Member Info for Moleinahole

Thanks GG great post. It was me who asked about whether we could go with just the single well! Your reply makes sense I presume this is two wells at the lateral but is it sharing soone common top part them else why are they drilling through the higher intervals for the second well?.As you say if bunter is well up the intervals they are drilling through as long as they can get through it and seal it off fingers crossed its a temporary blip. I think the challenge is why that issue was headlined the way it was to herald delays.
You touch on the by question of Southwark first gas. Of course we should have been drilling it a year ago. This time the pipeline and onshore is in place. But obviously still plenty to do on the platform itself So it's not early Q4. Dec or slipping into Jan feels more likely. Wasn't original plan to be online Q2 from an Oct drill so Q4 does seem challenging but not impossible yet.

Your both right of course but I suspect Denis is happier when we are above 40p than under 30p.
All 3 of us I think have averages well under current price so are in profit. And waiting (and waiting for delivery over many years!). So whilst it's up over where we have been it's not where it should be and given we were at 35p when skipper was drilled years ago it's gone way down before back up.
The opportunity cost is of course always a hard one. Grass is often greener elsewhere and always hard when you have been grazing on a pasture for several years to move! The risk is always The slow one picks up and the hot pick drops!
So Dunder is right on balanced/spread of risk but I can also see Denis approach. But as I say I think we would all be happier north of 30p and 40p!

Peak have you by any chance bought back in or thinking of!
IOG has several dynamics driving the share price as you well know. The share register is relatively stable but dominated by large institutional and LOG admin holding. What I do think has happened is as the institutions have trimmed the shares were picked up by PI holders.
They have now created a trading dynamic that had been absent. That has once again made the share vulnerable to violent swings. As soon as the upward momentum stopped the RNS fired the starting gun on a sell off which from your posts you joined in on and has pushed it down way below where it should be.
How bad the management are is something that has been debated here for a while now. They have undountably created an impression that production is not stable and banked for phase 1 and Southwark is unclear. That will now take time and proof to shake off. Consistent production with no new issue every 6 weeks would baseline what they have which is still profitable. Completing Southwark without further issues and broadly on time will help. The future exploration and next license round let alone phase 2 is simply not priced in at all.
So there are reasons to be optimistic but it is all premised on stabilising what they have in phase 1. Until they do that or the market perceives they have there is no reason to move it back up. However, the free shares now in float if not scooped up by a predator make this a great trading share. Even if one of the phase 1 fields ultimately end up shut in or run at low volume pending a resolution there is the next round of production heading towards first gas.
So whilst it's been a poor 2022 so far for shareholders the situation is not unrecoverable. But it is frustrating as the missed opportunity from 2021 to 2022 having bet correctly on UK production when it was unfashionable is obvious for everyone to see. I'd like to have seen some changes strengthening the technical side of the management or some reassurance that they have a handle on the contracted resource. Personally I'd have liked the chair booted out as I don't think we should have had anyone else associated with Sound Energy anywhere near the company in the first place and especially post the feeble terms for the incentive scheme. But for now the focus has to be on completing the work programs and anticipating and cutting out the problems before they occur where foreseeable. If they do that then fine. If not there comes a point where changes are needed to get people in with the right focus.

Dunder yes understand the drill does not necessarily correlate to the salinity (we still know little detail on the subject) but a troubled one would tend to increase risk. We knew Elgood had issues during drilling but Blyth went smoothly as far as we knew. It's more if I had to choose a well to have issues id prefer Elgood if I had to choose as it's away from the platform and smaller reserves.
Interesting day ahead with the gas price cap announcements will see how gas producers react to the news.

Dundee I'm being slightly ironic when I say unlucky. I agree it's part marginal fields geology and part poor something else and that is the bit I can't compute if it's either the contractors or poor project management or a bit of both. There is a bit of bad luck but that should have been planned for or anticipated.
We will forever probably agree to disagree on the RRE almost offer but would they be interested now as Kist while the uncertainty generated since first gas continues?
The Southwark drill conundrum I agree - it's an odd one.

Lose both fields !???! That would be a!most inconceivable for two separate fields to suffer same fate. Blyth is more valuable however. So it's a surprise if it's Blyth as the drill there went better with no reported issues. Elgood was the one that had issues.

Anyway good on Truss on windfall tax so far. She is of course correct.

Problems occur but IOG capacity for left field bad news is quite incredible and has become a habit they seem unable to throw off.
I was looking at the chart yesterday. In terms of shareholder value we have built phase 1 but it was later than it should have been and remains plagued by bad luck which has clobbered the share price. Compared to itself and peers it's under performed. Based on 2021 and 2022 the board deserve no bonus share giveaway. Getting Southwark in broadly on time should have been the main determinate in 2022 the rest of phase 1 was late and should have been a 2021 target I did not expect to see Elgood and Blythe spluttering along like this.
It would not matter if IOG had many producing assets. But they don't so issues are amplified and continue to directly clobber the share price.
As posted other day I think they will let this run until they have some thing to say about Southwark and even then might be tempted to avoid talking about Blythe. The time to jump and trade out and back was the minute that last shocker RNS landed. Now the damage has been done it is indeed a wait. If it's further bad news they will handle it only once they have something more optimistic from Southwark. The pattern of how they choose to handle news is now very obvious and predictable. Until we know these are teething problems and not more deep rooted issues there is really not alot to say. But the current situation must have jolted LOG admin into evaluating their risk assessment and expectations.
Painful to watch this unfolding at moment so yes news (good!) Would be nice.
I would not like to even guess what can go wrong next.

Pipe I agree the opex at original pricedeck of 45p would be a concern.
The high gas prices mean they surely will try and soldier on with Blythe (that's where the ADFVFN folk believe the issue is) until Southwark is online.

Alligator question I guess can't be answered until we get more information as to what is the underlying problem.

As of now all we know is that they continue to produce but having cut back the volume and increased the costs. But as Pipe says wears producing into good prices and that will continue this winter.

Whether we get any further update soon on the salinity and progress at Southwark I have my doubts. Next update should be Southwark reaching a drilling milestone from which a first gas date could be forecast with a bit more precision.

Dunderhead I agree. The puzzle from the last RNS was drilling fluid loss justified a statement of delays to Southwark with the delays unquantified. Just saying they had loss of fluid would have not been noteworthy but then using it to lead into a delay on an already troubled and delayed drill was unexpected.
Likewise the salinity and the increase in opex of 50%! That came out of nowhere with no timescale or explanation.
With just the two producing fields through a single platform the effect is amplified. I'm very puzzled by the tone set by the last RNS. The takeaways were reduced profitably through lower production and higher costs in phase 1 and Southwark might be delayed.
Both obviously needed to be released if that was the case. But the salinity seems odd to have suddenly started in August and the fluid loss on drilling unless it's been sudden and very severe is a really odd one. I guessing they have to finish both wells to produce. But is the delay weeks or months and would it mean the first gas is closer to 2023 like last year where the dates went out from Oct to early 2022 to mar/Apr?
It's the uncertainty that's damaging and the seemingly never ending catalogue of problems.
Coming back with some updates given the drop they have caused to the share price is necessary. The drilling progress may be easier than the salinity as that seems like it could be more complex to resolve. They really must know which field is causing it by now even if they may not know where it's coming from.

The other concern has to be the developing energy price instability. That should be good for a producer but it's incredible to see IOG share price drop from first gas. I suspect the issue is that IOG with its bond and capex to pay is more vulnerable until it's built it's cash pot up to further as yet unknown political interventions against UK producers. The impact of large numbers of consumers failing to pay will be interesting. If that translates into energy suppliers not paying the producers then in a global market what will producers do? Cut back supply and will the LNG suppliers divert to other markets?
The high price should be good for IOG but the delays and problems leave then less well placed than peers to take advantage. And that has been and continues to be the issue.
Combined with the composition of the share register with large institutions willing to trade, some newer PI trading and LOG overhang it's just frustrating.

Wooster the puzzle is this is well 2. The east well was ok. So the issue is well 2 is different and from memory I think a third well was planned for future. The natural fractures might be good for the gas but you've got to complete the drill first and you can't just keep pumping fluid in you have to apply a technical solution without impacting the well going forwards. It's not uncommon but alot depends on exactly what the problem is.
Hence the question of options around Southwark.

I just invest for my sins in oil and gas the real offshore drill experts here will I'm sure chip in but as with the scouring we have little information to work on hence the uncertainty.

If they have had an analyst call and gave them more info than we got in an RNS then they should have done a proactive to put same message out or written a better RNS. The problem is the RNS combined with the altered guidance. I'll have to disagree with malcy on commending the management for that the result is obvious to see. Malcy also needs to look closer at the share price. It was in the 30p last year before the giveaway to fund the phase 1 delays. It's dropped post first gas and then doubled only to be clobbered again. So it's at best flat and at times has been near 50% down in the best gas market in a generation!
Has he actually said anything more about the salinity and drilling issues I'm at work will check the blog latter?

AJ the problem with your comment is the the drop is not to do with the drilling.
It's the issues on the production at phase 1. The guidance was only issued end of June for H2 to counter the previous issues that were reported. It's really odd that we have had injection issues, extra fluids and he salinity each as separate events.
That's the issue and hence the reaction as each time it's increased opex and dropped production.
Be interesting to see a broker and malcy comment/spin on this.
Be nice if they also went and did a podcast with proactive to explain further what is going on.

Singapore I agree with your thinking.
The high opex compared to peers was a point I have previously raised. It's in part due to the low volumes but the RNS has effectively increased them by 50% largely off the lower volume and higher cost of fluid handling. Given previous guidance confirmed volume at opex end of June then something is really not right in July/aug. The previous guidance had already built in delays so while it's still profitable against base case a range of 15p to 20p is a 50% increase in opex in the last few weeks.
The other issue with valuing is they need to generate cash to repay loans and fun capex for 2022 to 2024. The fields volume will run down quite quickly so they have to invest to justify a higher price longer term. That's why Nails worth decision, licensing round and exploration drills post Southwark are so important.
The company isn't broke but the higher gas price is shielding them from significant problems. They simply have to sort out the problems and get volume back to build up a cash cushion.
We have been punished here and the board need to mean it when they say they are focussed on shareholder value and deliver on it. The way out is through maintaining production.
One question I have is the issues on Southwark were on the west well. Could it go live just on the east well? Or do they have to go together?
Some of those who have sold from 40p will no doubt be buying back their holdings to profit from the drop. On a day with gas bills scheduled to go through the roof IOG is a good example of the risks in production that govt and consumers will no doubt overlook.

Problems with the ROV.
Problems when drilling Elgood.
Problems with Funding via LOG
Failure at Skipper.
Failure at Harvey.
Sailor I am still holding but it is wearisome. When will we have a period when something does not go wrong and at a corporate level the question I keep asking is why. Is the issue the challenges of these fields geologically which don't seem at face value complex to me. There is a pattern be it skipper, Harvey, redell, Elgood of poor understanding of geology. Or is the issues with the team of contractors we have engaged?
Yesterday RNS was odd. After 3 rah rah paragraphs spinning about gas pricing and that we were paired with Warren buffet they launched straight into salinity issues and then reduced production forecast and as you read on very little commentary on Southwark other than suddenly announcing Loss of drilling fluids and alluring to delays. Hidden in there was a week downtime to fix the injection on Blythe.
The whole RNS was terribly constructed. I can live with things going wrong as you rightly point out they have resolved things at cost and loss of production.

Where do they go from here?
1. They must update on this salinity issue as soon as possible. I'm sure they are working on it.
2. Trying putting out positive news about Southwark for a change and confirm dates quickly. After last year when we went from phase 1 date moving out 6 months when barely weeks from live date don't repeat that.
3. Stop hiding information. It is clearly leaking out anyway.
4. Review the team and contractors. The geological side seems weak. Seek more help from CalE if need be particularly in looking at next license round.
5 Make sure the exploration drills have been reviewed and planned and then reviewed again for the geological and technical aspects. Cut out the costly mistakes and problems.
As long as they resolve the problems and there is not underlying issue with phase 1 fields this will recover with strong gas prices. They are making money but the results and share price continues to be hit by this catalogue of problems.
I think the next license round will be interesting they need to do better than last time and secure some prospects or find other partners to use the pipeline.
Not a good week for IOG i think the board will already be grilled by CalE and a worried LOG let alone institutional investors. I don't think a shareholder action group will make any difference. The board are not unresponsive if you contact them. The issue is the procession of issues and problems and that needs technical and geological focus.
The uncertainty I think will make LOG more likely to sell at lower price. A clear indication from LOG on their intentions would help. There is no chance of a share buyback by IOG this year.

Alligator the reaction is not a surprise. They have delivered 2 key pieces of bad news.
Phase 1 has proved problematic now at every level. What you can't guage from the RNS apart from a first volume downgrade (effectively this was a profits warning RNS in all but name) is any sort of view about what it means. First we have had more liquids than planned for at Bacton to handle. We now have salinity in the fluids. Is this a problem with the well or the formation of the pipeline even. You can't calibrate. We don't know which field or anything to do anything other than speculate. They could live with it or maybe it's a sign the well or field is not as it should be.
Southwark is the same. Fluids lost and an unspecified delay as a result.
The combination is Blythe and Elgood has something undetermined wrong that has cut and risks production and Southwark something has not gone to plan yet again that clearly risks live date yet again.
It's beyond frustrating now and the board need to be having a close look at what's going wrong. Do we have competent contractors or is this just a ostly run of bad luck. The institutional holders and LOG will be as concerned as the smaller pi holders.
I don't think we are at shareholder action group level but my goodness the board need to wake up and provide further updates on this quickly.
The constant stream of problems and missing production into the best gas market in a generation would normally result in changes to get a grip and sort it out. They have delivered phase 1 late and beset by ongoing problems.
It's a credibility and trust thing. They have under delivered and are being vague about the problems. That will punish any share and it's going to mean it will take more cycles of reporting to rebuild momentum and credibility.
That is why it's so frustrating.

For those new to IOG welcome to the usual RNS. Lower revenue and still issues in phase 1 is clearly why the price has dropped since first gas rather than moving up as it should have done.
Southwark loss of drilling fluids and delays as a result is really disappointing having watched the phase 1 date go from Oct to mar losing last winter revenue a repeat performance on Southwark with continued below planned production in phase 1 would be disappointing.
The discount on IOG is justified as they continue to present problems to shareholders rather than revenue. It's so frustrating.
Salinity getting into the well once they isolate location how do you fix that?
Southwark loss of fluid is not uncommon but presume it's controlled now and has not effected the well productive capacity when they flow it. Be interested in any views on that sequence they have had issues in.
So they are making money but phase 1 so far is under producing and continues to present problems resulting in higher costs and lower revenue. The high gas prices have likely saved IOG from significant problems. I'll go out and bang my head on a wall later. What next? I think a takeover is less likely based on those results and the exploration drilling I think has increased in importance as Blythe and Elgood have clearly under performed. Southwark fingers crossed it's not put first gas back too far there and it still will flow at original planned rates.
Poor RNS and I'm a long time supporter of the company they have sat on some of this news again till this RNS but it is what it is.

Take your pick from the II like Lombard who got shares heavily discounted from around this level of LOG making sales to raise the cash to convert pre Southwark.
Hard to tell which but it's what we have been discussing on and off for 2 years. Log have to convert at some point and stay under 30%. They get a free shot in doing so they can cash out some shares and still hold same equity position afterwards with the convertible able to replace whatever they sell. Reducing pre Southwark makes sense from a risk management position if you have a large holding and the option to bank profit and still carry a large equity stake.
I thought it was LOG last time we saw this and it turned out to be LO. The danger LOG pose to IOG is that they can suppress the share price by selling and then sell again to someone looking to accumulate to launch a cheeky offer. Like Kist.
Someone is selling and someone is buying at this price leaving the share range bound and detached from the underlying cash generation changing the balance sheet in a positive way.

Sclum no need as I didn't judge the comments as worth it.
I might ping a note soon however there way on observations about current share price. I still find it perplexing but if there was anything market sensitive they would have released by now. So I still tend towards the constitution of our share register with a mix of in profit II, LOG and trading small investors meaning we have become trapped in this range decoupled from the underlying numbers. Needs a bit of news or numbers posted I think to shift it up and of course more buyers than sellers.

Rhino hit UK producers by all means but what about levelling up and taxing imported gas as well? Why no tax on every other sector marking up prices including other energy related businesses. Why not use the vat profits? It's attractive populist to impose windfall tax but if you marginally make it less profitable and an unpredictable tax regime long term fields like Southwark and Elgood and Blythe where the costs are actually high will become unattractive and higher risk in the future.
The argument about windfall tax reminds me of interest rates another populist interference in the market. They have been too low since 2008 and have robbed savers and created a property bubble. It's the return to market interest rates that people should fear as much as energy bills.
IOG have invested through the thin times and deserve a fair share. As I say I don't see why we should pay substantially more tax than others who are also profiting.
How about taxing India for buying oil circumventing sanctions? Taxing sanction busting oil products reimported. No that won't happen when you just hit UK production as that's easy. Why not renationalise everything and go right back to the 1970's.

Mask/lemming you have both hit the nail on the head.
IOG share price has simply not responded to the changed reality of the gas pricing.
The high costs compared to reserves was one of the metrics from a comparison report so done posted a few months ago. IOG is relatively expensive. That matters less at current pricing as it's a small % of the revenue. At original planning deck 45p the costs were more significant and a valid reason to discount the share price compared to others. But that does not hold true at the moment. It simply defies logic that it can be that far disconnected from the planning deck pricing and still at half of broker estimate based on lower numbers. Based on what is known it doesn't make sense that we continue to swim against the tide rather rise with it.

Oilman claims to have inside information? From what is publicly available production is in line with forecast once the various issues onshore and offshore had been resolved (fluid handling, electrical and chemical injection). There is nothing publicly available to indicate production has again been shut off or reduced after the series of initial very disappointing faults.
Perhaps you would like to share more details of this inside information? I suspect there is none as if there was we would be closer to 23p again rather than moving back towards the first gas 44p.
The debt position is not an issue given current known production volumes and pricing both in the short and medium terms.
Oilman to put your mind at rest I'm quite happy to pass your post on to the company for comment. James Chance has usually replied when I have mailed.

IOG is far from perfect and does not need unsubstantiated rumours circulated to move the share price one way or the other. It's quite capable of moving pre news as we saw post first gas when it was pretty clear some in the market knew of issues both on and offshore. There is no sign of such selling at the moment. So based on what is publicly available this remains a waiting game for confirmation of current production and price achieved and confirmation Southwark will deliver to the revised time frames and that the drilling confirmed the resources and expected flows. If they don't then the share price will continue to struggle. If they come in anywhere close to pre drill estimates then IOG are well placed going into strong 2022\2023 winter pricing that will substantially reduce the debt and or build up cash reserves.
The low share price, bulky holdings with institutions is what will make this attractive as an acquisition target but likely more so with Southwark also online.
As others have pointed out the multiple of share price to revenue is too low and will be tested as cash accumulates.