Excellent post by showme on Advfn8 Apr 2018 15:47
....
I have just put together a few figures and made a few assumptions with what we already know. The figures are mind blowing considering the market cap of i3e at �25m
What we know:- Reference is to the corporate presentation
* Liberator has 2P reserves of approx 11.7m barrels of brent quality oil based on a conservative recovery rate of 28% (page 6)
* Break even extraction using 1 drill is under $25 per barrel of oil (page 7)
* Each drill costs approx $30m but a multi well programme will reduce the individual cost ( lets assume to $25m which I think is conservative ) Both Graham ( when speaking to me)and Neill in the recent VOX market podcast have said they would rather a multi well campaign in Liberator and each well would deliver 10,000 bopd.
Assumptions:-
* Funding in the RNS 31st Jan happens and they get 33% of the asset.
* There will also be an interest element repaid from revenue.
* Brent is $70
* Multi drill campaign consists of 3 drills.
Figures:-
*3 drills at 10,000 bopd = 30,000 bopd
*This is 900,000 per month and 10.8m per year ( this would be Liberator pretty much done in one year with all reserves recovered ).
* Income would be $45 per barrel gross and $30 net as the JV partner gets a third.
10.8m recovered in 1 year at $30 per barrel net to i3e is
$324m income less interest and offshore oil UK corporation tax of 19%
There won't be 19% on all of the $324m as overhead costs and interest can be offset.
Lets assume $30m is paid in interest which is far higher then I expect, i3e from Liberator alone will still have a pre tax income of $296m in its first year of producing. Post tax it will be at least $240m.
$240m is approx �170m. That's �170m sat in the bank less company overhead costs which will be a few million at best. This is �4.63 earnings per share with the current shares in issue.
Now we have the 30th round bid which will triple the reserves from 11.7m to 33.7m
Liberator is 2P. The 30th round bid is 2C with a 63% chance of commercial success ( page 10)
So with the cost of 1 drill, there is a 63% chance of success of another 22m 2P reserves.
Assuming the same drill costs and extraction costs and the same JV with 3 drills, that is another �170m per year for 2 years.
With these 2 projects alone, i3 energy could have banked �500m after JV costs and corporation tax within 3 years.
Please feel free to comment on these figures. Reasonable assumptions have been made imo but in Liberator, we have �170m in net revenue post tax nailed on and assuming we get the 30th round bid block, there is a 63% chance of success in cashing in another �340m for the outlay of an exploration drill (�20m ?).
Market cap of �25m. Once the funding is announced, major re rate imo.
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