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"Europa Oil & Gas ............................is PLEASED to announce an updated enterprise management incentive (EMI) scheme for directors and employees and the concurrent cancellation of certain historical options."
Who writes the RNS's ???? Surely the BOD should be sensitive enough to shareholders interests / views to recognize that ordinary shareholders are unlikely to be "PLEASED" that Management have awarded themselves FREE options whilst the SP sits in the gutter.
The last thing we need now is another dividend cut. One thing that has gone unnoticed is the historically high discount on Edmonton Light - it currently stands around $8-$9 to WTI and has done since November. This number is normally in the $3-$4 range. That's an extra kick in the nuts that i3e didn't need. The trans mountain pipeline is expected to narrow the discounts on Canadian Oils - hopefully line fill starts in March.
Kever,
What do you know about the real world and how would you possibly know about who would or would not be interested in asset based financing ?
A couple of interesting links:
https://www.coastalgaslink.com/about/approved-route/
https://www.coastalgaslink.com/whats-new/news-stories/2023/2023-11-28-november-construction-update/
I don't recall whether it was on here or the ADVFN BB - and asking what impact LNG will have on Alberta's Gas - Well here you go - The Nova Gas Transmission System (NGTL) has permitted a metering facility that will establish a connection between the downstream interconnecting pipeline and NGTL system. More information can be found on the CER’s website.
Not a lot of substance to your reply - I don't understand your hedge fund comment at all - anyone can go on the internet and look up the definition of hedge fund and see that the comment is nonsensical.
Sack the CEO - maybe a few agree but by no means everyone, with the exception of the dividend cut fiasco - I get the sense that many think they have done a solid job.
Review the Incentives - although I didn't agree with the latest award of options - particularly to the CEO and Ryan Heath - I'm not sure that they are any worse than your average Oil & Gas Company - would have to do a more detailed comparison.
For all the Complaining you do - you've not offered much substantive in the way of outlining a meaningful path forward. It also appears that you have backed away from advocating an aggressive drilling program.
On drilling - it was interesting to hear what Phil Hodge from Pine Cliff Energy had to say on this - in short there are multiple ways to skin a cat and dictated by the current Oil & Gas Environment.
The Trans mountain pipeline (both the original line plus expansion) doesn't pipe gas - however, the expansion is is designed to pipe heavy oils (and lighter oils if required). Heavy Oils is the one of the largest if not the largest user of Nat Gas in Alberta at 3bcf/day. The pipeline is expected to boost heavy oil production which in turn increases Nat Gas consumption. So all good !
Canuck,
You could have bought shares at 5p the same as Polus if you had the foresight - in fact you could have bought them cheaper than Polus at closer to 4p - but you didn't. You could have bought CFD's if you wanted - you didn't. The fact is without the money that Polus put into i3e - they would have gone under. Why are you pointing fingers at them just because they are more savvy than you?
Anyway - regardless of this - I asked you what strategy you think i3e should be following. You didn't answer but no problem - I've put the pop corn on reheat - please give it another go!
First off Gear is not a great example - yes they are undertaking a strategic review but zero evidence that it has worked so far - early days I know but I suspect the end result will amount to not much other than spending a fortune in fees at your favourite investment bank.
Gear Energy's financial performance has been very similar to i3e's over the last several years - perhaps a fraction better - but given that they are nearly 50% Oil versus i3e at 22% Oil - this indicates to me that their operational performance has been considerably worse than i3e's. Had i3e been 50% Oil - there would have been no dividend cut and the SP would be be considerably higher than it is now.
Looking at where both companies sit now - I would argue that i3e has considerable more potential. Its reserves including reserve life index are considerably higher as is overall production i.e. it has more scale than Gear and unlike Gear does not need to add to reserves. I3e also has more gearing to gas which has been a considerable drag on performance over the last 18 months but the macro looks considerably better going forward.
It is not representative to look at a discrete period (which you are doing) which happens to be the same period as Gas crashing from multi year highs 18 months ago (CAD 7.30 / GJ) to multi year lows in December 2023 (CAD 1.80) and then judge Management / Management Strategy as a failure. Increase the window to when i3e pivoted to Canada (just over 3 years ago) and it tells another story i.e. a company with zero revenue, zero production, zero reserves and over $30m in debt - compare that to what i3e is today. Something that I think gets overlooked is that i3e are in a stronger position now than they have ever been - lower net debt than the Liberator days, more cash, strong earnings, an untapped debt facility and 22 years plus of 2P reserves. The only real thing that has changed over the last 18 months is softer oil and gas prices.
Exactly what strategy are you advocating - previously it was drilling out the acreage as are the authors of this article you are peddling. Most in the industry including Nuttall (and Phil Hodge - recent CEO article I posted here) are saying "drill baby drill" is a poor idea at current valuations and low oil and gas prices and that investor returns are the way to go. So please outline the strategy you think i3e should follow - I'll go and get the pop corn and get ready for this interesting read.
Canuck - you keep posting old stuff - these guys are crap just like half your posts. I hope your not paying for this rubbish - i've already highlighted a couple of inaccuracies in the piece which you are aware of but you continue to post.
"They are just keeping the lights on, and paying a forced dividend"
Their paying down debt by £1.2m each month, their paying out just over £1m in dividends each month and at current Oil & Gas Prices they could afford to drill a clearwater well each month. So their doing a little more than keeping the lights on.
I would suggest a pretty uninformed comment but perhaps not as comical as the "forced dividend". Its not forced - it has been i3e's policy all along and is in fact consistent with your gurus philosophy of prioritizing shareholder returns over growth. I like the dividend, Management like the dividend and I dare to say the vast majority of fellow shareholders like the dividend. You keep banging on about the dividend but you knew this when you bought into i3e - it sounds pretty dumb to be complaining about it now. Its a bit like buying a red Ferrari and then complaining you don't like red Ferrari's after you bought it.
"If I was advising I would say go for BP, you'll sleep better."
In 2000 BP were trading at 650p - 24 years later they are trading at 460p and its a reasonable bet that in another 24 years they will be 460p or less. That's certainly the kind or performance that would make me sleep.
At around 10% i3e's dividend is twice that of BP's and it would not be out of the question for the share price to double from current levels something that BP's is almost certain not to.
So thanks, but no thanks on the advice !
As usual - cannot understand your point. Probably not the only one - can you kindly explain.
Also according to the boereport.com website - i3e's two pembina wells came on production 23rd Dec
No other new wells licenced yet which is interesting although data from the above wells demonstrates that they can spud within 2 weeks or less of licencing.
"they don't know the forecast 2024 divi payments and numbers backing it. They also don't know anything about how the company intends to use its debt. "
A nothing comment really:
1) First off i3e changed their dividend policy and stated that they were no longer basing it on forecast numbers and that moving forward (Q3 2023 onwards) that payments would be subject to a quarter end financial review i.e. rear facing. There's not many Companies that are able to guarantee their dividend and forecast into the future, particularly small Oilers. Secondly investors should have some confidence that the dividend remain at current levels or higher provided Oil and gas Prices don't go down - I 3e have stated that their aim is to pay a sustainable dividend - they also had WHI put out a "Car Crash Scenario" to illustrate at what kind of levels the dividend is sustainable at - what more can they do ??
2) Don't understand the comment on debt at all - i3e have stated repeatedly that their model is to drill when prices are high and to look for acquisitions when prices are low. I don't know of any company that announces acquisition targets in advance. Logic would suggest that if they don't see value in the market that they hold off and save cash until they do.
Https://twitter.com/i/spaces/1BdGYrLWVRLJX?s=20
link to the podcast by the Pine Cliff CEO I referred to earlier.
Interesting to hear what an expert on Gas / AECO thinks on demand / pricing. The whole podcast is worth a listen but for those that don't have the time:
1) at around 22 mins in he talks about LNG Canada
2) at around 25 minutes in he talks about a Conference he recently attended where the CEO of Petronas stated that gas will be flowing in the Coastal Link Pipeline in 2024. Petronas are one of the stake holders in LNG Canada.
3) At 27 mins in he talks about Oil Sands being the biggest user of Gas at 3 BCF / day and the effect of the trans mountain pipeline will have on Heavy Oil Production.
4) At 1 Hr 19m in is the reference to DEC.
Also in case anyone missed the link Agricore posted yesterday on i3e:
https://theoakbloke.substack.com/p/i3e-i3-energy
Agricore,
Thank you for the response and links to both articles. The article on DEC ARO’s will take a little time to get my head around and understand the analysis / numbers although I have briefly read the article.
However, initial response - You’re comparing financial ratios off the balance sheet and seem to be accepting the numbers as fact. The counter to the article is that the numbers are massively understated and although the substack piece does delve into the numbers – I’m not convinced the analysis is correct though I must admit I do not understand it sufficiently yet to have a fully informed opinion. Long term decommissioning liabilities and the ability to fund are very sensitive to the assumptions made on the inflation rate, oil & gas prices, discount rate and expected well life.
My skepticism on DEC’s numbers is based on them having 70,000 well bores (Active and Inactive) - they abandoned 200 wells last year (per their numbers) which represents about 0.28% of their well stock. They have a corporate decline rate of about 8.5%. This decline rate has very little to do with geology or well quality but more to do with the age of the wells – they’re old. Nothing wrong with that – it’s their business model and as long as its run well including funding ARO’s – then no problem.
As a comparison, I recently listened to a podcast given bythe CEO of Pine Cliff Energy (link below). For those that don’t know – Pine Cliff Energy is a Canadian Producer with about 22,000 boepd (85% Gas). Their business model is very similar to DEC – they primarily buy and operate legacy oil and gas wells which means they also have a low corporate decline rate (7%). Everything I have read about Pine Cliff indicates that they are a very well-run Company operating a conservative business model and unlike DEC are debt free. Quite coincidently he mentioned a North American Producer (not by name) but he was obviously talking about DEC– and commented that his Company had less than 1/10 the well bores that DEC have yet they retired 400 plus wells in the last year i.e. x20 times more than DEC on a prorated basis. I gathered from the CEO’s comment that he would agree that my use of the word “pitiful” to describe DEC’s decommissioning efforts would be close to the mark.
i3e follow the guidelines of Alberta’s Area-Based Closure program which recommends that producers abandon between 4 & 7% of their inactive well stock each year. i3e get grants towards the program which is audited. Based on these numbers – I3e are decommissioning 14 to 20 times the number of wells as DEC on a prorated basis. I3e have a corporate decline rate of less than 17% which is also low by Canadian standards due to the average age of the wells they operate.
The US simply do not have the same regulations in place so the danger of a US company being unable to fund its decommissioning liabilities are greater imo than Canada.
https://twitter.com/i/sp
Take a look at when the Q3 dividend was declared and paid (2nd & 27 October). Q3 was the first payment subject to the quarterly financial checks and it was declared 2 days after the Q3 end. Year end is always a little bit different, but I don't see any reason why the dividend could not be declared in the next day or so with payment before the end of the month.
With i3e having a healthy cash balance and current cash flow covering costs - I don' t see i3e delaying or cutting this quarters dividend. If I was making the decision - I would leave any thoughts about changing the dividend until Q1. (AECO has already taken a tick up above CAD 2.00 reportedly !)
I'll put a tenner on the dividend being declared tomorrow - but I have been wrong before !
It boils down to whether you think they have a handle on the decommissioning costs - my gut and the little bit of research i've done suggests they dont.
I did look at one of DEC's recent financial statements where they flagged they had decommissioned 140 wells in the last year as evidence of their commitment to ESG - a pitiful number in comparison to the number of wells they have on the books. As a reference - i3e reported they decommissioned 70 wells. i3e have a fraction of the number of active /inactive wells that DEC have and yet still have a decom liability of around $90m which in itself is a little high.
Anyway - good luck with your investment - my intention is not to bash DEC.
I posted the links on the 22nd December - just two articles out of few that are out there - I suspect you have seen them already. Also check out the liabilities on the balance sheet.
My understanding is that DEC have around 70,000 wells. Do a smell check of the Decom liabilities and plug in a cost per well - i've done it - its a bit of a guestimate, but I think the liabilities could be multiples of what they state on the balance sheet. But good luck on your investment.