Member Info for Moleinahole

Well they clearly don't want anyone attending making it as difficult as possible with the date, time, very short notice and requiring pre registration.
Given their performance in last year and the unjustified LTIP that is no surprise but pretty poor and shows how they think of their shareholders.

Deltalo the reserve report shows 2022 production was split equally Blythe and Elgood. Elgood is now depleted until they do compression in several years time.
So whilst we are generating cash it is at 50% less volume and lower price. H2 would get it back to likely the 2022 number or above in a success scenario.
Fortunately most of the cost is the operations and debt servicing. At the moment they are very reliant on gas price holding up and H1 carrying on even with water. Getting H2 online would make servicing the debt, repaying debt and funding exploration much easier. It can't occur quickly enough if you model out sensitivity to gas price or volume it's easy to see the dynamic at play. So last year's production revenue number is interesting but irrelevant. This year's volume and forward pricing is the key.

Wolster I understand your view and don't disagree.
You can only work on the pitch and with the tools\ players you have. So I'm being slightly flippant calling them a new team. It's mostly same people. IOG post Southwark is in a very different place. The share price is 4p from 44p because of the catalogue of problems. They have effectively written off their largest phase 1 asset before the bond has been repaid.
Its bleak because they have missed important deadlines where they could have cashed in on high gas prices to solve the funding. But at 4p nothing is priced in. It's valued pretty much at cash. They need to stabilise and H2 was a sensible call. Unfortunately they have hit another snag. They need to sort that and then trust that H2 does not have issues in the reservoir. If that works out then they have some breathing space to make better informed decisions. They absolutely need to close this out quickly before the bond covenant is tested.
They need a bit of goodwill from CalE and the bondholders to get back on track as well. They are still generating cash and have a phase 2 carry worth £60m.
But the hard truth is that you can't keep having the sort of issues we have seen - they lost the confidence of the institutional investors and instead the book is now held by more recent investors on low averages. It is both frustrating and depressing what has happened. But the damage was done the moment someone decided Southwark was worth the time and effort and cost as a phase 1 field. That can't be changed. The consequences are the company has gone from a safe\comfortable position to a much riskier profile relying on a single field to both fund development and device debt. That's why the institutions have bailed. I hope not to see them let back in by any sort of placing. Sadly it's been turned into something close to a coin toss. But virtually nothing is currently reflected in the price.

Gator/wolster that would never be in an RnS. That sort of risk detail would normally be in the more detailed documentation for the field development if anywhere. It's self evident lots of things can go wrong. Putting a comment like that in the 6th march RNS would simply cause confusion. IOG problem is that if it can go wrong it invariably does which is not a risk it's an issue that needs constantly re-evaluating as to why.
The new team as they like to try and differentiate from the previous team now have an early opportunity to demonstrate some capability. Let's hope they sort this one quickly.

I know it's common I've invested in enough oil and gas over the years to see it before. But it's different to H1. They RNS because it was different and had the potential to delay the date. That is key because IOG need to put some results on the board so they have a better story to tell the bondholders and shareholders.
Hopefully they can carry on and cement it off. But both remediation options will take time.
It would be more serious if the well was like H1 and has natural fractures letting in fluids. As someone else posted yesterday better to have the issue 500ft above than in the reservoir. I guess the challenge of sidetracking when so close to reservoir is how to avoid this feature and still enter near target location. So we have a trade-off of time\feasibility to seal vs list time going back to sidetrack.
The worst outcome would be they try to seal and still end up sidetracking. Either way it should not effect the ultimate objective of re-entering Blythe.
What would be problematic is if they have switched off H1 production pending resolution.

This is clearly different. If it was just natural fractures which we know H1 has because of the water then why have they RNS?
The difference is it's higher up above the reservoir and is producing non commercial gas and oil so they can't just leave it from an interval they won't produce.
Let's see what whether they can seal it off and carry on or have to go back higher and sidetrack.
Welcome to IOG.

You get the benefit of a good education with IOG when things don't go to plan.

We have debated the subject many times. The problems are being amplified by the very real risks they now pose to the company. It used to be moderately amusing but we are beyond that point now.
The consensus is I think that the complexity of these previously passed over fields with small volumes in difficult geology is alot riskier than thought. They are clearly fields people passed on for reasons.
Second, there have been repeated questions over the planning and preparation especially the sub sea work. Some problems like Southwark scouring and the bunter sandstone really should have been understood better. The A2 well result was so off the scale that something seems fundamentally wrong with the approach to the field.
Other issues have been bad luck like the rig legs issue. But collectively the optics don't look good each time something new goes wrong.
So it's likely a combination of bad luck, difficult geology and some poor planning and decision making. The in combination effects are clearly amplified due to IOG having a small portfolio other companies will have similar issues but if you have many work programs inflight don't matter as much.
Yes it's oversold but carries a risk premium due to knocking on the door of the bond covenants, repeated failure to deliver and a consequent risk of a need to raise equity at the bottom of the cycle. It's cheap for a reason as it's carrying alot of risk now. No long term holders here will be happy with how the last year has turned out.

Alligator even if they thought it a possibility they can't include every risk in an RNS!
Even if they did then they have an uncanny ability to corner the market in totally unexpected problems as seen at Southwark.
Having read up a bit on that formation I'm surprised. They obviously can't just drill through it so cement seems simplest option. Sidetrack how high would they need to go back to miss it? Once again the sub surface analysis is the weak spot. Mind we shouldn't even be having to do a second well on Blythe. It was a pretty dispassionate RNS. It's just so frustrating and reflects how patchy this geology is proving to be for phase 1.

I'm talking about the drilling. I know H1 has water issues in the reservoir but oddly that seemed to occur or was only reported quite a bit after the drilling.
Reading the RNS it's up to 4 weeks presumably that would worse case seems to be a more easily managed problem than Southwark drililng issues. But nonetheless an unwelcome surprise. Not alot you can do but sit it out as before. If your new to IOG get used to it and learn to grit your teeth when they drill.

Same pattern with every setback. This share has been battered down with steep drops every time.
Whilst it's a manageable problem a delay is a delay. Simply adds to IOG growing list of problems. Blythe H1 was the only drill that didn't have problems so it's odd H2 has hit a problem that H1 didn't. 500m from target and once again they hit a problem. As long as H1 is still online and flowing then they should be able to weather this setback. But it's just so frustrating. It's quite incredible their capacity to conjur up bad news.

About time share price picked up
Based on H1 we are entering time frame of news now. H1 drill was straightforward the issues was they drilled into a fractured compartment. Hopefully they have chosen better this time. They will know straight away it's hit or not as it does not need a frac.

Wolster phase 2 does not need funds from IOG we have a free carry subject to the cap. The issue is that phase 2 is on hold pending a decision that has been kicked down the road. Further work on Phase 1 like H2 and a further visit to Southwark and other exploration is when we need to stump up 50% cash. That is why it's unfortunate phase 2 is not yet ready to go but non phase 2 seems to moving ahead. Hence why cash preservation at the moment is important as unless it's phase 2 we will have to fund a share of where the drill goes. A smooth hookup of H2 and good gas pricing will greatly assist the next development.

Citizen like I say I'm in shock at Southwark. But they won't touch it any time soon. A1 they struggled for months drilling and gave up try A2. A2 seems to have two fundamental problems the low gas flows and the proximity to water meaning they can't frac it to increase flow. I'm not sure how they are going to resolve that. A1 needs 16m to complete and 5 months. Exploration drill 8m each. Southwark risk to reward is so high now it is currently effectively not viable. We have seen this before with IOG on Harvey where they review and then simply walk away months later.
Aim - Drilling an exploration well this year is likely. The impediment would be cash. IOG will have to dip into the cash to fund that will be easier if gas price stays high and H2 flows. If it does not then they would be likely to try and place to fund it. That is the risk post H2 they may try that stunt anyway hoping to use the bounce to raise. Funding should not have been an issue for IOG but they have created the issue through the huge cost and delays at Southwark and higher costs at Blythe and premature depletion of Elgood. Instead of 3 producing fields we have 1. The business plan has been totally undermined. The recovery starts with H2 but the near term key should be phase 2 decision. That is funded. But delayed. The review of that I think will be more telling. Southwark is clearly not a good place to be drilling unless you have a pretty good idea how to address it. Are Goddard and Nailsworth like Blythe or Southwark? The delay in the decision implies to me Southwark has more in common. So the learnings may be applied but possibly for phase 2.

You guys really tempt fate!
While further setbacks at H2 post Southwark does not even bare thinking about (the company credibility which is already in the gutter would be over and they would really have no choice but to seek a buyer) it is not no risk so having stood by the company through this disastrous period I for one am not counting any chickens on Blythe but am gritting my teeth.
To reduce water I can't see how they flow H1 much once H2 is online. Surely they have to throttle that back - so it will be interesting to see what net flow and monthly production we get on Blythe given Elgood is now depleted and basically offline. That contributed 4.1 mscfd last year and Blythe H1 4.1 - so I suspect H2 is going to get up only a bit over 2022 production into lower pricing plus a bit extra if they can actually improve up time. But it is vital it succeeds else 2023 production will drop back into lower pricing.

Massive month for IOG coming up to start to turn things around. They are pushing out the AGM to try and have some good news to counter the grief they will get from the 2022 performance so its a narrowing window where the news will start to land. They can then tell us what they plan to do next with the rig for the AGM. Southwark needs an extra £16m and the exploration plays are £8m a well. With cash tight progressing phase 2 using the CalE cash is what should have happened next but the FID on phase 2 keeps being moved out. By going out of sequence there will be pressure on cash eased if H2 works out. Finally the Board better not have ideas of letting institutions back in on the cheap to fund non phase 2 activity or just boost working capital which remains one of the other risks (apart from the gas pricing and bond conditions which the board just can't control). Windfall tax relief to tapper with gas price would be good but the Labour lot seem keen on keeping it and using it as a stick to beat the govt so it looks like UK domestic producers will continue to be disadvantaged and trim plans accordingly. License round early news would be nice especially if something low hanging (like a lock in from threddlethorpe? ) is a possibility.
We really are due a decent RNS for a change. I'm still in a state of shock about Southwark.

No chance. They need to work out what we t wrong at Southwark first. At least one of them seems to share some similarities and they both need a proper revisit before anything is done.
Simple maths. 4 months to drill and connect anything more likely 6 to a year. No approvals in place, no FID. The rig is on Blythe till June and then due to either return Southwark or more likely head to drill an exploration play.
FID on phase 2 is extactly what should have happened ages ago. It was part of the LTIPs they have just decided won't be met and hence set new ones based on a 9p share price and no milestone targets.
They are somewhat stuck waiting on the revisit (unplanned) to Blythe to stabilise finances. We have gone massively backwards in the last 12 months. We are 2 + years behind where we should have been from when they contracted a rig to drill phase 1 and 2.
That's why folk get to buy at 4p and not 60p which is where it should be by now. But isn't. I would assume Blythe will be the only production asset in 2023. Southwark as a slim outside chance but it was such a bad outcome both in time to drill and flows that it's too risky until s capital buffer is rebuilt.
Not too long to wait on H2.

What do you mean?
H2 is required because the first well is in wrong place and is producing water.
How long have you been following IOG? We were expecting 1 well on Blythe. The 2nd well is to fix the problems the first well has encountered. It should never have been needed. We should months ago have finished Southwark and be doing the exploration drills or phase 2 FID!
You refer back to that Malcy meets Rupert interview. The world for IOG blew up shortly after that. Southwark then was expected to at least produce something! Rupert proudly announced they had done work reprocessing the seismics for Southwark and H2. How then they proceeded to frac the A2 well and fill it with water and be unaware of the risk let alone the lack of any gas flows is why it was a shock that we are still recovering from. They have no addressed shareholders properly since and moved the AGM out to buy time before facing them.

I also think H2 will work but I will say given its proximity to Elgood and the previous issues it is no gimme.

No I'm not happy. And neither will the majority of long term investors who will all have bought at prices from 10p to 44p.
They could be bought out today and get that 10p a share for doing absolutely nothing.
Phase 1 was supposed to deliver the pipeline, onshore facilities and 3 fields. It was delivered late with problems in just about every component. Of the 3 fields 1 has been depleted in under 6 months with a fraction of the resources, the largest has been effectively declared uncommercial and the final one was drilled in the wrong place. H2 is to try to fix drilling in the wrong place. To get the reserves out Blythe they will have to flow both else it makes no sense. The cashflow from phase 1 should have paid the bond and funded the rest of developments such that there was a dividend. Now phase 1 if we are lucky will service the bond not even pay it off and carry the search for future production to either a re-evaluated phase 2 which is now fraught with risk or one of the other plays they are yet to drill and appraise. It looks challenging to get another field online before late 2024 the way they are going.
That is the issue. Phase 1 has failed - they never intended to drill Blythe a second time. I would strongly have preferred no LTIPs until H2 result and revised objectives with concrete firm plans on one or more play to measure progress.

I don't doubt they are well incentivised to do better than last year. That will not be hard. But I dont think some here understand what a 90% destruction of shareholder value means. To get back where we were this needs to 10 bag.

Apache I have supported the company for several years through thick and thin.
I have bought several times over last few weeks to average down and now hold alot more shares than I'd planned but still sit on a substantial paper loss.

Seeing the board trouser large salaries, use it to buy bargain shares and grant obscene LTIPS grates. They are rewarding themselves for a criminal destruction of shareholder value and have yet to show any humility or understanding to shareholders they have inflicted it on. Perspectives will greatly differ here depending on your entry point and how long you have had to endure their failures to deliver. These LTIPs are quite simply indefensible. Them buying more cheap shares on top while intended to show confidence simply grates more.

The LTIps should have been deferred to post Blythe results and more clarity on exactly what the plans are to align with something tangible. Not an easily achievable share price plucked out of thin air that is where it was a month ago and >75% below where it was when they set the last LTIP and window dressed to justify.

They are now clearly excessively incentivised to earn an obscene amount by doing pretty much what they were already paid to do last year.

Clearly some people think that sort of greed is good. I don't.

A 90% drop in one year has already delivered exceptional shareholder value destruction and a fantastic opportunity to profit for them.
Of course they had to wait to buy. But they could not have orchestrated a blacker picture to buy at the bottom and get LTIPs if they tried.
They have painted a terrible picture in the last few RNS with little attempt to control the consequent crash in the share price.

There has not been any prospect of a placing any time soon for 2 reasons.

1. LOG administrators would go mental over it.
2. There is cash to do current work program and some to spare.

Placing only comes into play if they break anything else, choose to give some to their city mates, breach either one of the ratios on the bond and need extra cash as a buffer for instance if gas price drops too much or have to progress a non phase 2 asset early and need say £10m to fund.

The great LTIP giveaway means in future they will do well even if they do dilute in future at a higher price. They should at the earliest opportunity reiterate the intention to protect existing share holder value by working with what they already have.

Well what a surprise that is.....not.
They know full well that LTIP arrangement is bad for shareholders. Classic deflection.
They now need to carry on sorting out the mess THEY have caused avoid defaulting on the bond and don't dilute shareholders for any fund raises at this pathetic level. They have a massive job on their hands to rebuild trust.

I remain on the view the LTIP scheme for 2023 is wrong objectives at too low a price and has rewarded failure with the prospect of exorbitant gains for them.