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Good morning all,

So with the anchor handlers now booked, I thought it worthwhile to carry out a logic based exercise on the last 2 drills, in order to try to establish a programme, for those that perhaps do not have the time or knowledge to understand what will take place over the next 4 weeks or so.

This is however merely my opinion, and should be taken as such and no more.

Firstly, I am delighted to see i3e have decided to contract the 3 Montrose based anchor handlers again, having done such a fine job with the move from the L2 well to the Serenity well site.

As reported last night, they are booked to commence on 3rd November.

If that indeed comes to pass and plug and abandonment works at Serenity run to plan (it is noteworthy that the anchor handlers have been booked 3 days in advance this time and not the day before), then the anchor handlers (coming from the very same port) should have the rig on the move by the late the next day (4th November).

If they then keep to the same pattern as Serenity (bear in mind these crews have done this operation once already in the other direction), then they should have the rig position by the following afternoon (5th November), and thus be leaving site.

At that point, the programme should then switch back to a similar path to that of the L2 pilot well. A copy of which was kindly provided at the time, by Redmirres on Twitter (see below).

https://twitter.com/Redmirres/status/1174633373576388609?s=20

If indeed so, then spud should come around about 2.5 days later ( as achieved at L2 where the permits met the programme. Serenity did not), which places the spud at 8th November.

The L2 pilot well then took 20 days to report its preliminary result, which would place the result around 27th November.

However, the L2 pilot well result missed its target, so I3E reported earlier than at Serenity, where oil shows and a deeper section of oil in the Valhall, encouraged a further 200ft of drilling and wireline logs.

The key thing to remember here is that in the Proactive interview from 29.10.2019, Majid Shafiq states that the well was TD'ed on Wednesday. The interview was on a Tuesday. Therefore, Serenity was actually TD'd on 23.10.2019, making the drill just 19 days.

So there is consistency there across the 2 drills, at circa 19-20 days for the drill.

What that should mean, is that a successful drill at A2, should take 20 days plus the time needed to complete the data acquisitions.

Serenity oil discovery RNS 29.10.2019 stated at the time ;

"data acquisition operations are nearing completion."

That places said operations at circa 5 days (23rd to 27th Oct), including report.

That would then place a successful drill result for A2 at 27th November plus 5 days = 1st December.

The very same 3 anchor handlers that were booked for Serenity move, are booked in once more.

Current start date 3rd November.

@Ophidian Understood but I do have some experience of similar type projects and there will be many issues to overcome with such things as integration of said equipment, M&E services, main service providers etc. I struggle with the off the shelf mentality somewhat, but I recognise your experience. my own view is that detailed design will take time because time in projects such as this, gets easily wasted.

I also believe that the lead time for said electrolyte equipment will take time including importation issues etc etc.

I have never seen a technical project of this sort get built quicker than 12 months and I would be surprised if it started now, and with all due respect to the people of South Africa, I don't see that improving in East London, because form says it won't be the case. I would think electrical utility connections alone would eat significantly into the time.

I would like to think differently, and I sincerely trust that your experiences with such things win the day, because electrolyte production start up in 2020, would be most welcome, but I stand by my arguments that buildings take time to build, and a EPC sign off in Feb 2020, for me challenges the school of thought, that electrolyte will be produced in 2020, but lets see.

What would be helpful would be some guidance from BMN on the subject.

@dubmaskullanga Then perhaps the RFP is more confusing than I thought and I have misinterpreted it.

If the "all structural steel and sheeting for the main facility that will cover the electrolyte vanadium plant will be existing," is infact the main building fabric, thus making the "electrolyte vanadium plant" EPC, actually the fit out only, then it is possible that they could still make 2020.

I still think the 2-3 months detailed design id prudent, and that design should influence the main facility fabric, such as mechanical and electrical ducts etc. So I really don't see how the main facility can be built successfully, without that detailed design in place. If it can then they could make Q4 2020, but I feel that is still a tad sporty.

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So its confusing at best.

Whichever way I look at it, as it stands with the words i have read in the RFP, unfortunately I cannot see electrolyte being produced at East London prior to 2021, be it that they could hit the very start of it, with a good tail wind.

However, that is not to say that BMN cannot produce it earlier at Vanchem, which they have indicated is possible, be it that it needs to be more clearly defined.

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Afternoon everyone,

Having reviewed the Bushveld Energy electrolyte plant tender, I would offer this ;

Key quotes - Request for Proposal ;

"Bids should be submitted electronically to tenders@bushveldenergy.com, no later than 17:00 (GMT) on Tuesday, 10 December 2019."

"A decision on the tender will be made within six (6) weeks of the submission date."

"The successful bidder shall upon receipt of written notification of an award, be required to conclude an EPC Agreement, with the IDC BE JV or nominated SPV"

"The Scope of Work encompasses the detail engineering, procurement and construction of a Vanadium
Electrolyte Plant located in East London. This covers the following:
• Detail design of vanadium electrolyte plant.
• Procurement, transportation to site and installation of all process and electrical equipment.
• Fabrication and installation of all structural, mechanical, plate work and piping items.
• Quality control management of all procured and fabricated items.
• Management and execution of plant construction.
• Integration of plant (minimum but not limited to mechanical, electrical, instrumentation, control)
• Plant commissioning, handover and project close out."

If we play a little safe here and say that the IDC/JV will make its decision inside 4 weeks (upto 6 weeks stated and we have Christmas in between), then the successful bidder would be appointed by the end of Jan 2020.

Then the contractor must sign the stated EPCV agreement, so we are likely looking at works commencing mid Feb onwards.

Then they have to start with a detailed design, which I would put down as being circa 2-3 months works.

So the start on site would likely be May 2020. We are then, in my view, looking at a circa minimum 9 months build.

So that would place first electrolyte at Q1 2021.

I don't like saying this but that is what the RFP is telling me. The fact the design is 'only' at a basic engineering level, means there is still much work to be done on the design side.

Things may of course work more quickly in S.A. to my own jurisdictions, but I somehow doubt it.

The only other factor that could influence things is the statement about ;

" All civil works including sumps, plinths and bund walls will be existing and constructed by the East London Industrial Development Zone. All structural steel and sheeting for the main facility that will cover the electrolyte vanadium plant will be existing. Storage facilities and office building will be existing."

The fact that groundworks have or will be already completed, could well knock 6-8 weeks off the prorgramme. The comment about "existing" structural steel and sheeting is very interesting, given its supposed to be a greenfield site. But it is contradicted by the further statement that ;

"Responsible for the design, procurement, fabrication and installation of all supporting structures required for the vanadium electrolyte plant."

So it is confusing at be

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Banks are not generally in the habit of taking away a company's assets, at the very first sign of a contractual term being breached. What they normally do is seek assurances or additional support from the company to alleviate said breach/additional risk.

That too, in my opinion, would apply, should A2 fail with its objective. That of course is the worst case scenario, but even then, it is highly likely that breathing space would be given to I3E, to explore the development of Serenity, in order to , at the very least, maximise its sale, or more likely, a farm out, that allows I3E to reduce its debt and progress the Serenity asset.

A scenario such as that, would likely lead to dilution, but given the size of Serenity, and it close proximity to available infrastructure, it would still end up delivering a healthy return from the current £35-40m MC that we see right now.

Yes it would take more time to deliver, and yes the profitability of the investment would reduce, but a prospect with likely 70mmbbl of recoverable oil, is a very big asset, which brings us full circle back to where we started.

An element of the market is attempting to take that oil discovery away. They did not like it beforehand and indeed wrote off its chances of success, and now that it has come in, and come in almost completely in line with the company's guidance, both technically and commercially, they don't want it to matter, well it does and by some margin.

More importantly, the RNS from 29th Oct 2019 states ;

"This result also adds confidence to our revised mapping of the Liberator field, which utilises the same reprocessed seismic dataset now used to map the Serenity field."

With all due respect to all commentators out there and indeed the entitlement they have to share their view point, there is very little justification for focusing in so heavily on the Junior debt facility. The evidence, when taken as a whole, demonstrates a very versatile, professional, and productive management team, that through the quality of the Serenity success, clearly has a very able and now successful technical team. That technical team has re-mapped Liberator and I am very much on board with that.

The Serenity oil discovery is "transformational" for this company, so much so that Majid Shafiq said at the start of the Proactive interview, that it was "an absolutely spectacular success" for I3E.

That means it is an absolutely spectacular success for I3E shareholders, and no term related to the junior debt facility is going to take that away.

Serenity means the state of being calm, peaceful, and untroubled. That is exactly where I am right now with I3E and their upcoming A2 drill, because the deals these guys have made coupled with the Serenity success, allow me to be.

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Some things to take note of in that bigger picture.

I3E have announced both through an RNS and now an interview with Proactive, that the RBL needs to be signed off by December. That is a fact that has been known by all parties since it was signed in June 2019.

The only thing that has changed since that time is the timing at which Liberator (and we do trust it will be) is proven, which has shrunk the time available to complete the facility (Originally circa Mid September, now early December). That is a risk.

However, anyone with any oil investment knowledge, or indeed knowledge of business, will know that the parties involved, will not have simply sat on their hands, awaiting an oil show. They will have completed as much of the paperwork as possible, in order to give the RBL facility the very best opportunity to succeed.

Furthermore, at last call, it was communicated by I3E that a syndicate of lenders, intending to be a part of the senior debt facility, are also members of the junior debt facility. A team of lenders that Majid Shafiq stated yesterday, have been working with I3E for the last 3 years and know one another very well.

It is therefore highly likely that said lenders are committed and indeed obligated to ensure that all reasonable efforts are made, to close out said RBL facility in good time.

In addition, do commentators really believe that upon success at A2, this group of lenders, including those in the junior facility, would simply walk away, or call in their debt, rather than offer a small negotiated, and perhaps financially beneficial, extension, in order to close out the deal. A deal that I repeat has been 3 years in the making.

Possible? Always. Likely ? Not really.

Banks exist to make money. This deal will make them money. It would not be thrown away for the sake of principals, or a clause in the contract that can be altered.

Do I3E have the abilities in place to negotiate that change.

Lets see now.

They have achieved a junior debt facility with no production in place.

They have all but negotiated a $100m RBL facility, with no production in place.

They have managed to persuade BGHE to defer up to £3m in oil services payments until first oil, in exchange for warrants, that came, at the time, came at a near 20% premium to the 10 day moving average.

They have managed to persuade Dolphin Drilling to offset a "material amount" of their costs beyond 30th Sept 2019, and sign a strategic agreement, for the use of Dolphin Drilling rigs, through to 2023.

What then are the chances that I3E can find a suitable WIN/WIN solution to a RBL facility, that to date, the company has not said will fail its December deadline, or indeed lead to a default on the junior debt facility. That assumption is a market led one, which whilst possible, is for me, given the recent deal making history of I3E management, unlikely to occur.

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Morning all,

I find myself once again somewhat gobsmacked but unfortunately not completely surprised, by the way many participants operate in the AIM market.

From the moment the failed L2 pilot well drill at Liberator was announced and the company decided to change course, the Serenity prospect became a major focus, perhaps even battleground, between an army of bears and a select band of bulls.

Much of the effort since then has in the main, attempted to find every single possible fault with Serenity and every skeleton that might lurk, in the company's closet. In doing so, questions have been asked of every aspect of I3E, with attempts made to undermine (be it by design or default) the professionalism, integrity, and therefore abilities of the BOD and their technical management team, and bring doubt to the whole idea that I3E could be a good investment.

These have included but are not exclusive to, its COS, the lack of a CPR, the fact that the block had previously been owned, and so must have been thoroughly examined, such that Serenity couldn't possibly be there, that this BOD cannot be trusted because their plans change too much. Whatever it may be, the intent was clear, our money should not be trusted to this company.

Now the Serenity prospect has come in and in my view, delivered a major new North Sea oil field, be it that it has to be appraised and financed. But those two facts do not take away how significant a find it is, or indeed the affect it will have on its neighbour Tain, and those that own it.

That field sits within what is considered to be a world class set of sands, and is highly likely connected to Tain, and so is automatically on the radar of at least one of the partners there. A belief that is backed by the fact that Serenity is clearly the much bigger brother of Tain.

That same field sits about 10-15km away from an existing FPSO, which has, to date, ample spare capacity to carry a unitized development, and can likely be delivered at a very reasonable cost, given that the full field development costs would need to be shared.

Yes it is early days and the company still has to complete its drilling programme and prove Liberator. However, the doubters would have me completely ignore the success at Serenity, because they have found a new bone to chew into. Now its about the junior debt facility, and a default that they imagine is relevant to the point that it renders Serenity, at best, a distressed asset that could need to be sold to pay off debt, that it is imagined cannot be re-negotiated in any manner.

This story, this event, that we are witnessing with I3E, is a prime example of the market's inability to think outside the box, or to breathe with the bigger picture, and consider isolated concerns, within the greater scheme of things.

@JP2000 I posted previously that in my view (and purely my view only), the revised bidding instructions will have triggered a 3-4 week period, to allow for bids to be updated (I favour 4 weeks).

That would place revised bids at circa end of next week. I would then think that AMER need circa 2 weeks to review and recommend their favourite, even though I suspect they have had one for a while.

So I would expect a recommended bid to come around about 15th November.

The company's statement about completing the FSP in Q4, is either related to determining a successful bidder, or as stated earlier, achieving a recommended bid that is backed by the directors and the major shareholders, which means everything would/could move fast after that, be it that it could well run into early 2020.

My view only based on previous experiences in other fields.

Take a look at slide 7 of the latest Liberator update. If they had sidetracked "towards the site it had already been drilled and found (oil) at," then they would have hit a lot of fresh air and disappointment. Plus the well they drilled gave little sign that a sidetrack would be successful, which is a key ingredient for justifying a sidetrack on an already tight drilling programme.

On your second point, I could not agree more. As I said earlier, the L2 pilot well could well turn out to be a very necessary leg on what could/should be, a very successful longer term journey.

The problem is Ophidian, in which direction would/should they have sidetracked? Without the data analysis, they would not have known just how far north Liberator is, from the original mapping that they had. A quick comparison of the 2 maps I posted in the tweets earlier, demonstrates this.

It has taken the entire duration of the Serenity well to determine where Liberator actually sits, and so the decision to down tools at Liberator and drill Serenity, has proved to be a good one.

Especially, when as we now see, they 'only' need to re-drill a 'local' pilot drill, in order to satisfy their RBL facility.

After further review, it may be confusing to some what I have just explained, and that was not my intent.

The updated map in the latest presentation (slide 7), is more than enough to see the relationship between the new A2 location and the discovery well.

Using the scale available, I have the distance between the 2 wells is c. 550m.

Apologies for any confusion.

https://i3.energy/wp-content/uploads/2019/10/20191029-i3-LIBERATOR-UPDATE-vF.pdf

Here are 2 links to a pair of tweets I have just published on the pending A2 pilot well.

https://twitter.com/BigBiteNow/status/1189503324497829888?s=20

https://twitter.com/BigBiteNow/status/1189503896508600320?s=20

The first shows the location of the original 13/23d discovery, which spurred I3E t acquire the first block.

The second shows the position of the new A2 pilot well.

The exact position North to South, needs a little more work, but it is quite clear that the original discovery has to sit within the channel boundary. So it cannot be all that far away.

The reason it is so close is because its task is to "priove the reservoir quality" through a "qualification test" and not as has been repeatedly claimed, to establish reserves. They are already there, be it that they were challenged by the L2 pilot well failure. However, I3E have clearly been able to adjust and agree a revised Phase 1 development, that still only requires a quality test of the reservoir, in order to be fulfilled.

Hence why I3E have positioned said pilot well, as close as they can to the existing discovery.

If anyone else were getting their hands on $100m so easily, they would likely be committing a crime to achieve it.

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What was clearly missed over the last few weeks, was not only the flexibility that I3E had with their Liberator area, but also the rather unique fact that the Lib phase 2 area CPR, was (as stated by Majid Shafiq in the 31st Oct 2018 interview with Proactive) rather cheekily produced, prior to I3E having control of the block.

Therefore, the resources there were designated as being "Contingent Resources, Development Unclarified. . . because the area is un-licenced, resources cannot be classified as Reserves" (See slides 4 and 6 of the CPR for Lib phase 2 area).

When I3E secured the phase 2 area, they were able to re-position the drill centre into that block, and bring into play the L4 zone and its 8mmbbl of 2C resources, without the need to do anything else, such as prove it.

The fact now that i3E are still talking about their $100m RBL facility but are only drilling "a few 100 metres to the North East" of the failed L2 pilot well (A position I might add, that practically places the well on top of the discovery well, despite the fact that said well, delivers an RBL to support the entire phase 1 development) compounds that argument all the more.

Not only that, it speaks volumes about the trust that the proposed lenders have in I3E management, the Liberator asset, and the revised mapping employed to define it, plus its ability to pump at high rates and deliver cash flows to pay off said RBL facility, in short order. In a nutshell, the low risk that the Liberator asset offers them, even after a perceived failed pilot well at L2.

The beauty of this entire situation is, that despite the fight that needed to be had to defend the truth post the L2 result, what the L2 failed well has actually done, is create a far more robust and secure Liberator phase 1 development plan, which in turn should now go on to kick off considerable cash flows, which if nothing else, will strengthen I3E's arm in negotiations across the board, including Serenity.

I have more observations to come but right now I3E is looking really good from where I am sitting.

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Having now had a chance to view the latest interview, first and foremost i would like to say just how rock solid this investment is for me right now, and how ludicrous the current valuation is, such that it is clear that what we are witnessing is simply temporary markets dynamics, which once overcome, will lead to a significant re-rate.

The interview had just about everything one could ever wish for ( and I will try my very best to avoid saying I told you so).

On the first Liberator L2 Pilot well COS, Majid Shafiq says this ;

"I know there were numbers out there of 90%. I don't think we ever put those numbers in the market"

On the revised and upcoming A2 well, he says ;

"We've drilled the 8 well (original discovery on LIB), we've drilled the 9 well, which is very close, we're drilling a few 100 metres north east of that, and we have the new seismic mapping, which tied into all those 2 well control points, and is a really good data set that got really really clear mapping of this sand, so its very high."

The core reasoning,

"The intention always was to drill a well here that meets a qualification test for the borrowing base, and that is what the A2 well was designed to do, and so we need to drill this A2 location and prove the reservoir quality. . . And it proves up a well location"

This is demonstrated by the fact that I3E are not being compelled to drill either the A3 or A4 locations, by their potential RBL lenders.

Talk immediately after the L2 pilot well was all about I3E potentially not having sufficient reserves in Phase 1, to fulfill an RBL facility for $100m.

However, the company throughout the whole L2 pilot well storm, maintained its stance, that they still had a "robust" phase 1 development. They just needed a successful drill to prove the reservoir quality.

If this was about reserves, then they would be positioning the next drill at a far more riskier location, such as A3.

Whats more interesting, and (i won't lie) for me personally very rewarding, is that the A4 location (see slide 7 below), is essentially the previous L4 location. That location could only ever have been the 8m in 2C resources, that formed part of the previous Phase 1 development.

From the Jan 2019 presentation (slide 8 - A regular favourite of mine these last few weeks) ;

"Phase I targets c.13 MMbbls 2P reserves and 8 MMbbls 2C contingent resources with planned initial flow rates of c.20,000
bopd"

I have previously, many times, stated that I3E remained confident about their phase 1 development, even after the failed L2 pilot well, because they had L4. That said, the A3 well would naturally have proved that location up further, prior to it being employed, purely because it would have happened first.

https://i3.energy/wp-content/uploads/2019/10/20191029-i3-LIBERATOR-UPDATE-vF.pdf

@Genghis15 With all due respect, I haven't employed an NPV as a means to calculate a future SP.

I have merely provided the existing NPVs as a means to demonstrate where Serenity should be heading. I have not even attempted to state an NPV for Serenity. Please review my posts fro clarification.

@Genghis15 With all due respect, I haven't employed an NPV as a means to calculate a future SP.

I have merely provided the existing NPVs as a means to demonstrate where Serenity should be heading. I have not even attempted to state an NPV for Serenity. Please review my posts fro clarification.

With regards to RRE and potential interest in the Serenity field and/or I3E, be it as owner or partner, I would offer this.

The Serenity result is barely out of the traps and the company has already stated that ;

"Additional pressure measurements and samples are in the process of being taken and the data recovered will be analysed over the coming weeks to develop further appraisal and development options for the Serenity discovery."

That is all going to take some time and in the meantime, I3E are going to drill their 2nd pilot well at Liberator, which is high impact because ;

"Progression of the RBL will require successful drilling at Liberator and the Company is obligated to enter the RBL no later than December 2019 in order to remain in compliance with the terms of its Junior Loan Note Facility."

If I3E are a RRE takeover target, which I doubt at this particular point in time, then RRE simply aren't going to be able to move quick enough to secure I3E for the sort of value that is being touted here right now.

By the time they even get out of the traps, I3E could/should have secured LIB phase 1 and the finance to go with it, which on top of the 100mmbbl of likely recoverable oil from Serenity, amounts to a much higher valuation.

And that is without even getting into the near 400m STOIIP sitting in Liberator West.

A I3E with LIB phase 1 fully funded, does not need to sell its assets unless the price is tempting enough to spark their interest. They are close enough to existing infrastructure to enable cost effective development that stimulates significant cash flows, which in turn can open up assets such as Serenity.

Shareholders would be wise pushing much further into the numbers here, because in my opinion they are potentially not appreciating what these assets are truly worth.

As I posted earlier on twitter.

According to #I3E Jan 2019 presentation, LIB at 21MMbbl of recoverable oil, had a NPV10 of $602m (3 wells). The revised LIB phase 1 now has 23MMbbl (4 wells). However, at 63m STOIIP in LIB phase 1, the recovery rate is 'only' 36.5%.

Blake next door is over 50%.

1 revised pilot well 500m from the L2 pilot location, will unlock that. Success there allows access to the $100m RBL facility, which should push #I3E through to first oil. Said first oil unlocks the cash flows necessary to appraise/develop Serenity and/or explore LIB West.

#I3E Serenity is on paper, more than 3 times the size of LIB phase 1 and is just 10km up the road and right next door to Tain, which currently plans to employ the same FPSO, that LIB phase 1 will use.

Therefore, develop costs will be higher there but not by a margin that would put much of a dent in the Serenity NPV10.

Today's market reaction is based more around the actual realisation of a positive result, than the investment case or true value of the company. With a little patience, that value will come out in time.

However, there are 2 major catalysts coming over the horizon, the pilot well at LIB phase 1 and the RBL facility close out.

The pilot well, just like the last one, is not a given. That said, they are now drilling into a field that has new upto to date seismic, has new well result data in the form of the L2 pilot well, but also has had its accuracy successfully tested through the Serenity well result.

That is why Majid Shafiq says ;

"This result also adds confidence to our revised mapping of the Liberator field, which utilises the same reprocessed seismic dataset now used to map the Serenity field, and integrates data from the recently drilled 13/23c-9 Liberator well. We now look forward to returning to Liberator where we'll continue the necessary drilling operations to progress that field towards development."

So the new pilot well has a very good chance of coming good. If it does then LIB phase 1 should then be secured. Then things should start to get really interesting around these parts.