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The board very clearly answered about capital allocation and new exploration assets and how serenity fits in. Given the terms of the serenity deal with Europa they might have well have done it themselves, but the market doesn't want that from a capital allocation persepctive
"I3 chose to JV with Europa on Serenity as an option into near Corrib gas exploration Ireland"
No chance, there are no synergies here and look what the board have said about capital allocation and exploration, besides Corrib fell through
G_G_G - I said yesterday that the farm out was certainly underwhelming as Europa real is a partner of last resort and the deal itself was pretty average at best, although it was done before the change in geopolitical situation which I think completely changes the game. However I completely understand why the market did not react positively to the farm out deal - rubbish partner, underwhelming deal.
However, I don't see the farm out as being any substantial driver of the share drop - its gained a lot in the recent weeks that leaves it even more exposed to a big risk off move, although what's very pleasing to see is that buyers have been found again and losses reduced.
As per your post the other day, I don't feel great celebrating high oil prices, given it is caused by the situation in Ukraine. Additionally there is an increasing risk that high oil (and other commodities) derail the fragile recovery and send the global economy back into inflation together with the negative impact on commodities that will have - as the saying goes, the best cure for high oil prices is high oil prices.
"why I'm still scratching my head"
Stop scratching your head - its the war, there is a major sell off across the markets today, the FTSE is now down 3%, a a huge move and quality stocks across the board are being hit sharply. BP and Shell announced their specific Russian impacts earlier in the week and that was the time their share prices moved in line with that - they have no more exposures today that people don't know about since yesterday, they are simply part of the overall sell off.
I'm in Jadestone as well - almost 20,000bopd, no debt, nothing hedged it should be soaring with oil prices and that is down 5% today and 8% from the peak it hit yesterday before the markets started to turn.
In markets like this, very few people give a fig about the individual prospects of small caps, its a dash away from risk and into safety and I3E is absolutely not immune to that despite what a small number of private investors may think about the prospects for the company.
"Looks like the board managed to shoot themselves in the foot again. I know it’s all about spreading the risk but the farm out seems to have produced a worse outcome than if they had just gone it alone and had a go from fcf. Oil is at such a high and yet down 7% plus so someone somewhere thinks something isn’t right"
You know there is war right? Last night one of the worlds largest nuclear power stations was shelled and relations between nuclear powers have reached their lowest point since then end of the cold war and probably since the Cuban missile crisis - did you miss that?
This drop is nothing to do with the farm out and everything to do with a risk off move across the markets.
I’ve exited for now - too much political risk here at the moment. Hopefully things improve and there may be an opportunity to re-enter even if ultimately I have to pay a little more than I sold at.
I think probably the market is currently pretty underwhelmed by the partner and the deal. Europa can only fund half of one well, they bring nothing for the long term development, its fair to say they are a partner of last resort.
As I said earlier though I don't think it matters - geo-politics is likely to completely change the way the North Sea is viewed, so a successful drill will become very interesting. Patience is the key here as Canada continues to develop.
"Think I'll pop 10k in EOG. £11m mcap for 25% of Serenity? Based on my previous post that could be worth £140m just as 3c reserves or a lot more when producing. Could quite easily 10 bag on Serenity success (apologies for rampy tone)."
Don't forget there will be substantially more funds required to get to production - EOG just have enough for the first well. There will either need to be a lot more equity issued for future costs, or a further farm down for development carry. EOG shareholders won't own the same share of serenity that they currently do come production.
I agree though they look to have a good deal so as a speculative buy its not so bad.
The fact that a dog like Europa Oil and Gas was the most advanced bidder on what is probably one of the most significant North Sea fields that is at appraisal stage with a relatively easy path to development should the well prove up shows what state the North Sea was in. The deal ultimately also reflects that as only 50% carry for 25% of the field is also pretty unimpressive.
However, clearly the geo-political situation has shifted massively back in favour of ongoing commitment to the North Sea and its likely Europa have now got a very good deal and I3E still retain 75% of a very large prospect that will suddenly look very much more attractive for development.
EBITDA - Earnings before interest, tax, depreciation and amortisation. Its basically revenue minus operating costs and especially in the oil and gas world not particularly useful as a depreciation and amortisation are generally a very significant part of financial results and statements.
NOI - Net operating income, seems very similar to EBITDA as its revenue minus the operating costs.
FCF - free cashflow flow is what it says, its the actual cash the business generates and takes into account capex spending which neither EBITDA and NOI do.
Shame its taken a bit of momentum out the share price, but agree with that, even at the lower end of forecast this is throwing off a large amount of cash and Maari should close bringing additional cash and production.
Personally I'm not looking to buy more, but if I was I'd definitely be treating this as a buying opportunity.
Guidance marginally below my expectations but what will the market think?
Good to see a statement about considering returning more cash to shareholders.
"This means basics like providing timely updates on quarterly production, which by market standards is over-due"
Based in my experience of being invested in oil and mining plays, quarterly updates provided any time prior to the middle of the next quarter are timely enough, especially for the final quarter of the year which ideally will have some preliminary financial information for the year. If you look back to the half yearly operational and financial update it came 16th August, a month and a half after period end. Based on that ideally they should provide the update by the middle of next week.
More progress, great to see a decent step up in the quantity of ore milled, exit rate of 32000oz per year and given the comments on further improvement in grade expected, 35,000oz for 2022 should be the minimum target - the question now is whether they can get the finance required to move beyond that amount.
Its highly unlikely they will be able to bring in a debt financed deal only, for one there is very limited working capital left in the business. The question now is at what can Advance bring to the table as non-operator - while Buffalo was still a prospect or better still proven, there would have been a market cap giving access to capital, so they could bring capital as a non-operator to support development of underinvested assets - now with a market cap of single figure digits its difficult to see what could be brought.
Best case they find an accretive deal where the existing production is debt funded and they can arrange equity financing in the background directly so it is no a desperate cashcall to bucket shops. My worry is they have missed the boat here, that was possible in the aftermath of Covid with oil prices depressed but marginal non-core fields will now be cash generative and is turning from a buyers market to a sellers market.
"How was I ramping you dick!... The only siilver lining for me is that Muscles lost money, good.."
You were ramping, providing false hope to others based upon utter nonsense. Total vulture