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Deltalo credit where credit's due and that's a decent post, well done !

Wake up and smell the coffee.

The mass sell off has already happened there's good reason why it's dropped from over 40p to this level and all that is left to invest in is the risk factor.

If the company can turn it around that's a bonus but the market has already priced it in to fail.

The choice is yours and what you believe in.

I don't get this obsession with shorts, the share is already 93.5% down on the year anyone shorting for profit would have made their money by now.

I think the only people shorting are covering their severe losses and even then there's probably not enough shares out on loan to create a short squeeze, this all sounds like trapped traders looking for an angle that's going to leave people disappointed.

The market will decide the price with good or bad news coming.

Calder5 good points well put across from a firm believer.

Shaml89 good points well put across from a non believer.

deltalo the SP has fallen from over 40p to 2.65p within a year, all this shorting conspiracy is ridiculous as that boat has well sailed. There's a lot of trapped traders trying to sell into any ramp they can.

The interest coverage ratio is a financial metric that indicates a company's ability to meet its interest payment obligations on its debt.

IOG is no longer able to maintain an interest coverage ratio of 5. This situation is concerning for investors and creditors because it suggests that the company may be struggling to generate enough earnings to cover its interest payments.

Refinancing is not always a guaranteed solution. The company's ability to refinance its debt depends on various factors, including its creditworthiness, current financial performance, market conditions, and investor sentiment. In times of financial distress, obtaining new debt on favorable terms may be challenging.

It's actually possible to get a good idea of the potential revenue for 2H 23 from the latest 1H 23 RNS:

Regarding 1H 23 :

Gross average gas rate 3.8 mmscf/d

Average realised gas price 124p/therm

Revenue £9.5m.

2H 23:

current realised gas 70p but I'll use the same 124p/ therm

Gas production 25 mmscf/d ( RNS estimate is 20 - 30)

(Virtually double 1H 23)

Revenue £20m for 2H 23.

They need to make over £10.6m (per quarter ) for the cover ratio formula and this is where it's going to be close again for another waiver.

Production/ price per therm is going to be essential to keep the lights on here.

Bondholders won't care about the size of the sharecount and the company may not have many other non-dilutive options left.

Hence the massive drop in share price

Thanks I have it:

Revenue before sales deductions in the period of £9.5m, impacted by lower production rates, lower gas prices and higher partner royalty payments

o In periods of declining production and gas prices, the joint venture royalty formula increases the reduction in effective net economic interest beyond 20.2% of IOG's net 50% working interest, however in periods of higher production and gas prices this effect can reverse

This means that IOG retains a smaller portion of the revenue during challenging market conditions.

On the other hand, during periods of higher production and gas prices, the effect of the joint venture royalty formula can reverse.

Cover Ratio = EBIT / Interest Expense*5

EBIT = Interest Expense * 5

EBIT = €2,456,550.01 * 5 ≈ €12,282,750.05

To achieve a 5:1 cover ratio, the company's EBIT would need to be approximately €12,282,750.05 for the second quarter (April to June 2023).

So basically the company earned less than £10.627m (before tax) in the quarter and had to ask for a waiver.

It's a shame you can't have a mature reasoned respectfull debate.

There's no shame in making a loss , wrong decision or miscalculate sums.

After all that's what these boards are for.

I've been in this game long enough to know there's a few holders that are making money whichever way the SP goes and they don't like people saying things against their agenda.

And these people ruin it for genuine investors don't you!

Cover Ratio = EBIT / Interest Expense*5

Don't think you guys realise lower interest payment shows the company's in a worse situation.

Calder5 you are correct here's my updated calculations

Interest Payment for April 2023 = (€100 million) * (9.5% per annum / 12) + (€100 million) * (3.053% / 100 / 12) ≈ €791,666.67 + €25,416.67 ≈ €817,083.34

Interest Payment for May 2023 = (€100 million) * (9.5% per annum / 12) + (€100 million) * (3.274% / 100 / 12) ≈ €791,666.67 + €27,283.33 ≈ €818,950.00

Interest Payment for June 2023 = (€100 million) * (9.5% per annum / 12) + (€100 million) * (3.462% / 100 / 12) ≈ €791,666.67 + €28,850.00 ≈ €820,516.67

Total Repayment for the Second Quarter ≈ (€817,083.34) + (€818,950.00) + (€820,516.67) ≈ €2,456,550.01

My calculation for the second quarter interest payment they deferred using the relevant monthly EURIBOR rates.

Second Quarter (April to June 2023):

Interest Payment for April 2023 = (€100 million) * (9.5% per annum / 4) + (€100 million) * (3.053% / 100 / 4) ≈ €2,828,000

Interest Payment for May 2023 = (€100 million) * (9.5% per annum / 4) + (€100 million) * (3.274% / 100 / 4) ≈ €2,986,000

Interest Payment for June 2023 = (€100 million) * (9.5% per annum / 4) + (€100 million) * (3.462% / 100 / 4) ≈ €3,115,000

Total Repayment for the Second Quarter ≈ (€2,828,000) + (€2,986,000) + (€3,115,000) ≈ €8,929,000

Cash balance at 30 June 2023 of £20.3m, of which £7.3m restricted.

They had £13m free cash available and the repayment of €8,929,000 = £7,729,182 at today's exchange rate.

They had more than enough available funds to pay, so why did they defer and where are they going to get the funds to pay if they aren't using what they have in the bank?

On the same update it also mentions this and it probably does explain the current market reaction to IOG.

If the Company is unsuccessful in agreeing revised terms this may result in the need to raise alternative funds on whatever terms are available at the time.

The Directors have concluded that the uncertainty around the volatility of the gas price and future production levels from the Blythe H-2 well, as well as the need to take other mitigating actions described above represent a material uncertainty which may cast significant doubt on the Group's ability to continue as a going concern.

No it can't be used to offset towards future drilling, it's to offset future profits.

Drilling doesn't guarantee profits as shareholders here should already know.

The ring-fenced tax losses of £239.3 million means that any losses incurred in their oil and gas exploration and production activities can be offset against future profits generated from the same activities.

It wouldn't actually lose £10m in value because the loan note would likely be held until maturity, and the issuer of the loan note would be required to repay the loan amount at the agreed-upon maturity date. September 2024.

Some light reading for the weekend, looks like the loan note would be £10m down if it was converted today, will be interesting to see how that unfolds.

The €100 million bond (see below) and £11.6 million long-term, unsecured, non-interest-bearing Loan Note Instrument, convertible at 19p into 60,872,631 Ordinary Shares, both remained in place, with maturity dates in September 2024.

€100 million Bond

The Group’s €100 million 5-year senior secured Bond was issued in 2019 in the name of Independent Oil and Gas plc (the former name for the Company) to a range of institutional investors across the Nordic region, Europe, UK and Asia. The bond has a bullet repayment structure, with a maturity date of 20 September 2024, and an interest rate, payable quarterly, of 9.5 per cent per annum over the three-month EURIBOR rate. The Bond has a senior secured position over the Group’s licences and infrastructure assets, as well as any further licence in which the Group takes an ownership interest during the tenure of the Bond. Permitted use of funds are Phase 1 capital expenditure, financing costs and general corporate purposes.

The Bond has been listed since December 2019 on the Oslo Børs with the ISIN NO0010863236. It is callable from September 2022, with an initial call premium of 50% of the coupon (i.e. repayable at a cost of €104.75 million (£88 million) if the three month EURIBOR is at zero or lower), declining by 10% every six months thereafter. The Bond documentation includes the option, subject to conditions and investor appetite, to issue additional amounts up to a maximum aggregate of €30 million (£25.2 million) (“Tap Issues”). Tap Issues carry identical terms to the initial €100 million issue but may be issued at different prices.

SQZ100p I do like it when investors show their working out and yours is no exception but I do believe that your production estimate is about 16.5% too high.

25mmcsf/d would be a fairer amount to calculate from.

I refer to the latest RNS from 12th July:

We expect 2H23 production to average in the 20-30 mmscf/d range.

I think we'll get a better view of which way the wind blows after they make this upcoming payment. Not long to wait interesting to see what the market is pricing in too.