focusIR May 2024 Investor Webinar: Blue Whale, Kavango, Taseko Mines & CQS Natural Resources. Catch up with the webinar here.
Fantastic. Majid confirmed that these barrels NOT part of their companies reserves and therefore booked locations for drilling!
Their Simonette Montney is a game changing company defining asset. Everyone hear should check out i3’ grandfather, Crescent Point Energy who did a whole Investor Day on their Montney that offsets i3’ Simonette.
https://www.crescentpointenergy.com/invest/2024-investor-day
Wondering why management did not provide clarity on exactly what acreage was part of this disposition. According to the company's last report (2023 H1):
"Royalty Interest production averaged 386 boepd in H1, which was in line with the same period of 2022. The
Company remains focused on maximizing third-party activity on its extensive portfolio of 198,040 acres of royalty
interest lands. During the first half of 2023, third-party operators drilled and brought on production 3 wells within
the Company’s royalty interest properties."
Today's RNS indicates that 16,160 acres of Montney royalty land was kept which indicates that approx. 182K acres have been sold for the $35M. This could also be a great deal for the buyer depending on the quality of those lands.
i3' last investor slide deck is no longer on their website. Does anyone have any info how their Royalty Interest land was recorded within the total acreage? Was it part of the total that the company reported as total drilling acreage or kept separately? Another question for management would be whether this sale impacts the "total gross booked locations of 391 (254.4 net) across the Company's four core areas, for a total Company inventory (booked and unbooked) of greater than 950 gross (550 net) undeveloped locations." per the 2024 Reserve Report...
My previous message did not post correctly...
Wow, what a great deal. On the face, it looks fantastic. i3 itself was trading at less than $9K USD per barrel and they just sold 370 production for $64K USD per barrel. Wow. This management team does it again.
The devil will be in the detail howover. Royalty deals are about the LAND not the PRODUCTION so we really need to find out what and how much of their acreage is part of this deal. Does anyone know this detail? It looks like the Simonette was all or mostly excluded which confirms that this is THE core area for i3 which they will grow from reliable cashflows from their older Central Alberta assets. This is a copy of the new Crescent Point Energy business plan which is doing the same. Drilling banger wells and growing their Montney funded by the reliable cash flows of their older Saskatchewan assets. Coincidently, i3' Simonette is next to $CPG' Montney. Will i3 become a little brother of $CPG? Likely.
The clean balance sheet is a game changer. AECO is almost $1 and there are some 100% gas producers that have a lot of dent and no hedged and fully AECO exposed. There very likely will be very stressed gas assets coming to the market soon just like 2020 and Majid & co will be keeping an eye on these like vultures. They have done this before and will repeat it.
The nearly $20M CAD in debt principle and interest annual savings provides huge flexibility to drill oil wells this year. I would not be hoping for a dividend increase as with gas prices, they simply do not have the cash flow to increase the dividend. It would need to come out of the balance sheet (debt) and management wont repeat this mistake again. Expect management to be going on the offensive and drilling oil wells here.
Tony, any thought on what land was part of this sale?
Wow, what a great deal. On the face, it looks fantastic. i3 itself was trading at
Budget released. Confirmed no windfall taxes for O&G sector in Canada.
Thanks Tony. Ignore my previous question, I misread the results and thought that “no” won the vote hence my question on process to pay the dividend. Looks like it was a landslide loss for Canuck Da Divvy.
Just wondering if this has any affect with how they can pay the dividend? Any idea what plan B is?
100% they need to GGG. Majid and Co have proven so be very good managers, especially in operations and investment banking. They have navigated the company exceptionally well during very low commodity pricing and have proven to be shrewd businessmen when dealing with banks on debt negotiations and M&A. Now is the time to market the company via investment funds and get that Canadian and US ownership up there.
It is not up to generalist investors like me to convince management to do their job and market the company via investment bank and fund analyst coverage. As a CEO and President, they should know that this is an important part of their job. Below is i3' measly single Canadian analyst coverage for a 21,000 boe/d company:
Canaccord Genuity (though no longer listed on i3' website as analyst coverage?!)
A year ago when shareholders asked management why they have next to no Canadian coverage, they responded by saying that companies need to use the services of the banks to get coverage and i3 don't want to do that as its too expensive etc. though they are working on getting better coverage. IMO that was a bulls**t answer.
i3 Energy Comp Analyst Coverage below:
1) Crew Energy (30,200 boe/d)
https://crewenergy.com/investors/
ATB Capital Markets
BMO Capital Markets
Canaccord Genuity
Cormark Securities Inc.
Desjardins Capital
National Bank Financial
Peters & Co. Limited
Raymond James
RBC Capital Markets
Scotia Capital
Stifel FirstEnergy
TD Securities
Velocity Trade
2) Saturn Oil & Gas (26,890 boe/d)
https://saturnoil.com/investors/#analyst-coverage
Beacon Securities Limited, Canada
Canaccord Genuity Corp., Canada
Echelon Capital Markets, Canada
Eight Capital, Canada
Velocity Trade Capital, Canada
3) Pinecliff Energy (26,000 Boe/d)
https://www.pinecliffenergy.com/investor-relations#analyst
Cannacord Genuity
Desjardin Capital Markets
Haywood Securities Inc.
Paradigm Capital
Peters & Co.
Schacter Energy Research
Stifel FirstEnergy
4) Surge Energy (24,438 boe/d)
https://www.surgeenergy.ca/analyst-coverage/
Acumen Capital Partners
ATB Capital Markets
BMO Capital Markets
Canaccord Genuity
Cormark Securities
Eight Capital
National Bank Financial
Peters & Co.
Raymond James
Schachter Energy Research
Stifel FirstEnergy
Velocity Trade Capital
5) Cardinal Energy (22,500 boe/d)
https://cardinalenergy.ca/investors/analyst-coverage/
ATB Capital Markets
BMO
CIBC
Peters and Co.
Raymond James
RBC Capital Markets
Stifel FirstEnergy
6) Bonterra Energy (14,204 boe/d)
https://bonterraenergy.com/investors/
Acumen Capital
Stifel FirstEnergy
Haywood Securities
Paradigm Capital
Peters & Co
Raymond James
7) Journey Energy (12,400 boe/d)
Peters & Co. (https://vimeo.com/864017426/d8a3efff9e)
Several others
8) Yangarra (12,000 boe/d)
https://www.yangarra.ca/annual-reports/analyst-coverage/
Acumen Capital Finance Partners Limited
ATB Capital Markets
Canaccord Genuity
Cormark Securities Inc.
National Bank Financial
Paradigm Capital Inc.
Peters & Co
Raymond James Ltd.
9) InPlay Oil (9,500 boe/d)
https://www.inplayoil.com/investors/analyst-coverage
Acumen Capital Partners
ATB Capital Markets
Beacon Securities Limited
Canaccord Genuity
Schachter Energy Research Services
Noble Capital Markets, Inc.
Eight Capital
10) Gear Energy (6,000 boe/d)
Tony, you did not debunk anything. You pointed out that i3 has one third rate analyst covering it. Unlike it's peers, it has no major Canadian bank coverage and none of the leading Calgary based O&G investment banks. You do not have a leg to stand on in your weak argument that i3 has the same coverage of its peers. It simply does not!
" "UK investors have little knowledge of the Western Canadian oil basin" - This is a load of crap - an oil well is an oil well - there's nothing particularly special about a Canadan Oil Well . You may think you are smarter than the rest of the world - but you are not ! "
This is absolute rubbish Tony. A UK offshore well is NOT the same as a Central Alberta well. A US Permian well is NOT the same as a Central Alberta well. A NEBC Montney well is NOT the same as a Central Alberta well. An Alberta Montney well is NOT the same as a Central Alberta well. A Sask well is NOT the same as a Central Alberta well. A Fort McMurray oil sands well is NOT the same as a Central Alberta well. A Clearwater thermal heavy oil well is NOT the same as a Central Alberta well.
You are a terrible O&G investor is you think i3's Central Alberta oil wells are apples to apples to any of those listed above. They are not.
If an oil well is just an oil well. Why do certain asset's like Athabasca's production trade ($ per boe/d) trade as a huge premium to a conventional boe such as i3' or InPlay?
The average UK investor is NOT as familiar with the Western Canadian oil basin as Canadian investors. Delusional if you think they are. For a Canadian oil producer, i3 Energy's 10% Canadian investor base is simply pathetic and management should be ashamed of this, admit it and work to improve it. It is as simple as that. Indefensible.
"There is something wrong that Canadian's are only 10%." - I agree, put your hand in your pocket an buy more shares - simples !!
I own plenty of i3 Energy shares already. Canadian funds own ZERO shares due to managements substandard marketing of their company.
Very well said Tony.
Didn't I tell you that Tony would disagree and come to defend I3 Energy's poor analyst coverage. Tony some responses below to your comments (you didn't 'debunk' anything BTW):
1. "Couple of things wrong with this Imo and you probably wont like to hear it – Canadians only make up 10% of the shareholding, 90% are UK i.e. UK Investors call the shots. Secondly, your assertion that that this is the reason is purely speculation on your part yet you spit it out as fact. I will touch on a couple of reasons in a later response to another poster who asked me this question."
Yes, of course Canadians only represent 10% of i3' investor base! This is a result of near zero analyst coverage for this company wherein 100% of their revenue comes from Canada! No revenue is generated from the UK yet 90% of our investors come from there. UK investors have little knowledge of the Western Canadian oil basin. There is something wrong that Canadian's are only 10%. This should be significantly higher for a company whose operation are in Canada! Again, this is because of a lack of analyst coverage and no marketing of the company to Canadian investors.
2. “There are a few small caps that are not included. When Peters & Co held a conference last year, the question was asked why i3e was not in attendance/presenting. The response from the Company was that Peters & Co typically follow the larger names only and / or Companies that use Peter & Co’s banking services. This does not include I3e but it certainly includes a few small caps such as Gear Energy that do use their services. You will see from a link that I’ll put out later that Gear Energy also trades at the bottom end of the valuation multiples – how can that be if the're covered by Peters and Co??"
Gear Energy is a terrible example of another company with a low valuation multiple. You are ignoring that Gear Energy is currently up for sale. No sophisticated investor or investment fund will invest in a company that is for sale where there is a high likelihood that it could get taken under. Not a good comparison to i3 Energy.
Peters & Co was just one of the examples I used. There are many other investment banks/ funds that hold events and conferences where small caps have the opportunity to present. Since following i3, I have yet to see them present once in Canada. Eg below:
https://schachterenergyreport.ca/about/conference-sandbox/
3. "I3e is covered by Canaccord Genuity Group Inc. who are a leading independent, full-service financial services firm with an international footprint and who by the way are headquartered in Canada with offices in London and elsewhere."
Canaccord is the only single Canadian coverage. i3' peers have 5x the coverage.
4. If anyone is interested in a proper response to IBB_Invests posts direct from the horses mouth– would suggest you copy it and email it into Investor relations.."
i3 Energy IR do not respond to emails!! I have emailed severals times over the y
Tony wont admit it nor agree but the reason why i3 Energy doesn’t trade at 110% of its PDP is because no one in the Alberta O&G industry has heard of us. Furthermore, a part from one Tier 3 investment bank, I: has no market analyst coverage. Peters & Co, the leading Canadian O&G investment bank doesn’t include us in their small cap charts. None of the big banks such as RBC, TD etc put out market notes updates either.
A year ago, Majid and Co said that there was progress in Canada on this and to stay stuned but it was all waffle. They made no improvement with Canadian analyst coverage and if things as they are with i3 operating in the shadows, they will remain valued at 30-50% to peers.
Thanks GGG. Historically, Alberta gas (which gets AECO pricing) was a regional hub with gas going to Canada and then some down to the states. Due to more gas production than demand (Canada has a low population) AECO gas pricing generally sucks. It’s about 1/20 (yes 5%) to European gas pricing and also discounted to US Henry Hub pricing.
The Coastal Gas Link Pipeline (CGL) that just completed will take gas from North East British Colombia to the Canadian east coast for LNG Canada. This combined with new US LNG facilities coming online for the next 3 years means that much of North American gas, including gas from Canada, will now be sent for North America LNG production. This is expected to re-rate North American gas pricing multiples higher closer to the $10 global average for gas. Henry Hub could easily form a base at $6-8 while Alberta AECO form a new base at $3-5. This is multiples higher than the $1.5 it’s currently at and it means a lot more cash flow for Canadian gas producers like i3 revenue. If the thesis plays out it will be a game changer. A similar situation happened in Australia a decade ago when it built its LNG terminals where gas was previously regionalized and now shipped abroad.
Pinecliff CEO Phil Hodge has a great Twitter space on this. Ask Tony for the link.
How can you be invested in a small cap Canadian natural gas producer to the tune of hundreds of thousands of pounds and not know what the Coastal Gas Link (CGL) pipeline is….?!?
Canadian reporting requirements are being enforced from Q1 2024 onwards. 2023 YE would not be required by today.
Don’t expect a dividend increase this year with AECO still in the gutter. Maybe 2025 if AECO forms a base at $3 due to North America LNG demand pulling gas from Alberta south and LNG Canada of course. Management has admitted that it was a mistake raising it so high. On the flip side if debt is paid off fully by EOY then that’s $20M in debt expense that technically could be used for increased dividend. IMO focus will be on growth instead.
Agreed. He is shrewd and prudent which I like. Unlike some of his peers they are used car salesmen ie Surge Energy CEO, Paul Coulborne. My only negative for Majid is the IMO the below average IR and analyst coverage efforts. I am hopefully that will improve with the new Canadian reporting requirements. I have nothing bad to say with Majid’s operational management nor financial skills. Excellent job at both in this low commodity environment. They are set up really well here for gas price recovery in 2025.
Although they can monetize some of their plays , with the new loan facility I am not sure that they will do this as those very valuable plays such as Simmonette are liquids rich. We will get a better picture of management’s view for what is core and none core soon when they issue their 2024 Capex and development plan. I think we will see more JVs than outright dispositions…