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Most oil and gas companies are valued for their production and cash flows and not their reserves. TXP produce less than 1500boepd and have a market cap of over £180M. From that perspective even with a share price of 85p this still looks extremely overvalued in comparison to almost every other oil and gas producer listed on the TSXV and AIM.
The future outlook is really good unless Canada for some reason decides to join the "Axis of Evil" or some how it is revealed that I3E are doing major accounting fraud like what Enron did.
In the recent presentation they reckon our positions in:
- Clearwater
- Simonette
- The North Sea
Could each potentially at peak production produce more than what the entire company currently produces. 30,000 boepd for each was mentioned as a possibility. That's if their theory and modeling holds true.
So I3E could potentially produce 100k boepd, but theres a very long road ahead before that. We could potentially sell off assets or acquire other assets in the meantime. Or become the target of a take over bid.
Basically a £1 party is not outside the realm of possibility.
If this sort of price is sustained I wonder kind of payouts some of our wells will have. According to the recent presentation the recompletions in the central area have rates of returns of more than 500% and less than 6 month payouts but I'm not sure what oil and gas price that is based on.
I would rather oil be around $90 over a prolonged period of time (years) instead of a spike up to $150-200 especially if that were to lead to global economic stagnation and recession (and collapse of oil price).
@ tony - in the proactive investors interview (https://youtu.be/7TVk3WtGPgg) for the Simonette Rofr transaction in early June at 5mins Graham actually mentioned that I3e peers trade at 4-7 ntm cash flow, Im no body language expert but he kind of rubbed his nose when he said it - was he being perhaps a tad bit 'creative' with his statement?
Why are you bringing up some geezer called Eric Nuttal? Why are you bringing up his fund? Which own zero I3E shares.
Based on Grahams assumption, with our current market cap we are already trading at nearly x5 noi for FY 2021 noi (£50M noi vs £233M market cap)
As we are trading at ×5 noi for FY 2021 are you and Ggg suggesting that we are currently over valued? According to the idea of x3 noi we should be trading at roughly 13.5p based on FY NOI for 2021.
If Graham was not being creative with his claim and noi x4-7 was a valid assumption then we should trade at between 40-70p in 2023 based on projected noi for FY 2022. And between ~ 18-31p for FY 2021 noi.
We should look at noi for the trailing 12 month period.
We are already trading at x3 the projected ntm noi guidance of ~$95M in the 16 Aug rns and x2.6 noi of the ntm noi guidance of ~$119M based on the 26 Oct rns.
I dont think there was anything in particular in that rns that would trigger an immediate rerate - unless us being undervalued is reason enough.
Graham in the proactive investor interview about the Simonette consolidation ROFR mentioned that I3Es peers trade around x4 to x7 NOI.
Assuming we end the year with NOI of $66M (~£50M) we are trading at the bottom of what we should be trading at - share price could be as much as 30p.
However we know that NOI in Q3 and Q4 was $18M and $31.5M respectly or for a combined £37M and oil prices are even higher so far this quarter. NOI in 2021 H1 was just £12.5M. Our NOI for this quarter is most probably already higher than our NOI for 2021 H1.
Anyways what I got was if we have a NOI of $150M for 2022 our share price should trade between ~40-70p so 100-250% upside from here. This is based just on their Canadian assets and their Conservative drilling program - with sustained or even higher oil prices some of their wells will have a payout of just a few months.
I haven't watched it yet but its been uploaded to youtube:
https://www.youtube.com/watch?v=mZXBEWQodLI - starts about 1hr34mins in
and someone shared the presentation pdf url on twitter:
https://cdn.proactiveinvestors.com/upload/SponsorFile/File/2022_02/20220224-Proactive-One2One-i3-Energy-vF-1.pdf
Its perfectly normal for oil exploration companies conducting drills in high impact areas to reach $500M+ market caps. Nothing strange about our market cap at all. Actually there should be alot more upside from here.
For example
- Reconnaissance Energy Africa Ltd (TSX: RECO; OTC: RECAF) - operate in Namibia, over C$1B market cap
- CGX Energy Inc (TSX: OYL; OTC: CGXEF) - operate in Guyana offshore, over C$800M market cap
- Pantheon Resources Plc (LON: PANR, OTC: PTHRF)
Thanks for the clarification Mattybuoy, so its not an exchange listing but we are indeed tradable for US investors on the OTC marketplace - a sort of decentralised exchange from the 23 November 2021 and we have our own US ticker. The total volume traded since 23 November has only been 440,000 shares however 235,000 of that has happened in February. Interestingly ITEEF closed at 28¢ (20.5p) today.
More people coming but not sure about a herd.
We dont really do a good job marketing ourselves.
Then again many people seem to be adverse to oil investments.
We have an OTC listing for the US market - OTC:ITEEF and we have a listing in Germany - FRA:I32. But these barely get any volume - like 10k shares traded a day (in comparison 88Es OTC listing gets 10s to 100s of million in volume per day and their German listing gets millions per day in volume).
Hopefully with a monthly dividend will come a monthly financial and production update.
drjimjones no longer has any position in I3E but thinks it will do well.
https://twitter.com/Unlucky_Dude2/status/1489630740568547333
AimInvestor
@Unlucky_Dude2
#i3e $ite ????
"US$184MM of combined 2022/23 Net Operating Income
Mkt cap cap 200m
+50p stock this be.
@eri****tall
@drjimjonesceo
4:03 pm · 4 Feb 2022
Doc Jones Resource Investor
@drjimjonesceo
·
4 Feb
Replying to
@Unlucky_Dude2 and @eri****tall
it will be.
AimInvestor
@Unlucky_Dude2 4 Feb
You still in here?
Doc Jones Resource Investor
@drjimjonesceo 4 Feb
No, but I think it will do well.
"But keeping investors updated and front of mind in the market is also their job. And I'd say it's the only thing they need to improve for them to be celebrated as first-class mgt amongst investors and peers."
Yep, myself and many others have been critical about their communications in the past - thats why they get like a B/B+ from me and not an A/A+ from me.
"Companies with similar or worse worse fundamentals are valued at 50-100% our current mcap. I'd like that gap closed and it will only happen if they make a concerted effort at promoting their plans and achievements to the market. Some bod members love doing it, others hate it. But the companies that are valued higher than peers on key financial multiples normally have mgt that are willing to engage with the market on a regular basis."
I'll take a guess and say that those companies are more mature companies with several oil price cycles behind them - we are still quite new to Canada. I noticed some Canadian investors shy away from I3E when they see how many shares in issue there are and the percentage of institutional ownership.
"Currently there's quite a long list of things we need to hear. Fair value for me is 21p (5% yield) until we've heard more about increased production, cf, divi or the Nth Sea."
Really? 21p seems quite low to me - it was low when oil was at $69 and gas at $2.50.
We've already heard alot about the dividend - what else would you like to to hear about?
Why don't you just put this North Sea farmout on the back burner. The company will update us if and when an agreement has been made.
They updated the market in October and again in December with their NTM NOI projections. Seems like were getting alot of information in regards to that. I will agree a production update will be nice.
"Hopefully we'll break into the 20's next week and this will be our new home before pushing into the 30's with some news on the Nth Sea. GLA"
Why do you need to share price to reach a certain level by a certain date? Why not just sit back, relax and enjoy the ride.
"Cenkman, I don't really care about how many wells or acres of land we own. Our mgt have a responsibility to keep their company investors (owners) across their investment. This means basics like providing timely updates on quarterly production, which by market standards is over-due."
As mentioned by spike501 we are still within the acceptable timeframe of a timely update. I am certain that the company is adhering to the rules in regards to notifying the market of any material news. TSX rules allow interlisted companies to follow the corporate governance practices required by its primary listing should they wish to do so. That is provided that less than 25% of the overall trading volume of occurs on the Canadian stock exchange in the previous 12 month period - so I3E meets this requirements. Under AIM rules I3E are under no obligation whatsoever to even release a quarterly update.
I3E in February last year stated that they only 'intend' to provide quarterly updates. They didn't say that they 'will' do so.
"And managing / setting expectations on the various things they've said in the past e.g. progress on Canadian development, f/o or loan facility. Otherwise any listed company could say 'hey we're a complicated organisation with a lot of things going on so stop asking about your investment'."
Yep, to the impatient they may not be managing and setting expectations appropriately. To others they most certainly are. We had a operational and financial update at the end of October (so just under 4 months ago) - we've got an update today of their activities on the acreage. If I'm not mistaken according to the AIM rules they technically didn't even have to notify the market of the South Simonette transaction as it wasn't a substantial transaction which met the 'class tests' criteria (transaction was less than 10% of total size of company).
"They get paid a lot of money for a company of our size."
Well I think Majid is doing an amazing job. He has substantial experience in the sector - has substantial experience in getting the best bang for your buck. Care to suggest anyone with his capabilities and a comparable resume who can replace him?
The CEO of UKOG gets like £300k, their market cap is only £16M and they haven't successfully explored anything.
"And they award themselves a lot of easy options. Consequently they should be better than the average at their job, which includes regular shareholder engagement. They've made a lot excellent decisions that have grown the company."
I have been critical about the easy options that they have rewarded themselves - it happens alot in AIM companies. In their defence they are actually producing tangible results.
I sure hope they are not going to do a share buyback anytime soon (or even in the next couple of years). A buyback at this stage is not the most accretive use of capital.
Optimising existing wells, grabbing the low lying fruit on the acreage (i.e. drilling wells with less than 2 year payouts) and acquiring assets that have payouts of less than 3 years is a better use of money. Not spending £1M to buy 5.5M shares.
If they were so concerned about the number of shares in issue they can do something like a 5:1 consolidation.
Yep, I noticed that too. So we may potentially acquire have producing assets in the Permian in Texas. It doesn't look like much production just 110,000 boe per year - or roughly 300boepd. I'd be interested to know the oil/gas mix.