Member Info for Moleinahole

Capital is an issue. The problem they are creating for themselves is unless they can draw down more from the bond they need to fund from revenue and cash balance. I can't see LOG admin supporting a huge dilution. So additional farm out of a % or delaying future spends. Would bond be happy to advance more or only at high interest rate?
So whilst some sort of equity component can never be ruled out who and at what price would you be able to raise as anyone would want a large discount. LO back again buying in? They have hit institutions who supported previously so may not be so easy.
It's almost unbelievable what the board have managed to conjure up here.

Well there it is. Unexpected and disappointing is an understatement.
The question has to be if they are questioning the viability of fraccing on fields like this (has the fraccing caused the water ingress and were there other options?) now why wasn't it questioned before? To put a platform on a field and then effectively do what has turned into exploration drilling is really not good. Which other prospective fields have similar geology/profile?
Moving to Blythe makes sense but drilling there presumably risks cutting off the revenue unless they can drill and produce at same time or cycle Elgood back in.
Southwark becomes very high risk to just carry on into A1 so doing more analysis seems sensible. Capital now becomes tight as they has to both fund further drilling as Blythe, Southwark and the other exporation wells and have to watch the bond now. There is little or no room for any further mistakes or problems.
Another bad RNS from IOG.

And to think we had people here a few months ago justifying a windfall tax. IOG is exactly why a windfall tax is wrong.

It will be Pi holders like me (very reluctantly and with a heavy heart having to dig very deep to average down) and some traders I suspect biting the bullet and buying. I found it easy to buy in volume even as it rose so there was plenty of stock available mid morning.
IOG always moves fast both ways - but we are in a bit of unknown territory such has been the devastation inflicted since October as to what shareholders holding stock will now do. LO you need to be cautious with - they trade both ways and are as capable of having hoovered up shares as sold. Next TR1 will tell.
Yesterday RNS was positive and well constructed. It has clearly demonstrated that while this remains not without risk the underlying finances are intact to give the board time to sort out the mess at Southwark and Blythe and still use that as a platform for future fields.
The vote of confidence from CalE (supporting Blythe well 2 by the look of it and future licenses) is worth more than LO selling in long run. I would say that is the key. CalE will be stumping up a fair bit in future for Nailsworth once FID decided so that support is important.
LOG admin will also have been in the ears of IOG management so I think the Board will know that they need to up the game and turn it around.

And finally they confirmed that they have applied in 33rd license round with CalE so inspite of the issues that relationship remains in place. Be interesting to see what they are.

Morning folks back today.
Well I thought the RNS was ok.
The news addressed most of the key talking points as far as possible a week after the unexpected results.
1. It seems 3 of the 6 zones at A2 well are goosed and will be sealed off so that's the water. The low gas sounds like 2 of the 3 zones to be redone so A2 likely to contribute some gas in due course but that's now a waiting game.
2. Sounds like plan is still same A1 next. They hope as A1 nearer original Connoco drill result closer to whatever baseline they expected from that drill seems a reasonable assumption to me. A2 was only advanced because of the fluid loss issues at A1 so will need to see first when they get going that is being managed.
3. Blythe confirmed it's £13m to IOG - so CalE would contribute.
4. Elgood interesting extra info on it being not produced due to dewatering. Is that because Blythe is producing water and Elgood condensate?
4. Confirmed cash position. They have funds and confirmed we are selling Blythe at @ 20mscfd. So that will be why cash is relatively stable.

So in summary the company needs to put some wins on the board with either A2 or A1 while keeping Blythe going. They are not awash with cash but have enough to finish Southwark and revisit Blythe. A2 I think will be quicker than some think, A1 we need to hope for better drilling when they restart.
A good A1 and sub optimal A2 from here would be a very good result from current position.

Thanks Rigger for your posts. If you are still reading as I posted couple of days ago I am interested in anything on these V field geology nothing necessarily Southwark specific. I intend to look around but I think a bit of context is needed to understand Southwark better.

Alligator the company just need to concentrate on sorting the problems out and then the share price will respond. IOG has always moved quickly and often not on news.

Well I'm away on business tomorrow off limits for IOG "news" so bound to be an RNS so won't be able to capitulate!
Dunder have you or anyone seen any decent reference material on this formation. We discussed bunter sandstones on way down but what about the gas holding formation. Is there history of fields in this area suffering issues like this? The other nearby V fields look like they have been good. Why did Connoco not exploit this one? The unexpected statement by IOG on both water and more importantly low gas flow suggests it was really not expected to be like this.

GGIts drop by with some words be good to hear from you.

Alligator this is in something of uncharted territory.
The shareholder base is not the same as it was a week ago or 6 months ago. IOG has lost most of its institutional holders and you have very different holders here now I suspect.
In terms of pure fundamentals and basic multiples it's trading at cash but has a bond due in 2024 but has production to extract from Elgood and Blythe.
Southwark I'd discount for moment till we get clarity.
So there is value Inn that production assuming we have no further issues. It should cover most of not all the bond.
If Blythe needs a B2 well to extract full value and you believe it will be executed without issues then 7p is obviously a bargain.
If you believe Southwark which is the biggest of the phase 1 fields is viable either through A2,A1 or another well then 7p is an even bigger bargain.
If you think Blythe will continue to under perform and Southwark is not viable then 7p is about right as a shell to be bought out by someone else with the means to sort out the assets and fund Nailsworth and Elland and the exploration portfolio.
So far however the board have managed to price that future potential at pretty much nil. Based on the last year it's not hard to see why that has happened. It's no wonder the drop onto a cash support has attracted charting and even fundamental bottom fishers to take Lombard and other frustrated trader stock.
Time will tell if stick has also gone into predators hands as a low ball offer is as likely as anything from here and that may depend on LOG admin revised expectations.

What news from Blythe and Elgood are people expecting that will have changed in last 3 to 4 weeks? Elgood is just going to run off this year and Blythe is pending the drill of second well which is completely dependent on outcome at Southwark for timing.
Cash is pretty much work outable from RNS and they are preparing year end now anyway so there won't be director buys or cash else you could work out year end numbers!
If Blythe is not producing in line with last RNS then it would be to downside more likely. So I'd be inclined on Blythe to say no news is ok for now!

No wolster I disagree. They can't sit back and decide after a B2 well. It's £26m for IOG to do on its own would deplete cash to an unacceptable level if they did then CalE share should reduce. They can't have it both ways. It's 50/50 for me if they agree.
That should mean say £14m to IOG unless the £26m was just IOG share when mooted in previous RNS.
The current production will top up funds by a few million and if that is spent at Blythe then it has to generate a substantial increase in production to fund the phase 2 and other drills. Southwark really has to contribute which is why it's key even a small amount of production would help considerably else the risk goes sky high. That is why the share price has been hammered it's gone from a low risk production play to higher risk where future wrong steps will jepardise the ability to refinance the bond or fund development when they need to develop phase 2 or beyond.
And that is the real issue the failure at Southwark is causing. It may mean they have to give a bigger share away if they can find a partner.
That's the issue this never ending procession of bad news makes everything harder. Having list the confidence of LO god forbid they think an equity raise in the future is the way to fund any of this. But lenders and even partners will be looking at the track record closely. You simply can't keep having problems on every project and don't forget both Skipper and Harvey have been very expensive additional exploration drill attempts to add resources.
If they don't get their act together the risk of a very cheap takeover with LOG admin and a huge number of LO shares back in the market is quite high.

No idea how rigger knows anything additional about Southwark. But they certainly need to study the geology before finishing A1 well.
Garyn as I understand this well it's a horizontal but obviously cuts through several intervals so not sure how far out it goes. That being the case the A1 and any future drill would go out potentially some way from the platform and in a different direction.
The question that we await to be answered is firstly what can be salvaged from A2 - can it be produced at low volume and what are the implications for the field from the water and low gas volume. Is the water ingress across the interval and across the field or local? Will the gas flow better drilling out into same formation in a different direction?
Dunder I am assuming CalE will contribute some cash to Blythe 2nd well. Assuming they do it's very much a question of timing. I would hope they produce Blythe and Elgood when they can to continue topping up funds as they will need them so the big decision is whether they leave the rig on Southwark for A1 - how long to know enough to ensure A1 applies the knowledge from A2? Would you move to Blythe now surely you generate revenue before drilling that again?
So the other options would be to head off to do the exploration drills but that would deplete the funds a bit more. So they have a difficult decision to make and it makes sense to do that with as much information as possible from A2.
It's not where we wanted or indeed should be but it's where we find ourselves.
Whatever they spend the funds on it simply cannot result in sub optimal results now. It's more important to get the next operational activity right than quick.
Southwark has been horrible from day 1 when the legs on the rig broke.

Because they are very close to if not inside the year end period with 31st Dec year end and result last year 17th March. So 60 days puts it right on the edge of that period.
Long term director buy will not help except short term traders making profits off it. What is needed is the outcome positive we hope on the action in hand at Southwark. Nothing less will help and if the prognosis turns out to be bad then what the strategy is to move the company forward again to at least hold this level in interim.
AGM once announced I will try even harder to try to attend this year.

Wolster have you gone mad! Releasing more news on Elgood and Blythe is not going to help unless it's very good and even then it's hardly going to help. They have no need to as they have said Elgood is being produced in cycles and Blythe at whatever rate they can manage the fluids. That fluid constraint is why Southwark simply can't be producing alot of water for such low gas flows.
There is not alot they can do at the moment other than concentrate fully on what to do at Southwark. The result there is as they say totally unexpected. The question remains why and what options they have. We will have to wait for that.
They can run off Elgood and Blythe even with the ongoing issues and generate a reasonable amount of cash and the bond is 2024 I thought. So they have a little bit of time. But Southwark has been a disaster from the moment it started with the rig and equipment faults even before the drilling and geological issues and has delayed everything else. But you are right they can't carry on like this however else they will need additional funding at some point.

Morning gator yes indeed. I suspect GG will be in shock like the rest of us.
Share price has retreated back to its rock bottom support pretty much being supported by the phase 1 production.
Southwark is in the balance. Having placed a platform on the location you would hope there was very good reasons why Southwark is being developed when they passed on Harvey and Redwell. The unknown is whether the A2 well is in any way viable after the remediation and what the information means about the other 2 drill that were expected to drain Southwark. It's just unknown. It could be specific to the A2 or have implications for the field. So a range of outcomes reman in play but there are two conundrums the water ingress and the low gas. I'm really puzzled about the 6 zones fracced - did they do them all at once and hence have no idea what was in each one and why was there no logging of some sort even before they fracced?
IOG will just have to work the problem now but they must have known something was wrong shortly after the Dec RNS.
The geology interpretation has been a huge issue on every drill and even predates Fiona. Lombard and LOG admin will be seething at this latest setback like all of us.
Every time this happens everything gets harder but the case for them getting taken over very cheaply grows.
We will see what TR1 we get in next few days.
The company has cash but they need to be speaking with someone to work out whether the issues are just inherent in the marginal fields they are targeting or whether there is more that needs to be done on them before trying to launch a production drill. This is not exploration drilling so it's really not good to be hitting these issues now. A revisit of any documents on the original exploration drill would be interesting. Certainly a high impact start to 2023 as promised. Has Malcy commented yet!

Dunderhead that's not helpful you know very well there was no actual offer to shareholders and the LOG administrator who had the largest say were not interested. The rise to 40p + on first gas shows it was too low anyway.
Our current problems have occurred since then.
The question is where they go from here looking back is not helpful now.
They need to understand the problems quickly and then make some big operational decisions. The problem is each setback reduces options to take the business forwards.

Who knows with Petrofac. But I doubt they chose the drill location. The geological interpretation has been the second significant weakness with IOG for some time.
Trying to ignore the share price at moment....
I guess the A1 well was the main well and that is pending. The big question is why the low flow and does that read across the whole field including A1 or is it particular to where they have drilled out to.
Will sealing off the water ingressing sections improve flows from the other sections in that well?
I'd agree they must have known something was not as expected in December. There must have been water and lower than expected gas shows almost straight away.
Problems were not a surprise given IOG histiry but the very low flow rate is the shock here.

Now they have to decide does the drill stay on Southwark and try the 2nd well once they have more data or do they leave Blythe generating revenue to fund whatever they do next. Elgood will deplete this year if they flow it again.
So they are still generating revenue but Southwark was an important field.
So how much drill time and money do you throw at it?
Thoughts from any of the more seasoned off shore drillers appreciated on this but I guess the RNS speaks for itself. Not a good position IOG are finding themselves.

Not up for sure.
Of the 3 to date this seems the worst. Very low flow and yet more water. Elgood and Blythe have flowed commercial volumes this seems so off what was expected on what should have been a larger accumulation. This isn't an exploration well it's a production well so the question again goes back to the analysis of.geology and drill data as per Blythe.
They were expecting to do up to 3 wells into Southwark so it's not impossible that different well directions would get different results. But that becomes a huge risk so they need to study the logging and interpret why the flow is so low.
If Southwark is sub commercial and Elgood depleting rapidly and issues at Blythe that means it needs redrilling funding is now the next problem.
Not a good RNS.

I sincerely hope they are not doing that Wolster.
They don't need to say anything about anything other than Southwark!
Southwark is on the critical path for revenue and releasing he rig to get on with the second well and then revisit Blythe before the exploration drills. If they have extra good news on anything else e.g confirming they have made license round applications or fixing whatever keeps going wrong on Blythe platform to increase up time that would be nice. But more good news can always come later and add to the positive we hope from Southwark.
If Southwark is poor in any way I doubt sugar coating with something else will make any difference.
What is needed is a bit of stability after 2022 where we get some progression and where we don't find ourselves 2 steps further back after each RNS. If they do that their credibility and our chances of seeing the share price continue to recover increases.

Wolster it's not frustration - Southwark first gas Dec Vs Jan or later is nothing given its well over a year late already for only 1 of the 2 wells! It will be here soon enough. It's trepidation with IOG every time we get an RNS but we live in hope of a better 2023. I'd agree the weather has not been great recently so we are still inside guidance range.

We certainly hope so as 2022 was certainly a high impact year on my wallet.
All those items were supposed to be 2022 work items but it's been a terrible year of missed opportunity.
What is as important is what they have applied for in licensing round and when the FID for Nailsworth will be made but the poor 2022 may mean that goes out as funds are used on the reentry to Blythe and to fund the other activity.