The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
Despite i like the focus on debt reduction (gross and net) there is something that puzzles me.
From the Report, this is what we will drill in Q4:
2 gross (2.0 net) horizontal Glauconite oil locations and 1 gross (0.53 net) vertical Leduc oil well.
From Memory and the last Presentation (page 13), the glauconite wells are mainly gas and have mediocre ROR of 58%. If that was true for the wells to be drilled I'd not be amused - it would just show that i3 will not invest prudent.
Thus my questions to the Oil-Experts out there:
1. How much Production - divides in Oil and Gas can we expect from those gauconite drills?
2. What can we expect from 0,53% of a Leduc horizontal?
3. The 6 Mio USD don't add up when I take the numbers of the July Presentation (3,58 MIO$ per well), not accountinf for 0,53 Ludoc horizontal - any idea why the drills are cheaper?
Any insight very much appreciated.
It's quite simple and it's psychology. Guys sitting on losses are disapointed when they see other oil stocks rise when POO goes up. Some don't have patience and sell to jump on other O&G Shared that rise when POO rises - kind of FOMO.
That takes i3s shares further dwn and more FOMO-guys sell. Its a selffeeding trend.
Will stp when the old hands think it is time to buy big - or if we are running out of shaky hands.
i3 is the cheapest O&G stock by so many metrics. you can't argue with acreage, output and Free Cash Flow. This will translate in higher valuations sonner or later. My advice: Buy and take a 2 year nap. You'll be surprised.
Monica69: When I read your posting history I see you are very pessimistic. Do you have any links that the farm-out at 3b won't happen?
And: Orinduik is just announced, not even closed! How should we farm out an asset, the we don't own?
Tax relief is irrelevent for us - we don't pay taxes in UK, sitting on old losses carryforward. All the "incentives" Sunak packed in the reaping-tax of 75% - all this incentives only apply for cpmpanies that PAY taxes.
UK is a very bad place to be - when labour comes in power situation for O&G will get worse.
@Panamapete: True - but nobody (me included) thaugth it would be a big deal to get a RBL or a bulletloan. Lession learned. it shows how difficult it is for the "dirty" O&G-business to get financing. All the way. Greta's followers take Big Oil in front of court and give them bad press. Banks want wo avoid bad press and want a cheap win on the E of ESG in banning Oil investments.
We all knew that but overlooked how serious the situation is. Thus it is better to have no debt and some money in the bank. Lets pay down this loan and walk tall.
"Simonette wells are about $9-$10m on a one off basis, however, because of the high fracking costs - if you were to complete 4 wells at one time - this comes down to about $7.5m per well."
Given that it makes perfect sense NOT to drill in Simonette - unless we would prove a new play - but I think this work is done already. Out acreage there gets more valuable month by month, so no need to drill it.
Pullin gout clearwater wells, accumulation hoard of cash an then go to simmonette with economies of scale. We've got the options to do this, we have many plays.
The other possibility was a farm-out in Simonette. But I don't think, we get favourable conditions. But you never know - our BOD are really good dealmakers.
Aah, o.k., sorry for the fuss - my information was outdated then. But still running room for some extra holes in Clearwater. we should know somewhere in October. Guess they will be more cautious than last year and not spend every penny earned...
Target is 2,6 CAD - we are just at that Level.
At these levels we would reap roughly 22 Mio $ more NTM NOI than budgeted. Could play out in some additional clearwater-wells.
I copied the data from their July-Presentation if anyone is looking to do his own calculations.
2023 Revised Commodity Assumptions & Foreign Exchange (6)
WTI (USD/bbl) $72.00/bbl
MSW Oil Differential (USD/bbl) $3.10/bbl
AECO Natural Gas (CAD/GJ) $2.60/GJ
USD / CAD Foreign Exchange 1.33x
GBP / CAD Foreign Exchange 1.68x
Next Twelve-Month (NTM) Net Operating Income Sensitivity (7)
NTM sensitivity Estimated change to net operating income
Change in WTI USD 1.00/bbl USD 1.30 million
Change in AECO CAD 0.10/GJ USD 1.40 million
Change in CDN/US exchange rate CAD 0.01 USD 1.27 million
WCSBCanuck - Thanks for explaining. That means we drill 40% of the known - and they should all come in as a success.
I agree with your baseline. we've got enough gas - we need more oil in the mix.
Excuse the silly questions but:
1) When they talk about +200 locations its an educated guess, or "inferred"?
2) When they drill one of the 23 locations in the inventory - this could upgrade some locations from the 200 "inferred" in the invetory-category?
"operational plan now calls for using 40% of CLEARWATER's inventory"
I'm quite sure that most of our money is spent in clearwater - we need reliable ROI, and Clearwater is best. Simonette has similar economics, but you get roughly 7 Clearwater wells for the price of 1 Simonette. Drilling 7 wells in clearwater means, you diversify risk. Furthermore we have to test all our plays in our somehow scattered acreage there.
But 40% would mean the got to drill 80 locations. Guess that won't happen. I'm happy when we drill as much as we can - and as the convenants allows us. At current POO the payout should be half a year Month (at WTI 72 it was 0,6 years).
Could imagine we drill the 6 wells in winter, another 10 in summer and so on - cashflow-wise funding itself.
Hope we drill clearwater like hell :-)
Thanks a lot, Tony! Remains to be seen how all this plays out on our Gas-boes and on AECO price in the long run. Centainly no bad thing, when LNG capacity comens online in North america - even when it's near the Gulf of Mexico. At the End of 2025 there is definitely more export-capacity in USA than supply --Y higher Prices. According to 2023.Q1 Goehring and Rozencwajg Market Commentary the major gasplays in US have reached peak production or are in decline. My guss: It will be a matter of pipeline and transport-capacity, wether the canadian gas prices rise accordingly. Hard to predict. But we saw some nice movement last year where US-gas leaded a rise in Canada-Gasprice.
Too bad - i lost my Crystal-Ball :-)