Member Info for neil9327

There's no shame in bottling it.
T'is better to stay out of a stock you don't feel comfortable with for any reason because there are always new investment opportunities, but there's only one lot of your money.

Yay!

No ulterior motive here, I just wanted to answer the question.

I agree that on the face of it it is frustrating that the price won't budge. I can't speak for other investors, but my personal reluctance to invest (I'm not invested) is simply the fact that these billions of barrels of oil has only been claimed by one person, the CEO. And in the interview on the day he made the announcement he seemed nervous rather than elated, so my question is why. I hope I'm wrong, and if the competent person's report due I believe on 30th March substantiates this, then I'll be more than happy to invest (if the price hasn't jumped too high by then).

And the same on ShareTalk's YouTube page:
https://www.youtube.com/watch?v=8B3KWSG8WPs

@cbaron I agree with your general point, but in the case of (£50M market cap) COPL I'm not really surprised the price "only" doubled post the announcement of a billion barrels - it was based only on the RNS statement of the CEO alone. Who has repayments for a $45M debt starting to become due this month, a liking for frequent placings, a history of inept management (one company of his going bust), and looking nervous rather than elated in a youtube interview on the afternoon of the announcement.
I bought in, in a hurry, on Monday. Did my due diligence on Tuesday evening - sold Wednesday morning. Whoops!

Hmmm.. He seems nervous rather than overjoyed - wouldn't you be overjoyed if you'd just discovered a billion barrels of oil?
And he keeps saying "to be honest". Is this because he is honest on selected occasions, and needs to make us aware of when these are?

Re: " In the derivatives world the exercise price is the level at which the market is marked to determine if the strike price is exercised or not and is not the same as the strike price"

Thanks. So your definition of "exercise price" is the current share price at the time the holder chooses to execute the warrant. If this is correct then there is no problem (because there is no way the share price will drop to £0.0001). And, thinking about it, that is probably the intention of the meaning by those who wrote the document (so that should the share price decline, more shares can be created for the warrant holders, compensating them for this decline).

My concern is that legally the term "exercise price" might mean the same as "strike price" though. For example:
https://www.gov.uk/hmrc-internal-manuals/stamp-taxes-shares-manual/stsm114000
says:
"A warrant, also known as a share warrant, is an option giving the warrant holder the right, but not the obligation, to subscribe for a specified quantity of an underlying security (i.e. stocks and shares) at a specified ‘strike’ price per share (i.e. the warrant exercise price) within a specified future date."
i.e. it defines the exercise price as being the same as the strike price.

I'm coming to the conclusion the risk is pretty low here.

I don't want to de-ramp. Quite the reverse - I think the company is significantly undervalued from what I can see, and the share price is likely to rise significantly in the near future.

I have a question about the 2019 Loan Notes warrants as described in the 2020 annual accounts document:
https://wp-i3energy-2021.s3.eu-west-2.amazonaws.com/media/2021/11/i3-Energy-plc-2020-ANNUAL-REPORT-and-Consolidated-FS.pdf

In the Notes to the accounts item 16 "Borrowings" it talks about the "H1-2019 loan note" s issued in May 2019.
It says:
"The noteholders were granted warrants (“H1-2019 LN Warrants”) in the notional amount of £1 for each £1 of loan notes issued"
and:
"Each H1-2019 LN Warrant gives the holder the right to convert the notional amount into such number of shares as is derived by dividing the notional amount by the exercise price."
where the exercise price is between £0.40 and £0.55 for each of three tranches.
This is for a total of 22 million warrants in total, with the number of shares being produced being £1/£0.40 (in the first example), so roughly 66 million shares.

So far so good (these shares at today's share price will be worth around 5% of the value of the company).

But then a couple of paragraphs further down it talks about "amendments to the May 2019 Loan Note Instrument and the associated Warrant Instruments" made subsequently on 23 June 2020. Here it says:
"All warrants associated with the Loan Notes will have their strike prices reset to the nominal value of i3 shares (£0.0001/share)."

Now, is this referring to the same Loan Notes as above? Because if it is, and the strike price is set to £0.0001, then doesn't this also mean that the "exercise price" of them is also set to £0.0001? (I believe strike price and exercise price are one and the same thing).

So from the formula above, the number of shares that each warrant can be converted into becomes £1 divided by this new strike price - which is 10,000. The result of which means that 22 million warrants * 10,000 = 220 billion shares are produced.
This would dilute the existing shareholder base very significantly, resulting in a large drop in the share price to the market cap divided by 220 billion, or £156M/220billion = 0.07 pence - a 99.5% drop from the current share price of 13.9 pence.

Is this a legitimate concern, or have I gone wrong somewhere?

Yes a big discount. But the fact that I and other participants in the fund raise received 90% of the shares we applied for means that the discount chosen would appear to have been about right. i.e. it was necessary to have this amount of a discount in order to attract the amount of capital required.
While this is good news for participants, I don't see it as being bad for existing shareholders because of the use to which the incoming money is being put.

£10 per share? Even if the share price rises to make market cap = NAV as reported at 31st March 2020, the share price would only be £4.22
Of course that assumes that the price of WTI oil stays at the $20.48 that it was at then (today it is at $25.65).

Still, I think it is worth a bit more than its current share price. I bought £25K's worth two days ago at £2.51, mainly as a longer term play on the recovery of oil.
Hopefully the share price will keep on going down over the next few weeks and months to allow the buy backs to generate more value for shareholders - but I suspect it won't.