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For anyone in doubt as to what is coming up here I would say this ;

In the proactive interview from 10th Sept the CEO Sahafiq had this to say (12 mins 24s) ;

"We need to drill the A3 well, we need to drill the Serenity well and incorporate all that data to determine precisely what we have in front of us here"

"We now do have a very valuable additional data point, we only had one data point in this field, we've now got two"

There may well be a number of things to check but the message to date is that the those 2 wells are getting drilled and they are far bigger deals than L2 could ever be.

I would think that the market is waiting on the confirmation of the next drill. There are no anchor handlers booked as yet for the Borgland Dolphin, which if drilling A3 has about 2.5km to travel the next drill position.

Of course the anchor handlers for the journey from Norway to the L2 drill site were not booked until 2 days before they were needed, so if as expected they are required then the booking could appear any day.

I suspect that should help get things on a more even keel once more.

As I stated earlier this morning in my answer to Olderandwiser, LOmbard have been very straight throughout their sales process, which started well before this drill result at circa 17.92%.

Everytime they have crossed a round figure they have reported. The only time they deviated away from this was the larger sale that came the day after the Tuesday RNS.

So it is no surprise that they have returned to their process and reported at the point they crossed 11%.

@Josiebear My pleasure. I have been in these situations before, the most prominent being BMN. At times like these it is about establishing clarity through all the noise and the smoke. The only way to do that is to test the data time and again. Read, read and read some more.

The detractors who are usually short on the stock, actually help solidify this because they throw the worst case scenarios into the pot. If they can be answered fully without lying to oneself, then they actually help strengthen the investment case.

There are questions to be answered here but in my opinion the majority of the concerns are manageable and demonstrate a substantial overreaction to the situation and the news that we have to date.

Good luck with your investment and those nerves of yours.

"So even if for some bizarre reason the reserves from Phase 2 were not included"

@Spike501 I take you point and in part i agree. I full recognise that the process is far more complicate than that and assumed we all knew that already.

Point A was to demonstrate the scope of reserves that can expected to be included in North Sea RBL applications and they can include all oil fields under the control of the borrower. I have scoured many other documents and found no evidence to counter this. The document is from April 2018 so is relevant although I recognise that it wasn't written 'recently' but such documents are very difficult to find. If you have evidence to the contrary then I would love to see it.

Point B. I have attempted to demonstrate that I3E plans are flexible be it that changes would cost time to development. However, this is not about when they achieve first oil but the fact that they can and the means by which they achieve it.

If Phase 1 failed to achieve an RBL facility of worth then the de-risking of Phase East/West and/or Serenity would give I3E scope to change their development plan to ensure that they achieved said facility.

Phase 1 is a I3E led plan not an RBL led desire.

As stated earlier the fields are maximum 10km apart and circa 15km from the FPSO. So even if for some bizarre reason the reserves from Phase 2 then I3E could adjust their plan to ensure the best finance was achieved.

The RBL lender is merely looking for sufficient collateral to offset their risk and a 50mmbbl find on Serenity for example would certainly achieve that given how little funding is actually needed to achieve Phase 1.

Yes I made an error also. Lomabrd last threshold cross was 11th Sept, so they have sold just 186k between Thurs and Friday last week, at a time when 12m shares were traded.

I tend to agree. Over 6m shares traded on Friday and Lombard only decided to shirt 180,000? That isn't the face of a distressed or determined seller.

@Spike501 Please take a look at the enclosed document.

Page 5 states ;

" RBL was established in Great Britain as “project financing,” where lenders agreed to grant credit based on the estimated cash flows from the North Sea fields according to development and production plans drawn up by promoters and approved by the government. In these cases, RBL is not available during the exploration phase of the field but can be obtained when proven reserves exist, even if there is no production yet."

"When the borrower has a portfolio of oil fields, the RBL “borrowing base” is calculated with the cash flow of the set of all reserves, which allows the lender to diversify its risk and the borrower to fund its exploration and development activities."

"Even when there is no production yet" across a "portfolio of oil fields" and " the cash flow of the set of all reserves"

https://www.duffandphelps.com/-/media/assets/pdfs/publications/valuation/oil-and-gas-intelligence-report-upstream-sector-2018.ashx

To be clear. There is documentation/evidence out there that states that ALL reserves across ALL fields owned by I3E, would be included in the RBL calculation, be it on a sliding scale.

That means Serenity too. Tain itends tying back to the Bleoheim FPSO just like Liberator Phase 1. So a revised development plan (if necessary) could even include Serenity but even if that isn't necessary the RBL would take the reserves there into allowance.

We must mot forget we are talking about 2 assets that are no more than 10km apart and only 15km or so away from a readily available FPSO. Far longer and more involved tie backs exist out there than what I3E is planning and that will have a large influence on things.

@spike501 Fair enough as is your prerogative but I disagree.

With all due respect you are demonstrating a misunderstanding of the data and the progress made by I3E since the CPRs were completed.

Firstly, in UK jurisdictions RBL providers will consider reserves across all fields that are held by the proposed borrower.

Secondly, and far more critical the reserves defined as Phase 1 are only Phase 1 because that is all that I3E owned at the time it was produced. Despite this the Phase 2 CPR stated that Liberator Phase 2 warranted 2C resources of 22mmbbl but defined them as "Contingent Resources, Development Unclarifed." (CPR page 6)

They also made it very clear that "because the area is un-licenced, resources cannot be classified as Reserves." (CPR page 4)

By acquiring the neighbouring block 13/23c I3E were able to update their development plan, move the drill centre and include an estimated 8mmbbl of 2C contingent resources as reserves because the development is now clarified and the bloack now licensed.

So it isn't phase 2 liberator anymore it is an extended Phase 1.

The rest of Phase 2 has been designated by the company as being Phase 2 but it will still be counted as part of the RBL if the resources can be classified as reserves with a development plan.

So a scenario.

L2 proves to be limited in its scope for reserves. Therefore, I3E would need to run with their back up well, which is L4, although that well is actually part of the stated first 2 well production (L2 + L4).

A3 is drilled and delivers a mid case result. Liberator East would then be further de-risked. If some reason I3E are struggling to get the level of RBL finance their desire from their 2 production wells (L2 and L4), they could easily switch focus to the Phase 2 area and run an alternative scenario of L4 + a new well that runs into the remaining 14mmbbl of reserves that are in the Liberator Phase 2 area.

Alternatively, if L2 and L4 are of sufficient size to achieve the desired level of funding, then the company could update their development plan to include the additional northern well, thus demonstrating it has a development plan and CAPEX for the lenders to assess as they see fit. Hence the flexibility.

Because the plan is flexible and not as rigid as the market is determined to make it, the whole of Liberator Phase 1 and Phase 2 East can easily be included in the RBL at a level that I3E determines is wise enough to secure their funding.

Each type of reserves carries varying percentage levels to its NPV10. What I3E needs to do is adjust their development plan as little as possible to ensure they meet the minimum criteria they require.

(2 of 2)

So the statement by I3E management has validity. The question is therefore about how what classification of reserves they are (proven, probable, possible). That classification will help determine the percentage of NPV (over simplified for this post) that the lenders attach to the total reserves in each class.

The key point here is that the belief that the funding is based purely on Liberator Phase 1 as it exists in the Phase 1 CPR is wrong.

Liberator Phase 2 holds 22mmbbl 2C resources that are classed as "Contingent Resources, Development Unclarified" (CPR Phase 2 page 6).

8mmbbl have been transferred to the reserves class, likely 2P, which would place them in "Approved for Development" class and in doing so secures them a far higher grading from the lenders on the discount to NPV scale.

In addition, the other 14mmbbl of 2C resources should be able to be included in the RBL calculations be it at a far lower ratio. The last known information I have found states 20%.

However, as we all know the A3 drill is looming large and should take centre stage to things long before the RBL is agreed and the lenders have done their due diligence.

Hence why I3E have stated that the RBL is dependent on a successful summer drilling campaign at Liberator and not at Liberator Phase 1.

A3 was always going to be a big drill because it potentially unlocks the substantial upside in Liberator Phase 2. It is now more so because of the result on LP2 and the fact that it comes prior to any further discussions on the RBL, which would always have been the case but is now more prominent.

However, the size of the RBL will be determined by both the technical results of both drills and the company can still secure funding based on the whole Liberator area and so the calculation/valuation and validity of Phase 1 should not be conducted on merely the assumption of how much recoverable oil Liberator Phase 1 holds in it.

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Good morning O&W.

Just picking up on your post from yesterday, I certainly agree that there are a number perceptions in play here that are driving the short term turbulent movements in the SP.

I agree wholeheartedly that there is certainly doubt over the current advertised funding levels for the Phase 1 development and it is as far as I can see driven by a misunderstanding of the maneuverability that I3E has with their lending.

I do however believe that it is more complex than that. There is a lack of information on what the L2 result actually means for the reserves that are defined in the 2 CPRs. That should hopefully be cleared up in the next LP2 update. In the meantime the market is playing it very safe, which is understandable. If we add in the doubt over Lombard and their remaining 11% and in my opinion a number of shorts that are taking a short term position based on all of the above doubt, then we have enough to upset the market enough to create this disconnect between what I3E is and what is perceived today.

I believe the shorts issue will come to close soon enough because there simply isn't enough information right now to justify a sustained push south and as far as we know the Borgland Dolphin is being readied for the A3 spud, which even at an adjusted COS, a theory that is not proven at this time, the risk reward offers considerable upside on a positive result there or at Serenity.

Lombard wise I have shared my view already that I don't believe their goal is to sell down hard or indeed to disrupt the market unnecessarily. Its an opinion based on watching their sells over the last few months or so.

So we are back to those reserves and the perception of what I3E can achieve with what they still have.

Contributors across the many social media outlets can try to undermine the reserves base as much as they want but the fact is the oil is there and the latest company interview states that the affect of LP2 will be on the 8mmbbl of reserves attached to that area only. That could change but it is current until further notice.

LP2 as we have established over the weekend, is designed to pick up oil through a horizontal section of the southern section of Liberator Phase 1. Therefore, there is oil there still but it is now about how much and how they re-design their wells to exploit it.

Currently the latest report from I3E is that they still have 13mmbbl of reserves plus LP2. 8mmbbl of these reserves are around the LP4 area, which were classed as contingent resources, Development unclarifed. The relocation of the drill centre to the edge of Liberator East has allowed those contingent resources to be turned into reserves (development clarified).

I am not assuming that Miton's sudden sell of is due to external issues. When they last reported on 24th July they went very quiet afterwards when there was opportunity to sell. They then suddenly sold off circa 5% off the back of the well result.

My view is they were the party with the stop loss in place and the MMs took full advantage but it is only a theory.

Nobody can say how much Lombard are selling and if and when they will stop and that's the point.

My opinion is they won't be sell everything because I have recorded their patterns previously as a means to establish when I thought the SP was going to push on from 50p. They have to date being very forthright, reporting every percentage threshold, which is rare. The last sell off went through several percentage barriers very quickly so could be put down to speed rather than a change of tact.

All other drops are reported by percent and they have had enough opportunity to sell into this market since the last threshold was breached on 11th Sept.

So whilst anything is possible, the percentages point to a de-risking of their position and not a rapid exit for the door. But until that is confirmed it will sit over the share and many will sit on the sidelines awaiting a driver for a change of direction.

@BWM Who truly knows why the SP has dropped so far and stayed there?

What we do know though is that a great many investors (too many) have been utterly bamboozled by the change on the drilling scheme from LP2 production well to L2 pilot well. Then we have the 90% COS that looks to have come from the house broker and was attached to that LP2 production well and not the pilot well.

Who here can say they invested on the basis that the LP2 pilot well was a "stratigraphic test well"?

Therefore, there aren't actually a great many investors out there who actually know what it was trying to achieve. Is that good?No it is not. Is it the company's fault? Partly but not near as much as many of these new visitors and experts in I3E would want us to believe.

The company is clear that it was a pilot well for the LP2 production well due to be drilled next year and was designed to optimise the well placement. Ideally that would have been right under a LP2 pilot well that had found a 70ft oil column but unfortunately that will not be the case.

Does it write off LP2 as a production well? No.

Does it relocate it? Yes that is what we understand to date.

The sheer lack of understanding of the COS, what the company themselves have said about this, and what the pilot well was supposed to achieve, might just have been enough to completely skew the reaction, a reaction that was then looking for more food to feed its fear, which came in the form of Miton and Lombard.

What that then all created was a period of deep uncertainty whilst the company (clearly communicated) took the time to assess the result, thus prolonging the uncertainty.

That creates an excellent opportunity to short and to drive down against the doubt on the anticipated iis seller(s) and the doubt being created on the validity of the investment case.

All these new contributors and articles certainly aren't be written by would be saviors. The Samaritans didn't just get word of I3E and decided to swoop in to tell us everything bad about them that we should supposedly have known already.

Is my theory correct? Possibly, possibly not? Is it possible? Yes it certainly is.

Shorters aren't born one way and stay that way. They merely play the market trend and opportunities that present themselves. Right now its all about the doubt on phase 1, on whether I3E can raise finance. Itr even goes as far as doubting that the reserves even exist. All designed to make investors who are already vulnerable think things are worse than they really are. So yes it is certainly possible.

However, a great many of those doubters will turn believers when it suits them. Ther are 2 high impact drills here, each of which could create a multi bagger situation. There are far worse punts on AIM with far worse chances that create far more attention than I3E is currently achieving but it'll come. Greed will see to that.

I would need to double check all videos etc to be absolutely sure. What I can 100% say is that in the June Proactive Investors presentation there is no mention of a chance of success in the slides, and in the Q&A session Mr Shafiq is asked again about the COS for the wells and he only mentions the A3 well and S1 Serenity well.

Like I say it requires a full check but it certainly looks to me that it did not come from the company. If true then that completely changes the dynamics here and gives credence to the surprise that I3E have shown in the interview from 10th Sept to both the share price and the reaction to the well result.

Nobody at this moment in time can assume or prove that the senior lenders needed to see oil in the pilot well. Of course if oil had been there then it would have of course helps greatly but nobody but the company can truly say if hitting no oil affects the senior debt facility and if it indeed does that it prevents Phase 1 from going ahead.

That they may need a portion of equity or a portion of alternative form of finance is likely but that does not prevent good money being made here or indeed take away the proven oil in the ground, although some would now like to remove that from the equation now also.

To be absolutely clear.

The WH Ireland note is based solely on the scheme as it was known in January 2019.

That scheme involved the drilling of a horizontal production well through the LP2 zone identified on slide 5 of the January presentation.

It had a very solid chance of hitting commercial oil because it would run into oil zones already confirmed through the original oil discovery.

Losing the zone around the pilot drill means that the LP2 production well will lose an amount of its reserves but not all of it because of its length and where it runs through.

Until we know where the edge of the channel truly is we simply do not know how much oil is attributable to LP2 and therefore its chances of being picked as one of the first 2 production wells or the third that is planned to come on line in 2021.

LP4 may just usurp it anyway because a successful A3 would confirm the reserves set aside for LP4 but could actually increase this further. A3 could also de-risk the zone immediately West from the drill centre, which could lead to a further re-think on the Phase 1 development. Until A3 is drilled we don't know what options I3E but the message is that the options are there even if the noise wants to concentrate on potential failure to achieve the Senior Debt Facility or A3 carrying greater risk.

What that does is completely ignore the fact that oil is there in Phase 1 and the story is now about what options I3E can implement to extract it. To simply take the Senior Debt Facility as it stands and say it is all or nothing is frankly just silly.

To even attempt to dismantle the company before we have even seen the L2 results in full and heard the company's thoughts on the revised reserves is simply wrong. I will guarantee that the more informed contributors here that are casting doubt over the whole business, really truly understand that there is still a solid business case here and are simply wishing to have a piece of it as cheaply as possible.

We are talking the captains sands, a prolific world class sands that is highly porous and that is not only clearly shown as existing under the larger body of Liberator but is far thicker than on Blake. A miss on a very narrow section of the field does not take that away. It questions the model and it certainly causes doubt but the main Liberator area is substantial and the COS is strong for a very good reason.

At times like this it is important for investors to ensure the fully understand the facts as they stand.

The COS that is paraded around for the LP2 pilot well is of little use because as Oil Man Jim has already pointed out the pilot well "was a stratigraphic test well, drilled solely to gain structural information"

The 84% being quoted here from the WH Ireland broker note from January is of no use whatsoever. It was produced when the 3 well programme involved an actual production well LP2. The closure of the Junior Debt Facilty brought about a change to that plan and the introduction of the pilot well.

RNS 16th Jan 2019 Announcement of New Corporate Presentation

Slide 6 clearly shows the programme and states "Liberator L2 Production well"

Slide 8 goes on to say "Borgland Dolphin semi-sub for first development well (L2) and appraisal well (A3) drilled in summer 2019"

Followed by ;

"Second development well and pipeline installation to be completed early 2020 with first oil expected summer 2020"

So the plan at that point was for LP2 to be drilled as a horizontal production well but to be brought on stream in 2020 with the 2nd production well and pipeline.

But by the time we get to the RNS 9th April 2019, the plans has changed ;

"i3 plans to drill the A3 appraisal well first, thereby fulfilling its licence obligation in Block 13/23c ("Liberator West"), followed by drilling the Liberator Phase I L2 pilot well and finally the S1 appraisal well into the Serenity prospect."

"This drilling campaign is intended to:" (amongst other things)

"determine the placement of the second Phase I production well (either L4 or L1) planned to be concurrently brought on stream with the L2 production well in 2020 at potential combined rates of approximately 20,000 barrels of oil per day"

The order of play changed again later with the pilot well coming first but the key message here is the change from LP2 production well to pilot well.

Therefore the note from WH Ireland talking about 84% COS was actually referring to the full horizontal production well, which whilst drilling through the pilot well zone, also picked up known oil accumulations in other areas of Liberator Phase 1. So to simply say that LP2 has failed is incorrect. To be a successful drill it has to produce commercial levels of oil. It would have done that even if the the pilot zone failed as it has done thus far (surveys and data still to be announced).

So the COS is irrelevant because investors are attempting to compare a vertical drill with a horizontal drill that picks up far more zones. Hence why I3E now say LP2 should still be available to them be it not in the same place.

LP1 is very much alive , LP4 requires the A3 drill but is accepted through the CPR as being reserves if a development plan is in place, which it is. LP2 will add reserves but its position must be reviewed.

So the scheme is alive be it it requires a solid review.

Thank you. Family day today but will look at it as and when I can.