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Https://www.energyvoice.com/oilandgas/north-sea/500311/repsol-and-sinopec-end-north-sea-dispute-with-2-1bn-deal/
Please see attached link from Energy Voice which suggests that completion for Respol buy out of 49% stake will complete towards the end of 2023.
Thanks Agricore.
The Canaccord note suggests that the company will be looking to raise cash of about £22m by 31 March 2023 to fund CAPEX and other working capital requirements. If they raise at say 40p per share, then that will bring another 55m shares into existence. That will give rise to a dilution of 30%+ if we assume existing fully diluted share capital of 112m shares (55m /(112m + 55m). Do you agree?
Seems like an excellent window to buy / top up which will not last for ever. I'm guessing that the Premier Miton downward adjustment to its I3E holding (presumably to part fund other investments eg acquisition of stake in Shield Therapeutics) is the main cause. If commodity prices strengthen considerably in Q2 2023 (maybe sooner if Chinese demand ramps up quicker) then we may well look back at the SP now and think it was cheap.
Maybe it got reclassified from type 2 to type 1 in September this year. At that point, the FDA described the 90 day extension as a major amendment to the original NDA (see RNS issued by POLX on 22 September)
Pure conjecture on my part. Someone who is a specialist in BioTech NDA's may be able to explain!
An observation (which may please GGG):
BEFORE RNS ISSUED ON 22 DECEMBER
Share Price = 20p Dividend per month = 0.1425p Implied Yield @ 1.71p per year = 8.55%
RE-RATING AFTER RNS ISSUED ON 22 DECEMBER
Share Price = 24p Dividend per month = 0.171p Implied Yield @ 2.052p per year = 8.55%
CONCLUSION
Dividend increased by 20% ----> Share Price increased by 20%
If I3E can grow production in 2023 and are able to raise the dividend by [20%] before the start of 2024, then the SP should increase by at least 20% from where we are at the moment. All dependent on commodity prices of course. Just a theory!
Fantastic update today and great prospects going forward. Well done to all who held on through the past few months when SP has been in decline!
The assumptions underlying guidance included average WTI of $80/bbl, AECO gas of CAD 4.50/GJ and USD/CAD exchange rate of 1.36. I3E also provided indicative sensitivity analysis for commodity price and CAD/USD FX changes which should be helpful to track whether actual NOI is more likely to be above or below guidance. On the assumptions/sensitivity analysis:
1. Does anyone know what the MSW oil differential of $3.85 relates to and how this can be tracked? Is it the differential between Canadian Light Sweet and WTI?
2. On the USD/CAD Exchange Rate, it seems that if USD continues to strengthen against CAD, for every additional 1 Canadian cent for the USD (above 1.36), then I3E NOI may increase by roughly USD 2.51m. Does that sound right?
3. On CAD/GBP FX, they have assumed 1.66, but have not included any sensitivity analysis for possible change. Assume that is because they think this is likely to be less material to the numbers?
All thoughts welcome.
Merry Xmas to everyone.
Hello Tony
Thanks for the calculations you have run to estimate dividend cover going forward. As you know, I3E have stated that their aim is to grow the size of the dividend and also increase production.
I guess you may have looked at this, but are you able to give an estimate of the lowest oil price / gas price where it is still possible in 2023, to:
- pay out the existing monthly dividend amount, for 12 months, throughout 2023; and
- increase production by 10% so that I3E exit 2023 at say 26,400 boepd (110% of 24,000 boepd)
Alternatively, rather than speculating, we could just wait for the 2023 CAPEX Guidance (and hopefully also DIVI Guidance) which assuming I3E follow last year's timetable should arrive later this month!
The article was written prior to the success at State 16-2. It also concludes that 99.2% of the oil in CC remains in place [1.2 billion barrels) and this figure excludes any oil in the overlying zones.
"The Cane Creek play has experienced some success over the years, with production totaling over 10 million barrels of oil since the first wells were drilled. However, there is an estimated 1.2 billion barrels of potential oil (barrels of oil equivalent, which includes natural gas) in the Cane Creek, meaning that 99.2 percent of the oil in the Cane Creek remains in-place. These numbers do not include all the other overlying clastic zones that also have petroleum production potential. So far, the challenges of this play have overshadowed the significant successes. This DOE-funded project seeks to provide multiple paths forward for the development of a commercially successful tight oil play (Cane Creek and other clastic zones) by reducing drilling risks and uncertainty."
Hello Tony
I don't have access to any information on historic AECO gas pricing. Like you, I use the gas Alberta.com website to get a sense of AECO gas price direction. On pricing, I have seen the following quoted in I3 E material & other research notes:
I3E base case published on 20 December 2021: US$ 2.77/mcf [2022] & US$ 2.64 [2023]
WH Ireland note, published on 19 Jan 2022 : $3.75/ mcf [2022]
Tennyson note, published on 15 Sept 2022 : $4.71/mcf [2022] & $4.70 [2023]
As I say, what I'm struggling to do, is reconcile these US$ numbers / mcf to the Canadian $ numbers / GJ quoted on the Alberta gas.com website (see original post below). The only thing I can think of is maybe I am using the wrong conversion rate to get from GJ to mcf.
ORIGINAL POST
Thanks for the spreadsheet, Tony. On the assumptions, do you think that AECO at US$ 3.70 is a prudent figure to use?
Working backwards (see calculations below), I think AECO at US$ 3.70 would imply an average AECO gas price of about C$ 5.25 /Giga Joule. That seems a bit high to average out over the whole year? Have I got my sums wrong?
CALCULATIONS
Assume average AECO price = CAD 5.25 per GJ
Assume CAD/USD exchange rate = 1.35
Average AECO price = = USD 3.89 per GJ
1 mcf = 0.947086 x GJ
1 mcf = USD 3.70 (USD 3.89 x 0.947086)
See converter table below for reference.
https://www.unitjuggler.com/convert-energy-from-GJ-to-MMBtu.html
Thanks for the spreadsheet, Tony. On the assumptions, do you think that AECO at US$ 3.70 is a prudent figure to use?
Working backwards (see calculations below), I think AECO at US$ 3.70 would imply an average AECO gas price of about C$ 5.25 /Giga Joule. That seems a bit high to average out over the whole year? Have I got my sums wrong?
CALCULATIONS
Assume average AECO price = CAD 5.25 per GJ
Assume CAD/USD exchange rate = 1.35
Average AECO price = = USD 3.89 per GJ
1 mcf = 0.947086 x GJ
1 mcf = USD 3.70 (USD 3.89 x 0.947086)
See converter table below for reference.
https://www.unitjuggler.com/convert-energy-from-GJ-to-MMBtu.html
Thanks Tony - it will be interesting to see what the detailed numbers kick out. At a very high level, based on the following, I'm thinking that the NOI for H2 2022 will be roughly $83.2m, about $5m less than H1 2022.
NOI for H1 2022 : £68.8m (Per I3E 2022 interim Results)
Average X Rate for H1 2022 : 1.29
NOI H1 2022 : $88.8m (£68.8m x 1.29)
NOI FY 2022: $172m (Latest projection, per I3E RNS)
NOI H2 2022 = $83.2m [$172m - $88.8m]
So, it looks like the higher production in H2 2022 mainly offsets the lower commodity prices in H2 2022. That gives a pretty solid cover for 2023 dividend pay-outs - I hope!
Please see link below for Rig 118 Specifications - for the technically minded!
https://www.cwcironhanddrilling.com/rig-118
The "About" tab on the website says:
"All of the drilling rigs are ideally suited for the most active depths for horizontal drilling in the WCSB, including the Montney, Cardium, Duvernay, and other deep basin horizons. The company has expanded its drilling services into select United States basins including the Eagle Ford, Denver - Julesburg (DJ), and Bakken."
I3E's portfolio is so extensive - an embarrassment of riches!
I would think that the main strategic decision for 2023 will revolve around capital budget, potential debt financing and farm out options to drive development. Interesting to see that the key areas for development (slide 16) are oils / liquid rich commodities. The balance between the various development options will be a factor in determining the amount left for a potential dividend increase.
GGG
I'm all for increasing the monthly dividend and to get to 0.18p per share, per calendar month, over 12 months, for 2023 would be great. That would be a welcome increase and looks do-able, looking at the numbers below.
Original payout (2022) : £11.827m [Paid over 10 months from March 2022]
Increased payout (2022): £14.784m [Paid over 10 months from March 2022] = $17.74m at X Rate of 1.20
Current payout (2022) : £1.6996m per month at 0.1425p/share
Desired payout (2023) : £0.18p/share which is circa 25% increase over 0.1425p/share
Desired payout (2023) : £1.6996m x 12 months x 1.25 = £25.5m or at X Rate of 1.2 = $30m
So I3E would need to fund an additional $12m ($30m - $17.74m), over and above 2022, to achieve this pay-out for 2023. As you say, this could be achieved by trimming the capital budget for 2023, given that so much has been spent to boost production in 2022 and the impact of this CAPEX will flow through to 2023.
Interesting to see average oil and condensate production + 13% from Q2 (3,886 bbls / day) to Q3 (4,396 bbls / day).
I am sure that I3E are allocating capital expenditure capital to those wells which give the quickest payback time and hope that in Q4 2022, drilling is targeting wells which will produce oil and condensate. Others on this board will be closer to the detail on the specific areas / wells being targeted and whether oil & condensate wells are being drilled in Q4 2022. They may wish to comment.
Hopefully only 4 - 6 weeks until announcement of 2023 CAPEX programme and 2023 dividend commitment.
Tony - Thank you for your review of the I3E numbers on this board - it is appreciated. On cash flow multiple, you said:
"The more accurate forecast is still in line with us trading at around 2x CF I.e. a significant discount to peers. " Based on some very high- level calculations, I'm getting closer to 3X cash-flow, as set out below. Would welcome any thoughts.
H1 2022 [Per RNS from I3E]
NOI = £68.8m
Cash flow from ops = £48.6m
CFO/NOI = 71%
NOI 2022 (latest projection per I3E) = $172m
CFO at say 71% (using H1 2022) = $122m
Average USD/GBP X Rate for 2022 = 1.24
CFO Ops = £98m
# Fully diluted shares = 1,231m
Market Cap (Fully diluted at say 24p) = £295m
Market Cap / CFO ops = 3x