Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
When you’re ready to eat a bit of humble pie – let me know, i'll warm it up for you and serve it with a bit of gravy.
As i've said before - not being rude but you are only 10% of the share registry - the UK holders are curretly much more important and is why they are looking to add another UK analyst.
IBB_Invest - I don’t suppose the excellent question on Canadian Coverage came from you, did it? Regardless, you cheery picked his response and completely skipped over the comments made on why the coverage is as it is. As a reminder, the point you were making a month back was that peers had up to 10 investment banks covering them indicating that i3e’s Canadian marketing was deficient(IYO). You also went on to say that they only had 1 third rate analyst covering them in Canada.
No one is disputing that more buying in Canada would be a good thing. All Majid has said is that the question is valid. He’s hardly going to say it’s a stupid question. Majid explained why there was less coverage than peers which you conveniently skipped over and its all to do with money and how much these investment banks can make out of the Companies they cover. This is discussed further in i3e’s response to the SPECIFIC comments you originally made in quotes below:
“The Canaccord Genuity analyst covering i3e is not a third-rate analyst… Investment banks have their own criteria to consider when allocating their resources. One criteria is the amount of income they might receive from trading volumes in the stock and potential investment banking income generated from the relationship developed with the corporate entity. Small cap stocks like i3 Energy have more limited trading volumes and in i3 Energy’s case as circa 90% of its shareholding is UK based, the majority of its liquidity is on the AIM market ... It is especially true for small cap stocks that institutional shareholders typically appear on the register as part of an equity raising process because there is not enough liquidity to build significant positions in open market trading without materially moving the price. The equity raised by i3 Energy to fund its acquisitions in Canada was all raised in the London market in 2020 and 2021, when the North American equity market for small cap Canadian oil and gas stocks was extremely limited. I3 Energy has grown its Canadian shareholding over time from circa 3% to just over 10% and we expect it to continually to grow organically, particularly the retail element. A significant growth in the institutional shareholding percentage will take longer and will likely be associated with an equity raise in Canada, for which the Company has no plans at the moment.”
So, in short you have not been vindicated, you cherry picked the answer, ignored Majids specific comments on coverage or at least did not understand them and took the snippet you did quote out of context.
A question for you – if Majid was really saying that increased trading in Canada was key and that the way to do it was by increasing coverage – he would do it surely? He gave no indication of doing this other than lobbying Canadian National Bank and indeed went onto say that they hoped to add another UK analyst!!!!
When you’re ready to eat a bit of humble pie – let me know, i'll w
From the Proactive Investor Website:
i3 Energy attractively geared to higher gas prices, says Stifel
i3 Energy PLC has received a forecast update from broker Stifel following the confirmation of the 2024 capital budget.
“Specifically, we have reduced and deferred drilling activity into H2/24, which results in 2024 production within the 18-19,000 [barrels of oil per day] guidance range, albeit towards the top end.
“We incorporate higher capex per well, reflecting the increased complexity of the 2024 programme of wells.
“Assuming some continuation of this results in our NAV falling to 28p (from 30p).
“Overall we remain positive. The shares trade at a considerable discount to both peers and NAV.
“Whilst the prevailing low gas price means that growth is on hold, the business remains funded, and we believe is poised to strongly re-rate on better prices.”
Shares today were up 2.5% at 11p
2) agreed but i'm not sure they confirmed they were in a closed period now. I think their response to why they were not buying on the market was a more general comment that their buying windows are restricted. But why buy anyway when you get stock / option awards ?
Licencing Round 33 refers specifically to the North Sea so definitly nothing to do with the Irish Licence and I think the RNS even refers to this.
i3e have not issued an RNS - so nothing to do with Serenity either. Vernetles on the i3e BB said it referred to a licence just north of Tain.
Key takeaways:
1) A strong presentation and highlighted how prudently i3e is being managed - imo
2) Potential for a further sale of non core assets - I would not be expecting i3e to generate anything like they did with the royalty production because I think they maybe none producing - but cash is cash !
3) i3e sitting at a 45% discount to peers on a PDP basis per Majid - this should narrow significantly imo as gas prices improve
4) Capex program promising a very strong end to the year and an even better 2025
5) Line fill complete on the coastal link pipeline. They would not have done this if the LNG plant was not expected to take gas very shortly - they would have left the line under purge otherwise. So we can expect commissioning of LNG Canada shortly i.e. line fill within the plant, start up of the cooling facillity and tank fill in preparation for LNG shipments.
NoOneKnows,
That appears to be the current situation now i.e. they own a 30% share of the licence but are unable to stump up the £5m.
Well this is what WH Ireland made of it:
Pantheon Resources (PANR) – Corporate – Independent Resource Report on
Alkaid Horizon, Ahpun Field
Market Cap £337.7m Share Price 36p
Pantheon Resources announced that Lee Keeling & Associates (“LKA”) has ascribed the Alkaid Horizon, consisting of the smallest and deepest development candidate of the Ahpun field, 79 mmb of recoverable reserves and resources (5million barrels of possible reserves and 74 million barrels of contingent resources).
For reference, the resource appraisal consists only of the deepest development horizon at Ahpun and excludes the Ahpun Topsets, which is considered to have superior reservoir potential and scale (and of course excludes the resource potential of the Kodiak field).
The appraisal was premised on prior well/geophysical/seismic data and the additional data from the 90-day flow test of the Alkaid-2 well drilled in 2022.
LKA estimated the base case NPV10 of the field (pre-Federal tax) to be $200m, with a high case valuation of $526m – conditional on success and project development.
The company stated it is expecting a report from Cawley Gillespie on the Ahpun Topsets (and the newly awarded Eastern Extension) with better reservoir properties in the coming weeks.
WHI View: We have long-held the view that Ahpun has the strategic potential to kick-start self-funded growth given its proximity to infrastructure. By virtue of circumstance, the company firstly assessed the resource potential of the supergiant Kodiak field – albeit we believe it is likely that Ahpun is developed first. Therefore it is critical that updated resource definition is coming in for Ahpun, allowing the company to assess developmental strategies. Today’s update
combined with the forthcoming resource assessment for the Ahpun Topsets will provide a relatively comprehensive resource coverage of the company for the first time in years, in combination with the assessments of Kodiak – which will be very helpful for investors and the analyst community. The resource updates, we believe, represent important milestones that we expect to build further on the company’s positive trajectory.
Got it - so I assume that you understand the RNS fully - can you outline what the market has missed if anything or is it just a case of PANR making an incremental step forward?
From Simply Wall St this morning - an automatically generated report that does not appear to recognize that i3e is an Oil Company and that profit margins are down due to Oil & Gas prices.
Ocassionally they come up with some interesting ideas but often the report is more useful for putting under the cat litter tray in the kitchen!
New minor risk - Profit margin trend
The company's profit margins are lower than last year and have reduced by more than 30%.
• Net profit margin: 10%
• Last year net profit margin: 20%
This is considered a minor risk. A large drop in profit margin could indicate the company does not have strong competitive advantages or it is yet to establish itself and its core business. Even if it is a well established business, this may make it a much riskier investment than one that has a combination of proven competitive advantages and a stable or growing profit margin.
Currently, the following risks have been identified for the company:
Minor Risks
• Dividend is not well covered by cash flows (147% cash payout ratio).
• Share price has been volatile over the past 3 months (7.2% average weekly change).
• Profit margins are more than 30% lower than last year (10% net profit margin).
There is a new broker note out this morning - anyone have access to it and mind posting ?
Spike,
You highlighted i3e are not analagous to Shell - are you suggesting that i3e are analagous to Repsol ?? There are two reasons why Repsol walking away from Tain doesnt necessarily mean much to i3e:
1) Repsol have stated their desire to exit the NS - i3e have not (currently)
2) Tain would have been a small development for Repsol not really moving the needle plus the money is probably better spent outside of the UK consistent with their new direction. A tain / Serenity development would be sizeable for i3e and would move the needle.
"Do you believe anyone would pay cash to I3E now for the Serenity licence?" - I dont think so. Majid has previously said that you would need an approved FDP in order to realize any value if I recall correctly. A Tain + Serenity with an approved FDP maybe worth something. I'm not saying it definetly is but maybe and I think this is what i3e are looking at. Serica or Ithaca (cannot remember which) recently bought an asset that was of similar size to Tain / Serenity with the clear intention of developing.
Anyway - sign up to the investor meet Company presentation and ask a couple of questions!
"Fantastic news" - why is the market reaction luke warm ?
"However it’s pretty clear that no one in the North Sea is buying undeveloped assets for upfront cash payments so in that sense it’s worthless as it stands."
https://www.offshore-technology.com/news/ithaca-cambo-shell/
After a 10 second search - here is one example of ithaca buying undeveloped assets - Its a reasonable bet that there are other examples
An impairment charge is going to lead to a loss albeit a non-cash charge - no paper profits, no retained earnings, no dividend.
Except that the latest capital structure can offset the reduction in retained earnings/distributable reserves and enable the payment of dividends.
I3e are currently earning more than sufficient cash to fund a dividend - thats the way I see it !
Bottomsup - I trust the comment was made tongue in cheek. Some may have a problem with you starting a DELT thread on the i3e BB and then telling others to stick with i3e - please tell me you were talking tongue in cheek !
DELT is also a usefull reminder to any investor particularly new investors that there are no certs on the AIM. HIGH RISK / high return. Many have ignored the high risk part of the equation including myself in the past.
I followed the DELT story from a distance and reading some of the posts on their BB - I thought the farmout was nailed on. Was that the case and something has changed in the last few weeks or was the chance of a farmout over hyped on the the DELT BB. I dont know the answer but this highlights the need for every investor to do the necessary DD and not blindly accept what is posted on a BB.
DELT - down 40% as I type. It would be interesting to hear whether GGG is going to hold tight or cut his losses and get out. The RNS was a poor read and is anything going to change between now and the end of May ?
There are no slam dunks when it comes to financing / farmouts - we'll see shortly how the SP reacts.
On a similar note - I'm beginning to lean towards the view that Serenity may be a dead duck - a couple of snippets from the YE report:
"There is a high cost associated with a field development plan and therefore it is contingent upon raising the necessary funds. There is uncertainty whether a one well development of the field would be commercial, and it is likely to require access to thirdparty production, processing, and transportation facilities. If the Group is unable to develop its North
Sea assets, i3 Energy Plc may not recover its loan and investment into i3 Energy North Sea Limited which could negatively impact the Company’s distributable reserves and ABILITY TO PAY DIVIDENDS. See Financial Statements note 3 where the carrying value of intangible exploration and evaluation assets has been identified as a critical accounting judgement."
"The Group considers the risk level to have increased in 2023 due to approaching the September 2024 deadline for FDP on the P.2358 licence."
The good news for i3e is I think the market has already written off Serenity and if it does not advance - then it should spark an effort to trim uk costs which would be a positive.
Also possibly explains why i3e undertook another Capital Restructure so soon after the previous one - i.e. to offset the impairment charges and allow the payment of dividends.
First of all I inferred that Shubham Garg had increased his holding - I did not say that he had "doubled" his holding. My only reference to "doubled" was in reference to weighting within the fund .
"You have zero knowledge that Shubham doubled his position in i3 Energy" - I do have knowledge , not by how much but I do know he has added and now the weighting is 7% up from around 3% previously . I have not mislead anyone.
Hedges are listen in todays RNS - read down nearer to the end.