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Concerns are showing up in the futures market re gas prices. The contracts for next winter are the most expensive on the curve.
https://twitter.com/surprised_trade/status/1783539479178776630
Concerns are showing up in the futures market re gas prices. The contracts for next winter are the most expensive on the curve. Like in Europe, most of the Asian LNG buying is done during the heating season in the northern hemisphere.
“If we look at the forward market for next winter, there is a risk premium,”
https://twitter.com/surprised_trade/status/1783539479178776630
Guided 2024 exit production of 20,250-21,250 boe/d reflects the back-end loaded nature of the company’s expected drilling effort – with annual production guidance for 2024 in the range of 18,000-19,000 boe/d. We see the company’s 2024 drilling efforts culminating in strong production growth into winter 2024/2025, just in time to capture the robust
natural gas prices expected for that period. Critically, the futures market for North American natural gas has found its floor and, based on the futures market, gas prices can be expected to increase significantly in the mid-term.
We are adjusting the basis of our fair value estimate to i) use our 2025 (vs. 2024) debt adjusted cashflow (“DACF”)
estimate as the denominator for our 5x EV/DACF valuation and ii) align our gas price forecasts to the futures market.
We also highlight that the value accretive disposition of non-core royalty interests for $US 24.8m announced on
17 April 2024 had built upward backpressure into our fair value estimate, which we flagged at the time. As a result of these changes, we are increasing our fair value estimate for i3 Energy to 21.2p from 16.2p
i3 Energy confirmed its commitment to pay its annual dividend of 1.0260 p/sh (via four quarterly dividends of 0.2565 p/sh). We highlight the generosity of the resulting 8.2% dividend yield based on the company’s closing price yesterday of 12.5p
Gas prices are expected to strengthen dramatically based on the futures market pricing. Oil prices are robust and likely to strengthen further in our opinion. We believe that i3 Energy has consolidated and is now maintaining its balance sheet in
preparation for scaled up growth in order to produce into a significantly higher natural price. Our updated fair value estimate of 21.2p reflects our positive appreciation of i3 Energy’s judicious strategy, combined with the inherent benefits of significantly rising natural gas prices in North America
Markets can be irrational at times, bb posters sold out early in day on mis reading rns, sp plunges, others follow selling their holding on an sp fall, broker reports follows later stating target price raised as business metrics look better going forward...guess it's what makes a market 😉
I3E shares are 9% down in early trading as the market takes profits on the back of lower y/y production guidance, which was due to i3’s slowdown in investment over the recent winter period in response to falling commodity prices. This follows recent improvements to i3’s balance sheet strength and liquidity position (and stock price) over the last few weeks following the $25m sale of a non-core royalty package and a new $75m credit facility by a major Canadian Bank.
This enables i3 to significantly expand its fully funded capex programme as it targets a ramp-up in drilling activity that balances growth, financial discipline, and a sustainable long term-dividend, all while positioning the Company to commence its high-impact Simonette Montney pad development drilling early next year.
...and yet the brokers based on the exact same figures see additional value and have raised the sp target to 21p from 16p....panic selling stated panic selling and the market is always quick to dive, slower to recover, however, all the reasons for investing in i3e have actually improved not got worse. Our brokers both agree with a raised target and both expecting an upward re rating going forward.
WH ireland broker raises target to 21p from 16p on release of i3e capital budget and forecast rns
(have been asked to provide part view of report released today on the back of today's rns so here is part view)
https://twitter.com/surprised_trade/status/1783428334380048768
We see scope for i3 Energy to trade above peers as it switches from consolidation mode into growth mode. We also see scope for the peer group as a whole to experience EV/DACF multiple expansion over the course of 2024 and 2025 – these valuations are too low, in our opinion, relative to historical norms. We believe that growing interest in the sector, the increased perception of energy scarcity and reduced production growth from US shale oil all play in favour of better valuations for oil & gas companies and we see i3 Energy in a prime position to participate in that rerating.
Target raised to 21p from 16p
Broker raises target to 21p from 16p
https://twitter.com/surprised_trade/status/1783421882500251726
We see the company’s 2024 drilling efforts culminating in strong production growth into winter 2024/2025, just in time to capture the robust natural gas prices expected for that period. Critically, the futures market for North
American natural gas has found its floor and, based on the futures market, gas prices can be expected to increase significantly in the mid-term. We are adjusting the basis of our fair value estimate to i) use our 2025 (vs. 2024) debt adjusted cashflow (“DACF”) estimate as the denominator for our 5x EV/DACF valuation and ii) align our gas price
forecasts to the futures market (vs. our prior use of EIA estimates). As a result, we are switching from a benchmark US gas price estimate for the purposes of our valuation from $US 2.15/mmbtu, to $US 3.50/mmbtu (a 63% uplift). We also highlight that the value accretive disposition of non-core royalty interests for $US 24.8m announced on
17 April 2024 had built upward backpressure into our fair value estimate, which we
flagged at the time.
As a result of these changes, we are increasing our fair value estimate for i3 Energy to 21.2p from 16.2p.
No problem as far as I see, production expected to increase, all funded, divi all in place and secure and if planned drills go well all figures could increase substantially, as they have learned under promise and over deliver.
'Following very successful initiatives in the first half of the year to increase our balance sheet strength and liquidity, i3 is extremely pleased to announce a substantial USD 51 million capital programme for the remainder of the year, which will drill a diverse group of oil and gas wells across our portfolio in Canada. The majority of wells will be drilled in the second half of the year, with the high-volume Central Alberta gas wells producing into a forecast strong winter pricing environment and pad drilling of our exciting Montney acreage expected to commence early in Q1 2025. The programme is designed to deliver production growth and support our dividend programme, whilst maintaining liquidity and a conservative leverage position to maximise flexibility to deal with volatile market conditions and opportunities as they arise."
From my reading it looks like a number of folk are misjudging the projected (guessed) figures made in 2022/23 with the ACTUAL production results achieved and cash flow, divi etc, markets always throw up the odd moment.
Https://www.investormeetcompany.com/meetings/full-year-results-139
Meeting notes (wrote as the spoke, so forgive any spell errors)
''Performance so good against backdrop of lower gas prices and high tax, however, we can pay 14p final divi (4% increase) and share buy back, displays confidence in expected cash flow for 2024.
Tailwind brought in oil , essential for keeping cash generation as gas prices plumetted, Oil a great addition
Reserves grown
Production ytd 45000 - guidance 41000 -46000
Well drill programme 2024 expected to be short pay back times
Tax will be less as investment programme covered by offsets.
lower gas and oil prices for 2023
$19 dollar a barrell average cost and under the target of $20 achieved
Tax rate effective of 48% for year (afdter off sets etc)
Bank facilities allow growth etc
decommisioning cost less than peers and advantageous in current tax regime
Dividend cover and cash flow meet current levels
Capex expected to qualify for full tax relief in 2024
Expect to see more benefits of Tailwind tax losses through 2024
Windfall tax is not reflective of oil/gas prices as far from windfall prices
Investing in UK is not for now unless right opportunity arrives, looking outside UK for the right opportunity, will not rush, Norway in focus currently but will take time.
Business in good shape and aim to continue to offer good share holder returns ''
These guys know their business, better than many of us posters imo and sp does not reflect the sp metrics imo and clearly Oil has been a major benefit rather than remaining as just a gas company
Broker note -
The Company announced an inaugural £15m share buyback in addition to the final FY23 dividend of 14p/sh, which combines for a total implied annual shareholder return of ~13%.
Cash resources more likely to be redeployed out of the UK.
We think Serica’s strategy has changed following the merger with Tailwindnd and the new management team are more comfortable investing in larger more long-term development projects to make use of EPL offsets for new investments.