Ryan Mee, CEO of Fulcrum Metals, reviews FY23 and progress on the Gold Tailings Hub in Canada. Watch the video here.
Adv was a one trick pony. They raised 25mn explicitly for that one drill. So it was obvious that 100% of the company's value was riding on the drill. You could argue that currently adv should be valued at zero given its entire value was on one asset drill.
If you assume zero value to serenity drill, then for EOG it will be whatever value the company had before the raise for the appraisal well. Really simple calculation - EOGs total exposure to the Serenity drill is the £7mn it raised which is currently valued very close to cash. And for I3e the calculation is - £7mn for 25% so I3e value just on serenity based on the transaction is £7mn times 3 I.e. £21mn. So a 10% jump from pre serenity rns that I3e issued? Of course market value is never that simple. All imo
I'm a holder of I3e and was since 5p (when we were stuck for ages between 4-6p), but the issue I always faced was liquidity in stock. I couldn't get a sell quote even for 50k-100k shares during times of volatility. Can't say that with the giants.
And I agree with Clearwater potential - if I3e has half of what Baytex has in their Clearwater acreage in Canada, then we ought to talk about I3e market cap over £1bn and share price over £1 per share.
I3e is way safer than eog because of less speculative nature. But I never liked the CEO AM and his tapping of shareholders for acquisitions instead of leveraging with some debt. Imagine if the cve acquisition was part debt funded - sp would be above 26p imo. Another bit I don't like is his lack of skin in the game - not much shares, which shows less conviction. I always have this feeling that there would be another acquisition with more dilution as he taps us for more funds. Nothing wrong with that if it's part funded by debt that could be serviced through the cash flows from the acquired assets.
EOG might be a way to relive the excitement of I3e early days of North sea exploration. And like you mentioned the rewards are in multiples of current price even before the drill bit starts turning as market realizes that on a positive outcome EOGs sp is going to be "catapulted" into the stratosphere where I3e will be sitting already imo.
Finally 3 out of the top 10 Shell shareholders have started asking Shell to invest more in oil and gas. Could this be the catalyst for Shell to close the gap between ExxonMobil and Chevron market valuations? Maybe finally Shell can start heading to £30 per share for starters?
"Ethical investors 'sleepwalking into an energy crisis' with refusal to back North Sea drilling"
https://www.telegraph.co.uk/business/2022/03/22/eyes-return-cambo-north-sea-oil-project/
It was just a suggestion to research EOG in addition to fog that was mentioned earlier. Honestly, thats how I came across EME at 6p, when someone else mentioned about EME on TXPs board and I thank whoever it was. No one of course should take any advice from these posts and should always do their own research. All IMO and always dyor
Tony- re eog vs I3e, I agree with most of your calculations but there is a bit of information that's missing. I3e is a relatively safer play compared to eog but not as safe as let's say bp or shell. I3e has had bulk of its gain already from 5p to 22p - that's over 400% share price rise. I3e might have another 50% from here so let's say 32p pre serenity, of course oil and gas prices dependent.
EOG has raised at 1.8p which is very close to its current share price. So without serenity EOG is valued at current levels already so currently buying in we are getting free exposure to serenity. If there is negative drill result, eog might still fall back to 12-13 mn market cap I.e. Current levels given that's where it was valued at before any serenity news type event was in play. So basically the margin of safety at currently buying in eog is massive compared to buying in exploration plays like DELT or EME. And unlike them EOG and I3e are going after an appraisal target so much lower risk than pure exploration play and much higher Chance of success (CoS). Also your $6 bbl valuation is very low both for I3e and EOG as the Serenity prospect is very close to existing infrastructure and hence could be monetized very fast and possible buyers are already nearby.
I'd say if your main argument for I3e investment was Serenity play in North Sea then alongside I3e, EOG basically gives you a torqued/leveraged exposure to just the appraisal drill. I'd say even a 70% I3e and 30% eog position or even 50-50 split would be a sensible play to the drill if one is as confident in the drill as I3e and EOG are.
All IMO dyor
EOG might be a better play - they've raised £7mn for the Serenity appraisal well coming up this summer. Low risk 200mn barrels appraisal well in North Sea. Market cap is £13mn excluding the £7mn cash. Worth adding to watch list imo
Dyor
Another one is EOG. Reminds a lot of PRD from 3-4p levels.
EOG also has Moroccan and Ireland oil and gas exploration acreage but the main driver that's upcoming is the Serenity oil field appraisal well in North Sea this summer. And EOG just raised £7mn for the drill - it's got sizable value of $200mn attributable net to its interest for the low risk appraisal well. Worth adding to the watch list. A lot similar to PRD in terms of geography and prospects imo.
Cheers for that. Keen to hear more from your contacts. Where do you see souc go upto? CEO, the ex Athabasca founder sees the production 10x which seem hard from current levels? Looks like he will be traveling to engage retail shareholders in uk soon from what he mentioned on his proactive interview.
DELT is good - need Pensacola to prove up, as a lot of other prospects are dependent on it. Sadly was in only till 2p from 0.8p levels and got out before gas prices went crazy.
Hmi - also missed it when i came across it at 5p few weeks ago. Usually tend to stick to oil and gas as can't predict fertilizer market although it seems it's mostly driven by natural gas prices given eu production constraints. Do you really see it go to £1 per share from current 15p levels- that's over £100 mn market cap from 28mn?
Another one to look into is EOG - it's got the Serenity appraisal well coming up with 200mn value net to it and low risk given its on the Serenity field. Worth a look - it also has oil production of 200bopd at 20mn market cap out of which £7mn is cash.
Ggg- I3e is the safer play for Serenity but it's gains would be lower than EOG if the so called herd arrives in droves pre drill. The impact of the herd would be much bigger on a 20mn market cap company compared to a 220mn market cap company. I3e has production that will underpin the share price and market cap while EOG will mostly be driven on Serenity play . EOG also has oil production of some 200 bopd so a nice £1mn per month income alongside Serenity play and Moroccan /Irish exploration prospects. At 20mn market cap you get what you pay for - just like with I3e at 220mn market cap.
And the placing shares are usually forward sold before the placing announcement itself. There is a fast run up in sp right before placing announcement. If you remember the most recent raise that I3e did at 11p or so, but right before the announcement the share price had rallied to 15-16p levels which we all thought was due to fundamentals, yeah that one.
Always the case with small and microcaps. All imo
Viable - Cheers for your posts. What do you think is the organic growth prospects look like at the existing acreage? Do you think the slide on souc website which shows production growing organically 10x at Selma chalk (I think) is realistic ? What's the upside case you have for souc compared to other plays like EOG, IOG, etc.?
Has some insights. Especially a question on shareholders returns.
AB mentioned that the capital allocation will be reviewed in the coming months so I suppose once the 0.5x net debt to ebitda is met, dividend or buyback could soon be in the picture.
Does anyone know if I3e Clearwater acreage has any remote potential as Baytex energys Clearwater discovery? If I3e has a similar play to Baytexs Clearwater acreage then it could dwarf even Serenitys potential.
The Canadian oil and gas stocks have given some mind boggling returns from the covid lows especially the likes of Baytex BTE.TO & Athabasca ATH.TO. Speaking of Athabasca - the founder of Athabasca has launched an AIM listing and is looking to replicate Athabascas Canadian success via a US play. He is now the CEO of Southern energy, SOUC, listed on UK AIM in case anyone is interested and worth adding to watch list imo
Southern energy #souc seems to be replicating similar model. Their aim is to grow current production of 2k boepd to 24kboepd and has current 2p reserves of 20mn but valued same as axl around £28mn market cap.
Chances are that as market sees the fast deleveraging story here, market will start pricing in the entry into ftse250 club which will bring in more II buyers who want energy exposure but are restricted to ftse250 companies.
Jan - best to look back to 2013 when enquest production was half of what it is now and net debt was close to low 100s millions and enquest share count was half. I think enq was valued close to £1bn on 800mn shares at oil above $100 and production near 24kboepd. So adjusting for share count and increase in production - enq should be valued close to £1.5bn? More like close to 80p imo?
He needs to explicitly mention what is the impact of $100 oil and high gas prices on fcf and debt. Like HBR CEO mentioned clearly at $100 oil and 200p gas price, HBR will be debt free by generating upto $1.7 bn FCF. Put in words so the media can run with it.
Need to get back into ftse250 if not in already (?) and get market cap back to £1 to £1.5bn levels.