Adam Davidson, CEO of Trident Royalties, discusses offtake milestones and catalysts to boost FY24. Watch the video here.
I have asked I3E before and provided they meet the debt covenants - they have full discretion on how to spend the cash.
In the interim report they talk about Trafigura being a potential partner in future developments - this potentially gives them more access to cash but obviously would mean that they would have to have the developments approved with transfigura.
I agree nomad - a very solid RNS.
Also look at the gas hedging bearing in mind that the Companies providing the hedging make their money by correctly predicting the minimum or maximum pricing of commodities. So in Q1 - 40% of i3e's gas production is hedged at CAD 3.04, i.e. they receive CAD 3.04 / GJ versus the current pricing of CAD 1.75 and in Q4 for example they are hedged at CAD 2.64 / GJ.
Quite why some people on here want to run projections at CAD 1.5 and CAD 1.75 is a little puzzling to me. Forecasters / hedging Companies are not always right but they are right more often than not otherwise they would not be in business. In this case because of Canada LNG drawing gas this year and the ramping up of Oil Sands production - imo prices will comfortably exceed the hedged prices in the 2nd half of the year.
Jun_man,
You are not making any sense and in fact have contradicted yourself:
"(desperate to announce good news) keeps repeating historical facts as if they were new information"
followed by:
"They've done it again in this RNS, effectively 'pre-announced' the Q1 dividend"
- so this is not historical but forward looking and as some were questioning the dividend I would think good news to most - so what on earth are you talking about ??
Define what you mean by break even - what is covered what is not?
Hxxps://www.gorozen.com/commentaries/4q2023
check out the Q4 update from Goehring & Rozencwajg (the norwegian illusion) - great research as usual and very bullish North American Oil & Gas this year !
Https://www.youtube.com/watch?v=4bWVySnf72o
Another great podcast
Who is WA?
The wells drilled and tied in the network in December are fracked and take up to 3 months to clean up i.e. recover frack fluids / drilling mud. I would imagine this is one of the factors driving the Q4 update - waiting for stabilized flow rates to report in addition to the development options they are chewing over.
Rehauer
"I would not put too much weight in that statement."
You're free to read into it what you want - it's your money. IMO - it's pretty significant - they would not be able to make that statement if Trafigura were not a potential partner for "future development".
It also seems to tie into the recent update of the loan covenants.
Just came across this in the 2023 Interim Report (Chairman's Statement). I assume this could mean that Trafigura might assist with the funding of a development in the Montney for example.
"We are very pleased to have established a relationship with Trafigura, a sophisticated oil and gas trader and a POTENTIAL PARTNER for future production focussed growth."
Https://youtu.be/EDLeAC8OeJY
Great podcast - well worth a listen
Adan Rozencwajg & DoombergT debating opposite sides of the coin - have we reached peak of cheap energy.
you're calling the bottom - based on what?
personally i think it is trading well below where it should be trading but you never know how the market is going to behave and what i3e's updates will look like.
i don't foresee any bad news - the nature of i3e's assets (hundreds of long life, low decline wells) means that baring any major setbacks such as wild fires, unexpected production curtailments etc - production numbers can be forecasted with a reasonable degree of accuracy and pretty much the other variables are known (exchange rates, opex costs, oil & gas prices etc). this means that you can usually forecast the earnings / cashflow reasonably accurately and the numbers look ok to me - they easily pass the covenant checks (still have to look at the last one based on debt/ebitdax - but a couple of numbers on the back of a *** packet indicates that this should be ok also).
if oil and gas prices stay at or above current levels - i3e might even surprise to the upside which i'm beginning to think is more likely than an update that disappoints the market.
Jezzoo - you've obviously have not learnt the lesson. If you have no confidence in management - you should probably be out already and sticking your money where you do have confidence.
Rehauer - Q4 update in the next week or two is my guess and the 2024 guidance at the same time / possibly a week or so later.
I also sent an email today in regards to lack of communication and the SP action. I received a response almost immediately. Similar comment that many peers report in Q1 including forward guidance.
Investors need to remember that one difference between this year and last year is the loan covenant checks which get done on the last day of the quarter and need to be approved before i3e can declare a dividend or Capex Program. This automatically changes the schedule of announcements in respect to last year.
I certainly did not get the impression that there was any specific issues with regards to upcoming updates - business as usual was my impression.
Https://www.upstreamonline.com/lng/shell-eyes-first-cargoes-from-lng-canada-this-year/2-1-1592410
This is Interesting - LNG cargoes this year ahead of schedule according to Shell. Prior to this Line Fill of the 670 km Coastal Link Pipeline (2 BCF) and filling of the 3 LNG tanks (5 BCF each)
Got to be a positive for AECO.
Part 6
Just for clarity - i'm not saying that the Dividend is not under pressure, simply that the Covenants would not mandate a cut at this point in time. Cash flow could be slightly negative during Q1 - i.e. revenue does not fully cover the dividend and capex, but due to available cash and the credit facility, debt covenants are still met and i3e would have the discretion to pay the dividend.
Thank you - I see within this link that Trafigura are the sole customer for Oil but I do not see any reference to the revised liquidity threshold - where is this spelled out?
I've seen you post this before along with Trafigura being their sole customer - i've not seen this information anywhere else . Do you have a link to the source ?
Part 5 (Liquidity Ratio - ii)
This is the 2nd debt covenant listed in note 12 of the interim report and the one I thought might be the most onerous:
ii) Liquidity Ratio greater than 1.10:1.00 (see definition in earlier post)
Revenue (next quarter) = £33.4m
Aggregate amount of uncalled debt = £14m
Swaps = -£0.1m
Cash = £15m
Cash Costs (next quarter including tax, interest and debt repayments) = -£30.2m
Dividends (next quarter) = -£3.09m
Capex=--£6m
Ratio = (33.4+14+15-0.1)/(30.2+3.09+6) = 1.58
A couple of points to note:
1) I have plugged in £6m for capex in Q2 just to see what the ratio would look like but even if you plug in say £10m – i3e well exceed the minimum requirement
2) Someone mentioned that a minimum Cash Balance of £6m was inadequate when i3e are paying out £15m in dividends. Firstly dividends are £12m on a yearly basis but even this is irrelevant as the financial checks are done on a quarterly basis and look at the revenues and cash costs in the next quarter which in the case of dividends would be £3m
3) Projections are from my model / estimate which is based on reasonably realistic / conservative numbers. Of course Oil prices could go down further but i3e currently comfortably passes the liquidity ratio . Biggest unknown for me is where production will be at in Q1/Q2.
4) So far my analysis indicates that the covenants are not overly restrictive. Just the final covenant to look at.