Member Info for Moleinahole

Up until Southwark disaster it was a good value and safe investment all the way to 40p+.
At this level it can't really drop much unless something happens at Blythe so it's a cheap entry.
But the setbacks from 2022 into 2023 have been totally unexpected - who could imagine the prime phase 1 field having a platform built on it and no gas after 2 long and expensive drills of production wells?
They seem to be publishing the info that would have gone into the accounts but pushing out the AGM and results as far as they can. Knowing the cash and production you can pretty much construct a P and L and balance sheet now without them issuing the accounts.
Broker note will be interesting to see how they now value this.

Alligator to be fair to RN the decisions had been made and obviously as late as Dec he thought the plans for Southwark were based on something substantial.
The shock of seeing yet another field written down does not diminish this now follows the fate of Harvey and Redwell and Skipper. Elgood the RNS in a round about way tells you most of the resource left is pending compression in 2027. Nailsworth seems to be the analogous field to Southwark also based on the RNS.
Blythe can keep the cash flow going with or without H2. So they can turn the business around in time if they finally get it right. But beyond Blythe the path forward is clearly not Southwark or anything like it.
CalE will get their money back from Blythe. But how the next phase is executed will be interesting phase 2 they are committed to fund so a fid on those seems likely not least because the exec bonus is also rewarded by the decision.
It might be a technical RNS but it's not that hard to read. Reserves down and risks increased. But Blythe remains a lower risk drill we can only hope H2 reprocessing proves accurate this time with no surprises on drill.

Well the reason we at at 5p becomes abundantly clear with that RNS.
Elgood was basically depleted at bottom end of previous estimates and Southwark is now so far down the list it confirms they have built a platform on what for the foreseeable future is basically a non commercial field. So that's that post H2 they need now to decide on phase 2 and the exploration.
Blythe at least has not been downgraded. So that's something.
Hopefully that is the final piece of bad news they have up their sleeves.

It's only not dropped because it's already at sub cash value.
So Southwark has since December gone from having problems to being non commercial. That is almost in unbelievable.

The rest is all the future

Dunder same answer as before.
There was no offer as you well know.
CalE was in the wings and the largest shareholder LOG were not interested at 20p which I where they went to explore a more hostile takeover.
So the non offer with all the available information at the time was not best option to develop at that time.
Events since 2019 have revealed more about the risks on the fields as much as the management short comings but you keep forgetting share hit 44p after first gas. So the question you keep posing on a regular basis about past history is no longer relevant.
All that matters now is the current forward plan and the current team leading operations and ensuring the contracted parties deliver.
Should an offer come in again it would be viewed through the lens of now not 3 or 4 years ago.

It was inevitable. Many of us didn't want her here in first place.
You can't preside over what happened here including being on the technical committee and deliver the results of the past 18 months. She would have struggled to get votes particularly if LOG voted against let alone other long term holders. No Lombard votes any more.
Chair less important at moment it's an operational focus at moment. So neutral share price wise I would say.

Wolster if IOG say something date related then by now you should know to add a significant wibble variance to the declared date! Not least to accommodate the next totally left field surprise. That is entirely part of the problem and on that we all agree. Missing dates has been less problematic than the surprises.

When they issued the A2 Dec 22nb RNS they were on target to move back across to A1. Dec to April I'd seriously expect late April to May in IOG speak would be around 4+ months and classed as " early Q2". That's the problem with terms like that. Had A2 worked that's not unrealistic. As if A2 had worked everything would have been in place to transition to A1 more easily.
So given the issues with A1 already and A2 on the way down and the completion stages 4 to 5 months is actually in same ballpark.
Its not moved much - I'd say a month at very most. Given the severity of the Southwark challenge it's expected. The issue is not the drill time it's whether they can actually solve the fraccing problem on the tighter Southwark intervals.

Well Wolster there is a range if you say Q2 of month 4, 5 or 6!
You have probably not unreasonably assumed march or at latest April. It could easily have been June and still be Q2 5 months after A2.
But that was before A2....
We also don't really know much about what they will do when they finish off what they have started at A1 to suspend or what the plan is when they go back.
So I don't think it's incompatible just disappointing and reflective of the Southwark challenge.
I don't think they will go back to Southwark for a while personally - certainly not till they have a better idea of how to develop it. But 5 months would give them a generous amount of time to handle any further issues had they done so. If it really is 5 months with high uncertainty about the reservoir then going back to Blythe is clearly the right decision as a shorter and lower risk piece of work.

The march into April date for Blythe 2 will enable the directors a chance to buy but only once they get the results out of the way. It's a closed period they will have to wait their turn I believe.
Quite what happens to the executive bonus scheme as a result of the past year is going to be interesting.
TSR of 12.5% in 3 years from march 2022 - 40% of pot. So far they have managed an 80 to 90% reduction.
Performance against basket of other shares - 20% of pot. I doubt you will find any comparable performance in the sector beyond bottom quartile.
First gas Southwark and Nailsworth FID - 25% of pot. Well Southwark not looking good for 2023 and no news at all on Nailsworth yet.
Emissions targets - 15% of pot. Well that was always an odd one but not producing Southwark will help lower global fossil fuel emissions so may be they are in with a chance with that one.

What it does show is how much work is needed for them to cash in now on what was a very undemanding bonus scheme. Over 3 years they have a chance still but they may struggle on the first 3 items.
So director buys may be required if they want equity related profit.

Alligator as someone associated with Sound energy I didn't want her here in the first place - Sound has to be one of the most infamous Geology related disasters for PI investors of the last decade.
As Chair she shouldn't be that close to the operations she is a non exec chair the COO and CEO jobs do the operations so I think the previous resignations including Hockey were those in charge of the debacle but yes she was around even as a non exec when key decisions on fields like Southwark were made and she chairs the technical committee. So close enough to bare some responsibility.

A very costly series of problems have occurred so doing a thorough review of phase 1 and applying lessons to rest of portfolio is key. Hence why I'm particularly keen to hear more about Nailsworth and Elland in future updates.

I see Mark Routh having had a break is back as CEO at Prospex. Wonder what he makes of last 18 months.

Right decision to return to Blythe. Starting to go back and correct the mistakes from phase 1. Blythe was a straightforward drill - the only issue was they drilled in suboptimal place so hit lower flows and water. Fingers crossed they have a spot away from water but still with good flows mapped out. Time wise that's on the earlier part of the range to deliver but has a fair bit of contingency built in in the post drill activities so is realistic.
Southwark is back to drawing board. I'm surprised a 5 month time frame for A1. Given they had already drilled for 3 months! Southwark is really parked for now and after the exploration drills.
The promotion of exploration drills which we have to part fund is what puts pressure on the capital budgets. They should have been after Southwark. But Southwark has delayed them and failed to deliver funds pushing everything closer to the bond dates in Q4 2024.
No mention of Elgood being cycled or phase 2 decisions. Is Nailsworth a fracced field like Southwark?
3rd party via pipeline gets a mention again as a mitigation for Southwark in event it is parked and or as a staging post to other prospects.
So all in all the expected RNS. The capital and bond now very dependent on Blythe H2 going smoothly else it will get more difficult to work with the capital budgets.
I think the problem now is less the short term and more where the next producing field will be to replace Blythe and when. But IOG has no choice but to go back to move forwards. Right decision.

Your doing IOG a diservice when we hit 44p that was the point the institutions (and LOG) started hitting the share price and gave been doing it ever since. So the drop has been 44p to @4p over the same period they have been splutteringly cash positive every month from 2 producing assets. It is insane what has happened.

LO have been reducing for quite some time. They bought on way up mostly 10p and 24p areas. Sold a few times around 40p and then been reducing more even before recent crash. So while they have taken a hit I would guess overall they have not lost much and are probably ahead.
Premier if they have reduced along with other institutions with smaller holdings have probably taken a bit of a hit. Whether any of them have been hedged for the downside I don't know. That possible.
Why are they selling? Well it's been dropping pretty much since the 44p high at first gas. Each RNS simply damaged the upside case. So the trend has been down following each setback in almost 10p steps.
Maybe this one has been the final straw for them given its dropped the mcap right down potentially as others have commented falling outside their stock selection parameters. By now many had hoped there would have been both capital growth and chance of a dividend. Had Blythe come in producing as it should revenue would have been double what we have seen.
I guess the risk reward profile for their funds no longer fits. There is always the outside possibility they are aware of or suspect a chance of a fundraise and can buy back cheaper. I doubt that at the moment.
Hopefully we hear something from the board soon to start to rebuild. But we now have a completely different shareholder base many in between 4p and 10p so any recovery will see % profit points hit as it recovers which will put a drag on a rise. News has crashed this, news is likely to dictate a rise. It's well oversold thanks to the institutional sells.

Risk at 4 to 5p -
It's covered by cash and still producing Blythe and can switch Elgood back on to drain the rest of that later this year. So a low end 2022 production volumes are possible to sustain into 2023. Price is with the vagaries of the global gas market.
No upside is now priced in at all. It's ridiculous really. Yes we have had issue after issue but that has to stop at some point (but how often have we said that).
Then you have the very real possibility of a bid if this weakness persists. What price?
The biggest risk apart from yet another problem at Blythe is they raise capital via a placing letting the big boys back in.
That seems less likely with LOG holding so many shares at prices all over 10p and they would need to explain why they need it to get their agreement. I would never rule it out as the bondholders and or CalE could force the issue if capital was needed that exceeded the cash we have and need to draw on in short term.
So on balance this level makes sense as a bottom and surely the only way is back up once we get some clarity on Southwark plans.
I have very reluctantly added more today to my already too big holding on that basis.

Dunder RRE non offer is history. There was no 20p offer irrespective of whether they should have talked to RRE or.not at the time you forget CalE was being lined up so it's easy to see why they thought 50\50 with CalE was better than selling at 20p. If an offer came now it would get looked at again on its merits by all of us. If IOG can get it's act together that is still likely to be worth more in long run than a cheapskate offer. The problem as you are well aware is they have not got their act together which is why we are where we are. Risk Vs return. So far up to first gas the return was good we hit 44p but persistent institution sells and bad RNS has caused the price to crash.
44p to 4p on a producing gas company this year is bonkers.

Not for long term holders it's not. We have already been diluted to let CalE and institutions to fund failed drills at skipper and Harvey over the years and accommodate LOG. The board were actually pleased to have attracted the institutions at discount who have now dumped stock at the expense of long term PI investors then and now.
Phase 1 should have been largely a question of lower risk hooking up known discoveries.
Any takeout or further farm out or equity will reduce the value of what's left a takeover would likely be at the very low end of value and possibly worst of the three.
Ok for everyone who has bought cheap in this crash but not for longer term investors who had supported the company to get to this point.
Those are the investors the board will be hearing from at the AGM and they will be wanting answers as to what has happened over the past year to go so wrong in so many parts of the execution of phase 1.
Quite simply in a year of record gas prices to end up where we are has been little short of a disaster.

Your not comparing like with like.

Deltic is an exploration well to see what is there. It's not been drilled into optimal location and is not completed to produce or been stimulated.

IOG drilled a production well expecting much higher flows in theory with the benefit of previous exploration drills but for reasons we don't yet understand fully found significantly lower gas flows than expected and water. Water we can't handle more of.
IOG now need to learn from the A2 well which is now an expensive exploration well more about Southwark and how to get whatever gas is there out.
The question is how to do that and is it still commercial and secondly what has A2 informed about the reserves it may hold. I doubt the reserves will have increased based on A2. The big question is whether there is a better way than the fraccing they tried to flow Southwark.

I prefer Deltic RNS to iOG recent news. Southwark still could be produced but IOG really needed some gas after Elgood depleted quicker than expected and ongoing Blythe water issues. It's increased risk and strained the finances. Whatever they had planned for A1 they simply can't just plough on and try same again until they know what the right approach needs to be.
There are now a range of outcomes from Southwark but they will all take time and money. The expected outcome was extra income to fund the next round of exploration. That has not happened. The institutions crashing the share price has made a difficult situation harder. The drop has made any equity based solution to capitalise activity prohibitively dillutive as LOG admin are unlikely to agree. At least I hope that's the case as IOG did raise to build contingency funds at 24p with institutions. That leaves playing within existing cash resources organically or they will find themselves the target of a takeover attempt.

Lombard are not an institution you want holding your small cap company shares.
Todays 4p price is in large part due to them ably assisted by the management at IOG by serving up some dreadful performance.
Traders will do well out of it long term holders will be less pleased with events and that will include LOG administrators. The board will not enjoy the next AGM assuming they get to it without being taken over. Shares are now loose in the market with traders at low averages and LOG have 30% of them above 10p a share. I think a low takeover bid is highly likely and the board will have difficulty defending against one so woeful has been their performance.

Volt I agree it's been priced at uncommitted cash. Given the uncertainty they continue to generate where else could it go? Priced to interest predators and bottom fishers now both PI and corporate. Very harsh but that's where we have ended up.
Never thought for one moment they could actually try to develop what could be a non commercial field with a platform in place and like extended. Can A1 work where A2 has come up short so short? If they go plan b can they actually deliver Blythe 2 without something else going wrong! Can anything else go wrong to stop current cash flows?
Surely even IOG has to end it's run of bad news eventually? The question is whether they get the chance.

Realistically how long can they sit on Southwark deliberating next move? Could they drill A1 down a bit more to get through the troublesome layers before suspending while waiting on Blythe approvals? Surely the geology must be more favourable at the A1 location else why are we there at all? Surely the geology can't be that different to other fields nearby and the right technique to exploit must have been tried?
As ever each RNS poses more questions than answers.

Scored Blythe by April! They don't have regulatory approval yet. Blythe first drill was several weeks. So will have to be a very fair wind late April more like May or June. Hence the problem. They can move to A1 straight away but that assumes they can quickly work ahead on how they will approach the gas bearing levels which they should be into in a small number of weeks if they restart A1.
It's a massive decision hence one they will do with CalE. How long do you wait before deciding to relocate to Blythe or do A1? Long enough to gather enough information. I don't know and they don't either yet. The unexpected results has really upset all the plans.
I'd rather they make the decision with as much information as possible but equally they can't just sit around. The rig has been there too long already and should have been long gone by now to the exploration prospects let alone pondering going back to Blythe.
It's always about the stabilised flow and in IOG case how much water they have found!

Edgar nobody is debating that this is technical stuff and difficult.
But I really don't expect issues like we have seen at Southwark. It's been non stop from the day the legs on the rig broke, the rov not working, the scouring issues, drilling issues at A1, difficulty in drilling A2, the valve to connect not working closing the whole pipeline, water ingress and low gas volume not remediated. That might be acceptable if the rest of phase 1 had been a success. But that has seen similar issues.
The cumulative series of issues is staggering. To then result after all the delays in a non commercial well after all that effort is beyond disappointing.
The big question for me remains how robust the analysis has been of the geology in selecting and planning the marginal fields they have targeted. The operational issues don't worry me half as much as the question as to how risky these fields are simply to try and drill and produce a production well. If this was an exploration well then fair enough. But it's supposed to be a production well and part of a multi drill exploitation. The platform and pipeline extension was put in place.
All along opportunities to mitigate or manage risk seem to not have been taken or the level of risk on these fields has been grossly under estimated by the company and hence shareholders have been running a much higher level of risk certainly than I imagined from phase 1.
The consequences of getting this wrong are reflected in todays share price.
The board job is to manage that risk and put in place the team of contract resource and raise funds. They had done a reasonable job on the funding but phase 1 risk and operations is way short of where I think we should be. You seem more sanguine about that. I think it's normal for shareholder who have seen a near 90% drop in share price on an already discounted asset where the share is now trading sub cash value to ask questions of the board. That RNS I think was one of IOG real low points there was some hope after the first Southwark RNS only to then see them dashed. It's the low gas volume I find most worrying. It now needs to be quickly followed up by clarification of the what next.

Scored I would say the result has signfcantly increased the chances of a low priced bid more than a raise.
The board are collectively on borrowed time now. The problem is CalE can afford to fund setbacks while IOG need revenue. So to have both Blythe and Southwark suffer significant geological issues in no small part due to poor geological understanding/well placement and Elgood producing at bottom end has been a disaster. That is on top of previous fails at Skipper and Harvey.
The board have been shielded from a catastrophe by high gas prices. They are destroying shareholder value and will be forced to think quickly now where to drill next. Massive decision and they can't just sit around burning cash with the rig idle now Southwark is marginal. Horrible position they really needed at least a low commercial volume from A2. What they have got is the worse outcome I think water obviously in more than just the 3 zones and the gas flow very low from the rest. The big question on Southwark is whether that profile is same across field to the A1 location. How can it be so far out?
The most likely is they go to Blythe I think. But they should only do that if they have done everything to ensure that works. £13m on that has to produce a significant and immediate return. But that is pending approvals.
What I think hurts most has been the missed opportunity to produce into high gas prices. They didn't need to be massively successful to do well but they have completely messed up.