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I was travelling yesterday and have only just seen that Tony had posted a link to the article below already.

PART TWO: Its development

i3 Energy’s strategy is to focus on the development of discoveries located close to existing infrastructure and the exploitation of producing fields, whilst maintaining limited exploration exposure.

In the Western Canadian Sedimentary Basin, the group has a portfolio of 242 operated wells, at an average 78% working interest, and 1,044 non-operated wells with an average 14% working interest. It also has 172,000 net developed acres and 186,000 net undeveloped acres of land.

The group’s interests in the UK Continental Shelf of the North Sea includes a 100% working interest in a three-well drilling programme in the Liberator, two blocks, and the Serenity, one block, fields. These are at an early stage and could well require the group to take farm-in partners in their ongoing development.

Recent Update

By the end of Q3 in the current year to the end of this month, the company reported some 13,740 barrels of oil equivalent per day for the period. However, it appears that the average was well up in just the September month, to 18,985 boepd.

With prices of both oil and gas going higher that is a quite healthy rate. There are anticipations by analysts that the company will be growing its production bases in order to take advantage of the positive commodity market price strength.

Good investor support

There are 1,126,425,992 shares in issue and the larger holders include Cairn Capital (26.13%), Premier Miton Investors (13.93%), Slater Investments (9.33%), Amati Global Investors (7.16%), Hargreaves Lansdown (4.26%), Interactive Investor (3.59%).

Broker’s Views

Brendan Long, an analyst at brokers WH Ireland, having raised it recently, now has a ‘fair value’ estimate out on the group’s shares of 35p. He sees the operating cash flow trebling to £71.1m in 2022, helping to generate earnings of 3.6p per share.

A team from Mirabaud Securities switched over to Tennyson Securities, who earlier this year were made joint brokers to the company. Their analysts Tim Hurst-Brown and James Midgley have a ‘buy’ rating on the shares, with a price objective of 28.5p per share.

My View

I am bullish about this £124m capitalised company.

Clearly as the company says it ‘is well positioned to deliver future growth through the optimisation of its existing 100% owned asset base and the acquisition of long life, low decline conventional production assets.

I know that these shares, which are now 11p, were up to nearly 17p in early July this year, while they were as low as 4.65p in January, so I may well be too cautious when I set my Target Price at just 14p, but it is a very easy objective.

PART ONE Article in Master Investor: i3 Energy – earnings accretive acquisitions have transformed this penny stock

By Mark Watson-Mitchell 13 December 2021
4 mins. to read
i3 Energy – earnings accretive acquisitions have transformed this penny stock
If you are a passionate about the environment, please do not read any further – this stock is not for you.

However, if you assume that there will be an ongoing demand for both oil and gas then carry on.

Better still if you like investing in developing companies with masses of upside potential then this is for you. Even more appealing for masses of readers is the fact that this company’s shares are a ‘penny stock’ which enables you to buy more with your money.

But, of course, it doesn’t matter how many shares you may have in any particular company if it is bad value.

Could well double again

I consider that the Aberdeenshire-based i3 Energy (LON:I3E and TSX:ITE) has a lot going for it over the next year or so and, despite its shares having more than doubled this year, they could easily double again.

Following a set of complex asset and funding transactions concluded in late 2020 the group transformed itself into an oil and gas production company.

It is now an independent oil and gas company with a low cost, diversified, growing production base in Canada’s most prolific hydrocarbon region, the Western Canadian Sedimentary Basin and a portfolio of promising appraisal assets in the North Sea.

The company describes itself as ‘an energy company focused on the development and production of high return hydrocarbon fields and discoveries.’

You can now see why this is not one for the environmentalists.

Part of its strategy is to focus on the development of discoveries located close to existing infrastructure and the exploitation of producing fields, whilst maintaining limited exploration exposure.

Four important expansion struts

That group is highly acquisitive, searching out accretive purchases. Its strategy centres around four main struts – seek, acquire, extract and produce.

The group’s Seek strut is to pursue high quality assets where cycle, situation, or geography offer disproportionate opportunity. Those targets must exhibit excellent technical and economic underpinning.

With Acquire it looks to purchase producing or late-stage development assets from companies where required ‘finish-line’ financing, market conditions, or cost of capital provide opportunities with a sizeable margin of safety.

To Extract the company looks to maximise shareholder value during times of cyclical strength and market sentiment. Furthermore, it must remain equally strategic when large valuation gaps exist.

Then as it goes on to Produce it actively participates in production and development partnerships to smooth operations, mitigate delivery risk, and preserve project value.

Glen, Maybe you would like to tell us what Hanno is actually doing to justify his $540k salary??

Many thanks Cenkman - Very interesting.

What is getting up most peoples noses is the complete lack of engagement this company has with its investors. As the CEO Hanno is in charge of that!

I3e featured on Zak Mir’s Trading blog - says we could be looking at 20 to 25 pence in two to three months time.

Berenberg said it thinks Kistos can grow production by roughly 380% in 2021 to about 24,000 barrels of oil per day following its recent acquisition of a portfolio of assets from Tulip Oil in the Netherlands.

The German bank, which issued the stock a 495.0p price target, also stated low unit costs and "a supportive European gas price environment" had ensured that this production growth was forecast to be "highly cash generative".

Berenberg pointed out that Kistos has "a sector-leading scope one emissions profile", as well as a management team with "a strong track record of value creation".

"Our net asset value-based price target indicates circa 33% upside to the current price and Kistos is the cheapest company in the sector on cash flow multiples once through this initial phase of development; it is trading on 2024 EV/EBITDA of 1.2x, EV/DACF of 1.4x and a 45% FCF yield," said the analysts.

Doc Jones is selling out of some stocks in his dividend portfolio because of increasing inflation - possible this is one of the stocks he is selling?

Thanks Tony - I saw this posted yesterday by The Abbott on the other board - It can only be good news.

The fastest and easiest way to send a positive signal to the market (thereby increasing the share price) is for Magic Majid to back himself by buying a meaningful number of shares in i3e with his own money!

Can’t see Tony’s name mentioned on pumped or dumped but JAdam is there at number 83.

Joe Soap = The Abbott on the ADVFN Board??

Nanoco results out tomorrow.

ITE up 5 pct in Canada.

Wazza - Give the ceo.ca board a try. I bought more GASX today (one of Doc Jones recommendations).

Thanks Tony - yes I am Pirate there as well.

Thanks Tony - I do not have Graham’s email address and would be grateful if you could supply it either here or on my channel on the CEO board.

Tony - I submitted a question at the last General Meeting on management share options and why management did not but shares with their own money. Guess what - my question was not put forward to the meeting! PI’s are clearly an inconvenience as far as Management are concerned.

Tony - Long and short of it is that PI’s don’t feel valued - or that their interests are properly considered. Best way to remedy this (and show they are properly aligned with PI’s) is for Management to put their hands in their own pockets and buy I3e shares with their own money.