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Bloomberg is saying the price to book ratio is 0.58
We are effectively going down, as you quite rightly say we all know how much cash is being generated but the share price or market cap is not keeping up with this increase in NOI and this divergence is a little frustrating.
I'm not entirely convinced the number of shares or day traders are to blame for the recent lack of direction. Gas prices on the CME for June expiration are up 10% in 2 days and I would expect at least some of that to translate into a price rise for i3 but not at all. Something is up but can't put my finger on it.
I would be surprised if a bigger player isn't running the slide rule over i3 at this share price given the contents of the Monday morning RNS. I3 has a market cap of £291m at these levels which includes production of 20,000 boepd rising to at least 24,000, NOI of $241m, a 20% increase in it's Clearwater Land position and no debt, I could have listed many more positives here but I'll let other people fill in the gaps. I would like to know a figure for cash in the bank but didn't see it on the RNS.
Maybe some investors are scared given i3's history regarding the Liberator field and maybe some people didn't read the 5th May RNS correctly and thought Placing meant just that, some people say the share price has had a good run but I feel the 7.5p low for the year was undervalued and the share price was around 15p last July when the shares were issued to fund the Cenovus asset purchase.
Cable has also moved from around 1.38 from July last year to around 1.23 today making i3 around 10% cheaper in $ terms which I believe adds to my opinion that i3 is very undervalued. I don't do speculation so these are just my thoughts but if a major is looking to buy some good quality politically stable assets then surely i3 must be one of the first names on the list.
We don't actually know what the share price was when the deal was being arranged and as these things are not done overnight it could have been that 27p was above the market and someone was keen to buy. Market sentiment at the moment is terrible but i3's fundamentals are fantastic so when the market shakes off it's self induced depression we are well placed to push forward.
I feel yesterdays move was a total over reaction. The fundamentals of the company have not changed and Nat gas closed around 5% higher yesterday and is pushing up further today so the fundamentals have actually got better, the only difference is that a tranche of the companies shares swapped ownership at 27p and given the shares were at 27p a short while ago it could have actually been the market rate when the deal was negotiated.
It's probably a broker to broker fill which has to be registered on exchange to represent the change in ownership as opposed to any market maker involvement, the market makers will only get involved if they have client orders to fill.
On the plus side June Natgas is making new highs today so I wouldn't expect i3 to be around these levels for too long.
I think with i3 it is a case of jam today and jam tomorrow hence why the fundamental analysis of this share leads to the conclusion that it will go higher. Technical analysis and indicators although suggest it's been overbought I have seen shares double in value still in similar circumstances, some people may think that taking profits in a rising market is a good strategy but with i3 I think that buying into a rising market and capitalising on it's strength is the best investment strategy. I hope people are not concerned that it's an AIM listed company because to me it's only AIM in name and listing as it doesn't share the same attributes as most of the other AIM listed companies.