Member Info for G_G_G

Ok so it's a repeat of Hammerphil's post from days ago. I was wondering why we haven't seen the company post something or the share price move a little. It's because there's nothing official. I'm not saying Hammerphil didn't receive this info, and I too believe someone probably said something they shouldn't have, but sadly until it's official, it means nothing for us. Back to waiting then. Anyone want to place bets on when we'll get news on:
1. EPC
2. Development program
3. Tariff (anything not even an approval)
4. Funding

"We were considerably undervalued versus peers on pretty much every metric pre-deal, which made us a target. We're NOW EVEN MORE UNDE versus peers, so even more attractive to a predator." - so even though PI's didn't get a fair shake at the placing - still a great deal for PI's ?

Tony, perhaps I'm not the smartest on here as I have no idea what you're trying to say. If our share price has gone backwards versus the share price of the company pre-deal, and in no way reflects the underlying value of the company post-deal (sure we can all agree on this point), then how can it possibly be a great deal for PIs? You have worked out what I'm saying in my last post right? That we (PIs) could get paid less in the event of a t/o then if it happened pre-deal. Let me explain, the bod receives an offer for 20p once the shares are printed. They no doubt will come out and say it fundamentally under-values the business. But what difference will that make if a couple of IIs (who now effectively own us) decide they'll take the easy tens of millions instant profit on the recent raise, not to mention the many more tens of millions from the 5.5p raise. As I said this is 'one of the obvious issues of doing 'great deals' in a manner that builds significant 'underlying value' that isn't reflected in the share price.'. Happens when you print lots of shares at a level far lower than the new underlying value of the business. Try to copy, paste and respond to the points that matter Tony.

And yet another 250k sold, but this time for 2.5p. I wonder how low we have to go to get something meaningful from the bod. It's not like we've been waiting very long.

Comments on here really do kill me. On buy-out, this is something I was talking about for a while before the acquisition, and I was using 20p as the example of a value that probably would be accepted by the IIs (who effectively own us). We were considerably undervalued versus peers on pretty much every metric pre-deal, which made us a target. We're now even more under-valued versus peers, so even more attractive to a predator. One of the obvious issues of doing 'great deals' in a manner that builds significant 'underlying value' that isn't reflected in the share price. Other than shareholders not benefitting more greatly from doing the same deal another way, it makes you an even bigger target. But I'm sure many on here have worked that one out. I wonder if the IIs would go for 20p...? After all they'll get to almost double their latest £40m. Probably all it would take, which funnily enough is the same share price (not value when fully diluted) that more than likely would have worked previously (imo). In many ways we deserve a low bid hostile take-over.

Hi Glen, yes I noted that statement. You could take it to mean what you've said, which indeed would be positive. It could also mean they intend to split the companies due to investor appetite not necessarily being aligned with both sides of our 'energy' offering. Ultimately I think we're all in agreement that we'll own little to none of the project if it goes ahead. My belief is we'll sell part / all of our ownership at the Shareholder Agreement Stage, which is post PPA & PCA, but pre-FC. CMEC would have all their guarantees at this point. But this could be 12 months or 5 years from now. Who knows with the way things are dragging out. Let's hope the tariff unlocks the PPA & PCA so we don't go through the same f@cking about as we are now. Tariff is no doubt the biggest hurdle though so I expect a very big re-rate when we get news, especially if we're down here. As I've said, hopefully Hanno can sort at least the EPC and funding concern before-hand so we have a springboard from 5p, rather than 2.5p. How high we go will be impacted by our share price at the time.

CF, where did you read the transmission line contract has been awarded? And why wouldn't nccl promote this - they've talked about it in the past. GLA

Agreed Tom you have been very diplomatic and polite for that matter. Let's see how long it takes for all the extra value to be reflected in the share price. I also cannot wait to see how they handle the next acquisition. Have a good night.

Tom, I think we know every angle of your pov as well. Should you 'move on' from your position?

'But the bod decided not to go down that avenue. That implies it was either not an option for them or not possible, or the longterm the metrics (in their opinion and with their future plans in mind) were in favour of a placing.'

You forgot an option in there. So clearly you don't know every angle of my pov, and others for that matter.

But you're right. I'll move on and only come back when I've updated my spreadsheets to let you know when the 'deep value' starts to reflect in the share price. At the moment it appears it's so deep no-one can see it, but that could be due to the poor visibility created by 360m hands floating about. But I'm sure they will clear up in no-time on the back of some news. Hope you get your speech back soon.

Tony, Tom, I could easily argue the opposite - that it's conjecture and hypothetical that you believe debt wasn't an option. Obviously there's no way I agree with that statement. Imo it has always been an option, and STILL IS. And there's no way that debt wouldn't have resulted in a completely different scenario for the share price and therefore PI wealth. It's just IIs wouldn't have their hands on another 360m shares. You know it is possible for a great deal to add significant underlying value to a company but not have it reflected in the share price. It tends to happen when you raise a significant amount of shares, at a significant discount to the underlying value of the enlarged company, and then hand it to IIs who you know are trading it. We've just witnessed it (again). And we're more than likely going to have it happen again.

Tony to answer your question (again), the deal was a good one with respect to how much we paid versus the value of the assets. But it was structured poorly for PIs, meaning that added value hasn't been reflected in the share price. That doesn't mean the share price won't go up. It will on a lower gradient, over a longer period of time. But it will go up more slowly (due to II profit taking - remember Graham's words), and won't hit the same highs in future had debt been used. So I'll say again. Great deal. Really, really great deal for IIs. Great deal for bod. Nowhere near as good for PIs. Arguing against this would mean you refuse to acknowledge the share price. Or how we'll struggle to break 15p in the near future. Or what the share price would be if they debt funded - one of those questions you refuse to answer.

Now Tony, let's see if you can finally answer my questions. You haven't done so, otherwise I wouldn't be asking (again). They're listed below as bullet points this time. Are you dodging the questions because it pains you to even contemplate they will do it again with the hundreds of millions of extra shares listed in the additional resolutions. Do you not want to say out loud what you'd think if it happens again in the scenario I outlined when the debt route will again be an option. I'm wondering whether you dismiss the debt v raise question because you fully know debt would have been far better for the share price and PIs. Saying 'well they didn't do it so I'm not answering' only serves to reinforce your reluctance to consider why the 'value' of the deal hasn't been reflected in the share price.

If you're able to answer my questions honestly, then perhaps you'll understand my answer to your question. Now let's see if you can put something in words.

Tom, see previous post regarding a likely scenario in future. As has been argued on here it's not about whether the deal is value accretive, it's whether it would have been better for the share price doing it via debt, a concept that appears to be too difficult for some here to contemplate. Both ways will have added value to the company, as the value of the deal remains the same. But in one scenario you have 360m shares being given to IIs at 11p that can be traded into the added value, and in the other you simply get the acquisition value with a manageable debt load for your new production and NOI levels. There of course would be a small discount for this modest debt load on our expanded and solid balance sheet.

As for one comment:
'The biggest thing that flatlines I3Energy’s SP is no news and there will be plenty of RNS’s in the coming weeks and months'
- Nope. The biggest thing that holds back the share price is II profit taking (listen to Graham in Zak Mir interview). We got to 16p because the IIs pulled back on their selling as the deal was being closed, meaning PIs were driving the share price on the back of the bod PR blitz. It also means PIs were the ones that got burned in the drop. Up until the PR blitz the share price couldn't break 10p for more than a week or two, so the 'news' theory isn't the reason we got well into double digits.

One last point on debt. Please stop comparing our debt proposition to disaster cases like HUR. There's absolutely nothing similar other than the word 'debt', and arguing otherwise simply shows a huge degree of ignorance. HUR were using a large amount of debt to effectively prove a risky production proposition i.e. it's wasn't conventional in any sense. So the debt is almost as risky as 'exploration debt', which is the type of debt WE SECURED FROM THE SAME IIs for the Nth Sea drills funnily enough. There's a big difference in 'exploration debt' and 'production debt'. Obviously exploration comes with risk. The debt is used to drill, with upside (and security) coming from an increase in reserves. There's no production or revenue linked to this debt. So this debt is harder to get, and attracts the worst terms. But debt linked to 'production' doesn't disappear down a drill hole. And when companies take on 'production linked' debt to make an acquisition of producing, conventional assets, they realize all or a significant proportion of the inherent value of the acquisition in their share price. You get more value assigned to your sp if you take on more debt and print less shares. This type of debt gets the best terms if it's linked to assets that are producing (i.e. no execution risk), and the debt load is manageable based on the balance sheet pre and post deal. It's comical that people on here are even comparing our situation to HUR or any other over-leveraged O&G basket case that took on unmanageable debt for exploration, or production with large execution risk.

No Tony you haven't answered my questions regarding a scenario that I see as quite likely given the additional resolutions attached to the vote on this deal. You did notice the vote on them being able to print hundreds of millions more shares didn't you? It matters not anyway because the circular on page 18 outlines that IIs will essentially decide what happens now and in future. Let's see if you can finally answer the below questions. And please don't try to avoid giving answers, as you're normally very good at estimating values and likelihoods.

- Let's imagine in 9 months time we're finally at 21p (likely timeline) and they print another 360m shares at 15p and hand them straight to IIs for another 'great deal', will you still be arguing there was no other way?
- Do you think debt would have been a better way?
- Will you still be arguing they couldn't have arranged a debt facility on our pre-deal 20kboepd production and +$80m NOI? Let's also assume this new great deal adds comparable NOI multiple to the recent deal so a much stronger balance sheet post deal.
- What do you think the share price would be if this acquisition was fully funded with debt? Do you think it would have gone up from 15p or down to placing price as per our current situation?
- What do you think will happen to the f/o news if it drops in the next month - will it re-rate us and hold, or spike and retreat?
- Please also remember Graham mentioned the IIs were holding back the share price all this time with their profit taking from the last raise (Zak Mir interview). But now we have another 360m shares.

Appreciate your answers this time.

Maestro, it won't move to 16p anytime soon. Re-read recent posts and try to understand how these things work. Just because the value is there doesn't mean IIs won't take their 5-20% on the excess shares they purchased. Remember if they flip for 20% it effectively lowers the average (improves the return) on their original outlay. And they'll keep doing this for months. Why do you think it took so long to get to 10p last time, when 'deep value' had us pegged at 15-18p? Why did we drop below placing price last time (even with such 'deep value')? And you think this time is going to be different? Tell me, are you guys going to vote in favor of another 360m shares being printed for the next great deal? Think of a scenario, like when we hit 20p in god knows how long and they print 360m more shares and hand them to IIs again at 15p, will you still be saying it was impossible to debt fund any of it? It's always better to have no / low debt? And it's a great deal, even though the share prince would drop to 15p and take an age to break above 20p again?

Meanwhile I see we're almost at placing price. Let's see if it breaks below. My money is it will happen, just like last time. And the ex-divi will help it along, unless they land something pretty good in the next 2 days to keep us in the 11's (and maybe 12's).

Agreed Benjan.

Chris, that's great to hear, thanks for letting us know. Let's hope they clear up the funding issue soon then.

GLA

You are correct Tony, he compared using the same multiple. As you know I believe the share price should be more than 21p as well. Bu it isn't, and won't be for some while. My point about what Graham said is he mentioned how the IIs were holding us back due to profit taking all this time. So why do it again? And why have another resolution to print another 360m shares in the circular if they intend to go down the debt route next time? As I've said, let's wait and see what happens next.

Best move for lths from here is to buy at / near / below placing price and accumulate as many shares as possible. SP will go up over time and there will be opportunities to trade into great news. In other words think like an II. Imo there'll be a reasonable amount of time to get shares on II terms regardless of the bod talking about 21p underlying value. I'm personally not expecting us to get near 21p until they're about to drill the Nth Sea (providing we have good f/o terms). Alternatively they do an equally 'great deal' and debt fund the lot. But if they print another 360m shares for another deal, and again hand them to IIs at a deep discount to company underlying value post deal, well breaking 20p could be quite difficult. Hopefully the circular has at least made a few people think about how 'great deals' structured for IIs aren't necessarily great for PIs. Good debt versus bad debt. And how it's always better to use debt in the first instance for an acquisition like this, and then raise in the second instance from a much higher share price base. Doing it this way round does however mean less II ownership though. Hmm interesting... But I'm sure they're working on a debt facility so not a problem there. There's a way to make more out of this scenario, but nowhere near what could have been made if done differently. Let's see how everything pans out. GLA

You don't want to hear the answer to those resolutions Tony. What's quite clear is the intention to print a lot more shares (and buy back a lot less). Just how many, for how much, and who they'll hand them to this time, well I guess we'll have to wait and see. It will also be interesting to see how PIs feel about it then (especially the well-versed newbies here). But then again, they may be working on one of those impossible to negotiate debt facilities on the back of our now 20kboepd production and $80m NOI just in case another great last minute 'take it or leave it' £50m acquisition opportunity arises. But of course that would be impossible in today's debt market, especially for companies with balance sheets like ours. The section 'voting arrangements' on page 18 also reinforces how easily this can keep happening.

As for the share price not breaking below 11p. I've had another think about it and believe it quite well could. It's not unlike PIs to sell down below a placing price before, and for a period of time after, the shares are listed, especially when 360m are about to hit the market. They do this for a while because they know every time they buy above 11p the IIs will take profit. And given we have the ex-divi date in a few days, it doesn't even serve the interests of PIs to hold onto them up until the 360m shares are printed. So given the circumstances we find ourselves in, I'm going to say it's more than likely we will dip below 11p (maybe even 10p) post ex-divi in the run up to the shares being issued, and probably for a little while afterwards. And I'm going to put a longer time frame on how long it will take for us to break 15p. I'll go with at least 6 months with a fantastic f/o deal (and drilling scheduled in the new year) being the only thing in the near future that can change this.

To add to the point I'm making I noted something Graham said in the interview with Zak Mir. Take a listen from 3.45 where he explains the share price rise was because there were no IIs selling in the market while they were trying to finalise the deal. He goes on to explain how IIs would have capped the share price because of 'profit taking'. And yet they have just given 360m shares to the very same IIs for 11p (versus their now publicized underlying value of 21p). And even funnier is they are again talking about how the market has gotten it wrong. Nope. The only way we get to 21p is if PIs are again willing to pay the IIs a premium on the surplus shares they took up. And that's a lot of shares Tony. But maybe send an email to the company and they can explain what I've been saying (and now Graham as it turns out).

We could be in the 20's with a deal done differently. Or no deal and still above current sp with all the existing 'blue sky' opportunities of Canada and the Nth Sea and 360m less shares. So yeah a great deal for IIs and mgt, but not such a great deal for PIs. You starting to join the dots? Seeing a pattern? Feeling familiar?

Having said all this even a raise of £250k would be alright providing it's picked up mgt. Crazy the sp has gotten so low.

Indeed extrader. Well if Hanno thinks he's going to get a placing away then he may need to think again. Share price is heading toward 2p! I really don't understand the hold-up on the 4 pieces of news but he needs to get his act together and manage the things in his control.

1. EPC contract - In his control. Overdue by more than 6 months versus Hanno's timelines.
2. Development program - Partially in his control. Overdue by more than 4 months versus Hanno's timelines. This has also snuck into the latest presentation as being ahead of the tariff milestone. This has never been flagged as an important milestone, rather one that was to be completed at the same time as the tariff.
3. Tariff - Partially in his control. Overdue by more than 4 months versus Hanno's timelines.
4. Funding - Completely in Hanno's control.

The best way forward as I see it is to land news item 1 asap, and on the back of this mgt cash in a modest amount of options / warrants, say £250k. This will see us back to 5p range. They can sell the treasury shares into this for additional funds whilst we await our f@ck up African partners to scratch their @sses and do something. This should give us enough money to see us to year end and I don't think the market would react negatively to the treasury shares sale. The most annoying thing is EDM / Moz have been in receipt of the tariff envelope for over a year. And they've already approved a tariff at a higher rate in the recent (African time) past.

Either way, if they can execute the above we're at a much higher level for when the development program and tariff news finally land. It's a lot easier to get to 10p from 5p, than from 2.5p. They can then do a raise just in case our African partners are equally useless when trying to close out the PPA and PCA. Hell I doubt PIs would even care if some of the funds went to the solar project if they're raising at 8p on the back of the development program and tariff being agreed. If mgt are indeed confident of the outcome then it's possible for them to execute this plan and put us in a much better position for the tariff agreement. The only reasonable explanation for the delay in the EPC contract is it could be linked to the tariff. Given Hanno has never mentioned this as a reason I'm inclined to dismiss the idea. But he really does need to give us something. The news heavy period promised in January hasn't involved anything with the main project, and we're now in mid-July. He at least can solve the funding and confidence issue in the meantime, with signed EPC contract or not. GLA

Hanno has four things that he needs to finalise in the very near term 1. EPC contract, 2. Development program, 3. Tariff, 4. Funding. The way I see it just one of these pieces of news alongside a modest option / warrant cash-in by mgt and the share price will re-rate almost instantly. Confidence will be restored, and if the tariff takes until September at least we'll all feel better knowing the project is going ahead providing of course the other pieces of news have been delivered. The modest amount of warrants / options will more than likely be in the money as well so no loss for mgt. And if they do intend to sell the treasury shares, well selling at 5-6p following these pieces of news doubles the return versus selling now, and I doubt the market will penalise the sp for doing so. I'd for one applaud the move as combined with a modest cash-in of warrants and options it will likely fund us to year-end by which time the tariff will surely be sorted. Hopefully Hanno and SF are seeing the next piece of news as the ideal time to fix our funding and confidence issues. It would be a smart and welcomed play. AIMHO GLA

I just had time to go through the presentation. I agree it looks like an effort to instill some confidence in the company. Issue is there's so many unknows with regard to how the solar side of things will be spun out of nccl, let alone funding. And most importantly, what sort of ownership we retain of ngp. If I'm reading correctly (sorry I skimmed as working) does the last slide indicate we retain 40% ownership of ngp?

The other thing that jumped out is slide 8 has 'development program agreement with EDM and Moz government' + 'EPC contracts' as the next set of milestones. And 'tariff agreement' has been grouped with the PPA and PCA as a secondary set of milestones. I'm hoping this isn't them saying we're only getting the EPC contract and an agreed development program next up. First of all they need to give us the EPC contract, which is over 6 months late and 8 weeks since 'nearing final form'. Secondly, the development program has hardly been communicated as a significant milestone, and if this is meant to excite investors versus the tariff then they're going to be greatly disappointed. The tariff needs to come at the same time or very close to the EPC contract and development program given how long things have taken to date. It's what we're all waiting on and has always been expected to come next. Otherwise it says they've spent all this time debating and agreeing a development program, which still isn't agreed. I'm starting to think another month is going to end and still not a single thing of note on the main project will have been finalized. No doubt we'll get an update on the somewhat opaque solar side of the business though. Good thing is it stills says to me the main project is alive. But christ this company is frustrating to hold.

Can't say my immediate thoughts are good Gary. But if SF and mgt cash some options / warrants to provide additional funding then I'd say it's prudent. It's just without them clearing up our funding concern this sort of thing will always look bad. This is in their control. It's also been 8 weeks since the well overdue EPC contract was 'near final form'.

Extrader, what do you make of what's happening here?