great news!
Hope to see some news regarding partial sale of Cambo as well, benefitting from Rosebanks green light. Quite sure 100% share is not ITHs target project allocation.
About time too !
Hoping the shares get re rated
"The controversial Rosebank offshore development off Shetland has been granted consent by regulators.
Located 80 miles of west of Shetland, Rosebank is the UK's largest untapped oil field and is estimated to contain 500 million barrels of oil.
Development and production consents have been given to owners Equinor and Ithaca Energy, following the acceptance of an environmental statement..."
https://www.bbc.co.uk/news/uk-scotland-scotland-business-66933346
Should be due as soon as the big wigs return from their holidays
“During July, the Group announced successful exploration drilling at the K2 prospect together with the decision to proceed with follow on appraisal drilling. Results from the appraisal side-track are expected during September and will provide further data to determine a recoverable resource estimate and future development activity. The K2 prospect is an excellent demonstration of the Group's BUILD strategy targeting opportunities close to existing infrastructure to maximise value.”
O&G Exploration, Development, and Production is a very very high risk/cost business, hence, why would anyone/company with half a brain invest here in the NS and take all relating risks/costs while this now nonsensical crazy tax regime and costs (not forgetting NS decommissioning, Environmental, HSE, Net Zero……..etc.) are in place so that then the UK government can take any potential profits for nothing/personal political agendas; “Energy Security” in the UK has become a meaningless political slogan at a time when it should have become a top priority, DYOR!
Source: https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/oil/090623-interview-equinors-uk-rosebank-oil-project-to-be-crown-jewel-of-decarbonization
Equinor speaks first, followed by ITH chair Myerson.
Keep my fingers crossed that both projects will be sanctioned this year. Market has priced in certain level of divi-cut for 2024 if you ask me. Any positive development around these projects should boost Ithaca.
With oil prices now at $90+ and expected to rise further and OPEC+ cuts until year end, the likes of ITH should be raking it in and thus plenty of cash flow to secure dividend in 2025
Thanks for your thoughts Tamovv.
On the divi, I’m going to pencil in $200m until we get better guidance on the production number for next year. I do think they’ll have to b conservative, and ensure they still pay off a good chunk of the debt, especially whilst the two main development projects remain on ice.
That would give us $133m at the year-end results and another $100m around this time next year.
What I do find odd is why the drilling at GSA has been postponed. The tax regime is horrendous BUT the investment allowance is small bright spot. Labour, only last week, were still talking about a proper windfall tax and removing the improved allowance, I would have thought next year would be a good opportunity to proceed with any short cycle activities.
As you say, the hedging has and continues to be excellent. Harbour could learn a lot, especially given their Gas hedging for next year is still awful.
I do remain optimistic that once the current government see the damage they’re doing to the industry they’ll tweak the tax regime, this could be done in the on-going fiscal review. Whatever folk think about Oil & Gas we still need to produce it whilst there’s demand for it.
Many thansk for rasing this topic Megla. Noticed low activity here so tought it would be fruitless, but more than happy to share my thoughts:
The IPO documents guided for 420m 2024. I don´t think they can maintain this level for the reason you stated (15-30% of CFFO). However, I think they don´t want to fully disappoint IPO investors + parent company Delek raised Dividend to approx. 10% yield this year as well, so I expect them to use the upper boundery (30% CFFO). As long as they don´t risk running outside their leverage target range (which I totally don´t see, but surely they are bidding for some UK M&A targets/divestments from big oilers right now) I expect them to stick to 30%. Important to mention they won´t do buybacks in my opinion due to low freefloat of just 10%, so investor returns will be spent on divi 100%.
I was very pleased by their hedging performance, comparing ITH and HBR its mind boggling when you look at production and EBITDAX:
ITH 1st half 2023: 980 mUSD at 75.8kboe/d
HBR 1st half 2023: 1.400 mUSD at 196 kboe/d
so HBR did +42% EBITDAX at +158% daily production...
During the conference call they explained their hedging approach when showing the respective slide of their investor presentation and also commented on some good hedges they placed recently.
Of course lower production will impact CFFO, I haven´t had the time to fully update my model yet. I expect like 7/8 kboed less (they mentioned -5 kboed directly resulting of one investment they decided to skip, which was part of their 2024 baseline before).
Operating costs seem to be under control as well as finance and least costs, so just from my gut feeling (will update once I adjusted my financial model) I see 250-300 mUSD, giving a 2024 target divi. yield of 11,3%-17,3%. The lower end fits to the IPO valuation (offered around 11% if I recall correctly).
I am happy to add shares on levels of 140 pence, having the jucy dividend plus hopefully marco tailwinds in mind (praying for the UK government to announce after summer break).
So we know the IPO divi for 2023 will be respected, but does anyone have a view what the divi will be for next year?
I have a rough range of $150m - $300m, the lower being 15% of post tax CFFO and the higher 30% of post tax CFFO.
We know production will drop next year, so not an exact science, but interested to hear views.
Brent & UK Gas prices recovering from yesterday with also a weaker £GBP versus $USD here
https://tradingeconomics.com/commodities
Is that realise a surprise to you, all North Sea companies have said the same, its a clear message to UK government, if the latter dont make the North Sea investible, the UK O&G companies will be taking their investment elsewhere
The First Half Results say:
"Until the fiscal regime is improved, as a direct result of the Energy Profits Levy, investment across our operated and non‐operated portfolio has and will reduce, including the deferral and cancellation of certain 2023 and 2024 projects, impacting medium‐term production outlook, with production in 2024 expected to be lower than 2023 levels."
Is that a cause for concern?
Its another third, so 133 mUSD. Remember this from the last conference call.
Timing for the rest is shortly before Year End.
Looking very much forward to the results on Wednesday. They should suffer more than harbour from lower energy prices compared to last year, because of less hedging.
Crazy to see them paying 400 mUSD dividend this year, compared to HBRs 200 mUSD but 3x production. Would be interesting to hear if they comment on future dividend development at ITH. One of the last presentations gave general guidance in terms of percentage of CFFO, so with EPL still in place I think they have to cut to 200-250m from 2024 (just avoided to cut this year to not totally screw up IPO investors...).
Still one of my favorite stocks even though it fundamentally looks significantly more expensive then HBR. Like the management team at ITH and also at Delek Group. They just were a little unlucky again with timing of the siccar point purchase, could have bought it for 30-50% the price a little later... :-/
It has only just been updated, Tamovv. I’ve been checking regularly is well.
The remaining divi is about $270m of the $400m that they committed to. Not sure what the payout proportion will be at the interims.
Sorry, just seen Ithaca finally released it on their own website. I swear it hasn´t been there on yesterday already :D
Londoner,
Many thanks for providing that date. I wasn´t able to find it.
Could you please share your source? Looking very much forward to their Interims.
Interims next week, Wed 23rd Aug. You'll get your answer on the dividend date.
Anyone know when the next divi is?