Member Info for Moleinahole

A good slick presentation as usual. Need to have a read through the slides - don't recall anything particularly new but need to have a closer look as he flew through the deck - particularly the slides for the future hubs which I've not so far paid much attention too! The slide on the revenue and gas price projections warrants another look to cheer me up!

Things that I noted from the Q & A bit:

1. He addressed the Bacton going into the sea question - 15 years from current efforts and as future hydrogen hub and key to future energy its Tier 1 infrastructure providing SE Englands gas and OGA see Bacton as energy hub.
Refurb at terminal sounds like its on track and once that and the offshore bit complete then they will back gas and then flow straight away. So no change to guidance on phase 1 this quarter.
15 years of gas but more to be added in from multiple fields. (that sounds longer than I thought - would need to have a look at that as I thought most value was in early years - he may have been referring to Bacton generally rather than IOG specifically).
2. Contracts - simple contract based on Daily price - nominate amount and sell as you go.
3. LOG - good relationship - positive no indication they are selling and they want to maximise position and see IOG as a success. No change at moment and not selling out.
4. Rig - back into Dundee as we knew. Being investigated and repair plan underway. Both IOG and noble incentivised to get it back out. Weeks not months - no change on guidance. Frustrating but safety first. Not a block to first gas and sounds hopeful to still hit Q2 2022.

Apart from that I'd say worth a watch if it comes online. Main take away for me was the rig and LOG insight.

Thanks Dins registered to have a listen in.
Will be interesting to hear the spin and some validation of my patience. They obviously can't do anything price sensitive so it's the general tone of the pitch I'm interested in given small and PI investors seem not to have been on their minds for past 3 years.

Peak the trading remains strangely subdued since the great institutional giveaway. That followed by the delay at Southwark with the legs on the rig have taken all the momentum out of the share. Strangely quiet so opportunity to hear a bit of spin too good to miss.

We discussed Bacton and the coastal remediation work couple of years ago. I doubt we will see Bacton gas terminal allowed to drop into the sea at least not in the IOG extraction lifetime. The question would be how much it costs and how much Bacton continue to contribute to cost over next few years if they have to keep topping up the beach. Either way shared amongst all the Bacton companies I don't think it's a major concern.
Any sign of activity on the Hans Rig? I guess they will be fixing and then doing alot of testing before it comes back out again. Hopefully bit of news on that soon while we wait for them to finish connecting up for first gas sales.

Someone gifted shares at 25p when they were worth alot more is looking a good explanation! If its not LOG and more from Lombard then that leaves both of them with commanding holdings.

Edgar I agree with your thinking.
In the current climate you ask yourself on the balance of probability which direction is the share price heading. In this case there are hard numbers and tangible business activity to support higher forward share price projections.
What we can't control is the short to medium term activity of LOG and other institutional investors. They can have the effect of damping down what should otherwise be a value based calculation.
9m sold by someone - can only be Lombard or LOG - most likely LOG. They need to sell down to exercise the options both to stay under 30% and to raise cash and realise assets with a risk based mindset. A TR1 will confirm.
Their activity does risk arousing interest in buying IOG before we get to see the full program of work however.

And the rise and fall of the daily gas price and the share price should concentrate the minds of the LOG administrator in weighing up risk Vs reward of holding for them.

Yes both the giveaway placings at 10p and 25p other week have been complete gifts to the institutions both at the expense of long term holders.
I would have preferred a raise post first gas or not at all rather than 25p but they did it and so we have institutions who have a paper profits. When combined with the LOG conundrum in spite of good gas price and proximity to revenue the share price continues to face headwinds.
It's very much a waiting game as the fair value is north of here.
When they turn on the gas at Bacton in a few weeks (Yes after all the years waiting we are now only weeks away from a producing asset, a pipeline and onshore reception facilities) will be interesting to see if we can close that value gap and get up nearer 40p as a start.

Monkey even when we disagree here its done in a most civil way debating the issue at hand and long may that continue!

GG - thanks you've confirmed my own view on numbers and time. Based on that I think LOG admin will be out Q4 or early Q1 (Jan). Just can't see them hanging around to June 2022 - I reckon they would want to be out at @40p.

On the numbers. The key bit of early higher cash flows is it gives them some flexibility. The option to borrow less for phase 2 making that more profitable (I'm assuming they just pay off existing bond to schedule) or maybe they start to look at other opportunities. Maybe they have promised institutions dividends to keep them on board.

Edgar that's the question when does the adminstration end against timings on Southwark. 2 to 3 months same as Blythe? If they can extend then they may wait else first gas is the time.
It will be one or the other but they will be gone.

Welcome Rhino.
Yes was aware of the compensation we had discussed that few months back. The question I'm posing is what is their price! I would guess they check out on first gas as I can't see them staying for extra drills!
So that being the case one or more institution will be lined up. The big question is who that might be and at what price. They would want a bit of discount and hence that's why i think till they are out of the way they continue to act as a brake. But as I say value will come here as we reach first gas. It's been an interesting journey so far.

MCH I think there is a broad consensus that there is still a value gap to be closed here. If there wasn't I'd have sold a few by now!
If they go back to back into the exploration drilling it's going to be interesting but I think this is still shackled a bit by LOG who remain a risk with what they do in next few months. Will be nice when they are significantly reduced or gone.

You would think any CGT would be offset against other losses and would be the gain net investment but maybe IOG will do very well for them. The interesting bit is they might be time bound to sell their block holding. It's too big to do it in open market so how it's disposed of is going to be interesting. Too soon for company to buy back so an institution will have to take them or of course a buyer of the company on the lookout for 30%.

The game was played in the giveaway at 25p to the institutions. The moment LOG decided to sit and wait you could not buy volume.
It's a sit it out period unless you are looking to add in which case judging the direction is of course of interest.

On the question of value it's north of here Toro but when you did your numbers does it include the 50% farm out to CalE and you have to consider the cost and tax to get a meaningful number pure cash is good but it's only one part of the balance sheet. We borrowed a huge amount for the bond for phase 1 and to repay some of the debt (but LOG have still been able to pocket a huge and growing profit for the hard done by mini bond investors exceeding their promised return by some margin (in part at my expense)!).
The big question of when LOG and Lombard exit strategy given their large holdings mean we are hostage to them to a large degree. But value will out eventually here.

Trustatrade looks good to me. Assuming the drill mud loss was resolved and it was all completed and flow is sustained then they are pretty much there for Q4 gas as the risk is mostly gone.
The comment on revenue being above base case we knew would come.
So successful so far and off goes the rig to next location.
Makes the recent giveaway to the institutions at 25p all the better for them.

No - only because I already have a very large holding at limit and in place over a year ago and I'm at my risk limit here! I'm building other stocks positions at the moment and my average here is 17p but having been forced to average down several times over last few years after each downward correction in particular following skipper debacle and the great 10p giveaway when I participated and supported the placing! This time we had no invite to participate it being a short sharp raise - but I would have had to dig deep if it had been offered.

Peak it was a mates rates placing pure and simple. The purpose was sensible but the share was clearly being held back - it was either LOG selling, bad news or a placing given the proximity to gas and a rising gas price. So it was "convenient" a placing for future post phase 1 investment to secure the rig (allegedly needed right away - even though I thought we had some cash) arrived at that opportune moment. That matter out of the way surprise, surprise off we go again. Easiest money alot of those funds will make this year and Lombard were fully in with >11% of the pot on offer! The rest must have been spread about as no further TR1 and LOG admin held tight per TR1 today. So LOG and Lombard hold commanding stakes between them if they choose to sell on - shares are very concentrated in their hands where in the past it was PI holders.

News close - looking forward now to rest of Q4.

Edgar I guess alot depends on how you see the direction of the business. The gas runs down pretty quickly in phase 1. So they need a stream of future prospects to start to see value beyond. They have to repay the bond before we see the profit accumulate so you need for me to look at earnings post tax/debt servicing. Year 1 should substantially deal with the bond and then you are looking at year 2 to start to really generate cash. So you have to project the pricing into the future and thats where its as much an estimation.

For me the Elgood uncertainty on the reserves (on the back of Harvey and the other down grades on he reserves front) continues to make pricing difficult. We need that new profile - how sustainable and for how long is the flow rate. Blythe needs to come in close to original numbers and then we will have something to work on - we should get that soon. The gas price rise has masked to a large degree the reserves question for the moment certainly for phase 1. The decision to continue to drill starts to address the longer term question of reserve numbers. Long term they either need a stream of prospects coming online to maintain earnings or need to look to sell the worked up asset sooner rather than later. The decision to drill to me indicates they are looking more towards working up the assets now.

Either way I think IOG is a good news story for UK and also the LOG back story - they are doing very well clawing back money for the LOG investors at these prices! The current share price is pretty much back to where we were before we were bashed down to 10p to let the institution in. So its been a long haul here with so far not a huge return to show for it given the risks - so I tend to be very cautious on values here but I am pretty comfortable we should be higher now this placing is out of the way - but we await some key figures.

Edgar whilst is 180 a therm at moment the planning case and I suspect the broker will be in the 40 to 50 a therm area. Now the last year means that probably too low for phase 1 - alot of value is in year 1 and 2. So its a shame we are a few weeks later than originally planned but still looking to land into very strong gas into 2021/22 beyond the planning estimates.

Don't forget they have to repay the bond which once done puts them in a good place to look at options for the next round of work needing similar large sums for a hub. But having strong cash flows is of course very good news - had the gas price not shot up IOG would have been more constricted - its helped the raise for the drill extension option, mitigated to a degree the lower quantum of gas at Elgood (we still don't have a revised number). The balance sheet will soon start ticking over nicely with cash. The question is not just initial flow rates but how long they last.

Had the placing not been in the wind we could have progressed a bit more on the share price but still more to go - I had originally pencilled in 40p+ on first gas but have not done a recount recently.

Peak as you know I hit my target holding well over a year ago - so the ups and downs of last few years I have used to increase (not by trading!) my holding in several bites of the cherry.

I'm happy with overall direction - the what could have been with Skipper and Harvey means we are due a positive drill! it will be interesting to see if we move up now as given the significant change in gas price and proximity to market we should be north of here. With LOG not selling - this placing might explain the subdued share price performance.

Monkey I don't like being diluted and its always a pain watching the continued ability of the big boys to buy at discount! The board are very much aligned to them and the day we let the big boys in at 10p was when we went to the back of the line in terms of who matters!

Where the proceeds are clearly used for a defined purpose and not just lost in a general pot its more acceptable.

Hopefully, brakes can start to come off a bit now this is out of the way and the positive news flow commences again.

The bigger beasts here (CalE, LOG and the city) will be expecting a good return now. Lombard "only" took 4m of the placing (11.6% of the pot on offer) - so the rest have gone to others which is probably good.