Member Info for tonynorstrom1

maybe we just figured out why some Americans chant "Go Brendan" at Biden rallies!

A couple or interesting articles on Oilprice.com this morning and WTI at $83

https://oilprice.com/Energy/Energy-General/Biden-Plans-To-Refill-The-SPR-When-Oil-Prices-Fall-Below-72.html

So Biden plans to top up the SPR at Oil less than $72 / bbl - good luck with that !

https://oilprice.com/Latest-Energy-News/World-News/API-Shows-Crude-Products-Draws-As-SPR-Releases-Slow.html

Commercial Oil reserves are still being drawn down despite SPR releases. This is why Nuttall is saying Oil Prices are disconnected to fundamentals and fundamentals always win.

https://oilprice.com/Latest-Energy-News/World-News/BlackRock-Says-It-Wont-Stop-Investing-In-Coal-Oil-And-Natural-Gas.html

And it wasn't really a jibe at GGG - Graham quoted it in response to me asking some questions.

I think its a great quote and a reminder for all Investors to DYOR and know what you own. I know a few here follow your posts as they do GGG's and also some of mine and others. What would these poster think if one of us were touting the share to be worth 50p each and then find out later we had sold out at 33p for example.

So its important to have your own view on things including realistic target prices because others "may be playing a different game to you!”

of course i got the grammar all wrong which murdered the quote - should have been more like

“Be careful of the Investor that is playing a different game to you!”

Well I'm a mix of the two - I think there is a lot of value still to be realized here but it may take a bit of time to pan out. For now I'm happy to take the dividend which I think I3e could grow at a minimum 10% per year via production growth and steady oil prices. If Mr Market were to offer me a fantastic price - I might take some shares off the table but otherwise i'm happy to sit and collect the dividend.

GGG,

I have run the numbers until the end the year making some assumptions - mainly WTI $90 in Nov & Dec, production of
23,500 Oct, 24,000 Nov 24,500 Dec and spending the balance of the Capital program over H2 which works out to a whopping £9,397,118 per month.

Based on the above - FCF in H2 only turns positive in Nov and even December's FCF @ 100% doesn't cover the current dividend ............and cash is drawn down from £30m at the end H1 to about £15m at the end of this year.

So you are right - I seriously don't think i3e can afford your spending plans. What I think they will do is push a chunk of the 2022 budget into 2023 and adjust their 2023 Capital Program to the realities of the prevailing Oil and Gas price which looks to me like a probable reduction in the 2023 budget v 2022 unless Oil Prices suddenly take off.

Based on the assumptions above, we can look forward imo to a more modest +/- 10% increase in the dividend early next year.

To be clear - I still think i3e's numbers look very good but perhaps not as good as some here seem to think due to the recent declines in the POO. I agree with Jolly and Shubham in that we are at the early stages of i3e's development and it needs time to play out. Even I3e said you wont start seeing the results of this program until the backend of this year and moving into 2023 and beyond.

Let see what Q3's update looks like.

GLA

Hi Cash,

No - I believe they will hit production targets and I agree they should exceed 24kboepd by years end and perhaps be close to this in the Q3 update (post period) - but I think its taken longer than i3e expected. Also Oil & Gas Prices are lower than I think they expected and imo they will struggle to meet $200m NOI by years end.

The discussion here has been about the dividend and whether they can afford to significantly up it to drive the SP higher - I think some here are being unnecessarily impatient and seem to have forgotten the dividend has already been raised once this year already.

https://vimeo.com/235412480

MickR,

As a shareholder - I Hope you are right but imo - the cash position is already known plus or minus so I suspect you will be more surprised than me unless the outlook is stronger than most expect - lets see.

"They have ample cash to pay a higher dividend and still increase production."

Have you have run any numbers - are you in a position to say that ?

I don't agree with you - you're talking about 24k boepd to pay for these increases - the're not there yet.

We don't have a full picture of Q3 production but we have some snap shots - we know for example that July closed out at 20,500 and as of 12th September this number was about 21,600 and at the end of September (close of Q3) it was about 22,400 - so the average for Q3 maybe around 21,300. However, giving you the benefit of doubt and running the numbers at 22,400 for the whole of September - they don't cover Septembers dividend at 30% FCF - not even close and mainly because WTI averaged $84.20 in September v $101.68 in H1. I think FCF in Q4 will be a lot tighter than you think also.

They probably dont even have as much net cash as you think either - it was just over £30m at close of H1 with £25m in debt so net £5m.

"Seriously wtf are you going on about?" - I've run the numbers and that's what i'm going on about.

I would rather they pay a sustainable dividend with sensible yearly or twice yearly increases - revenues / FCF allowing rather than throwing money at it in an unsustainable manner for short term gain.

Vmax - I dont always agree with Joe but on the dividend he's done his homework including the effect of NOI / Oil Prices - so i'll have to disagree with you on that one.

Parge - you could be right but not imo, once they've set the monthly dividend - they will loathe to cut it unless absolutely necessary. Investors prefer certainty - a cut never goes down well although it could happen as the policy is maximum 30% of FCF so if FCF declines - so could the dividend.

“Be careful of Investor that are playing a different game to you”

Shubham Garg for example thinks that I3E is a 2 year story - great assets- underdeveloped and needs a couple of years to let Management see how they can grow production / revenue / dividends.

There are other investors with a much shorter time frame looking for an exit and pushing for short term measures to jack up the SP which may or may not be sustainable.

Which type of investor are you ?

I dont think the Final Results will move the needle much unless there is something in the post period outlook that surprises.

The numbers are what they are and can and will be forecast by most serious investors within an acceptable degree of accuracy - the production is known - where is the surprise coming from?

Joe,

I believe your assessment is correct for the reasons you mentioned and I also think that they have been slower to bring on the new wells than they thought - they will have trouble meeting the $200m NOI in my opinion. We will know more after the Q3 update but my numbers say they will fall short

As for a dividend increase - they would have to change their dividend policy - i.e pay out more than 30% of FCF which they could well do - I dont know.

Here's a sense check on the dividend - go the the Interim results and look at the dividends paid, the FCF generated and the Capex spent:

1) Dividend was over 27% of FCF
2) Capex spent was £23.7m ( about $31m out of the $97m - $66m yet to spend!!!)
3) FCF is calculated after the deduction of Capex - so with NOI down, Capex up (they may not spend the full budget - imo they wont in 2022) dividend cannot rise without changing the payout ratio.)

Its simply not true that buy backs are more expensive than dividends - If you do the maths and calculate total investor returns: dividends v Share Buybacks - its the same cost/total return. However, a buyback is a permanent reduction in share count.

And if your talking about Harbour Energy - its SP has outperformed i3e over the last 3 months - so how can you say that buy backs have not worked - you cannot.

I'm not saying a buyback is the best course of action - i'm saying dividends and buybacks. (A sustainable increasing dividend, with cash in excess of debt and Capex needs funneled into a buyback program)

@eri****tall
20h
"If you don't see the value in our stock, then we do" is now becoming the mantra of energy companies, expressed with meaningful share buybacks, until they either privatize, or force a re-rating from near generational low valuations.

@eri****tall
15h
To be clear, I do not want nor expect sector wide privatizations. It is the re-rating that I'm after that such action must force -> What is the value of the last remaining share if you have 20+ years of inventory and can buy back all of your shares in only 3-5 years???

https://www.youtube.com/watch?v=eUo7HoG_V2Q

Attached link to a presentation by Shubham Garg. Presents a +/- 3 minute summary of all 57 Companies in the Oil space.

i3e is at around 1:23:30

I’m with you Nomad. Eric Nuttall as a fund manager is completely focused on Investor returns - he would be pushing buybacks if he didn’t think they worked.

One of the main objections to buybacks is that Companies don’t tend to time them well - i3e is undervalued against its peers in a sector that’s undervalued against historical multiples - the timing never looked better.

A second objection is Companies with zero or negative growth prospects - not good generally to invest in these type of companies including buybacks - i3e is not one of these Companies.

I did actually send Nine Point Capital an email on buybacks v dividends - have not got a reply yet but one day later Eric Nuttall posts the above tweet - coincidence?

Production growth has driven the SP and dividend.

"We've gone from 18kboepd in H1 to recently announcing 22kboepd and the sp has done nothing. "

I would question this and the context you put it in - as a "sage" on here said a little earlier - "words are cheap".

If you go back to the Q1 update (issued 9th May) - they said average production for the period was 18095 boepd but clarified that production in April Averaged 20,256 boed.

Q2 update issued 26 August stated average production for the period 19502 boepd but end of July was 20,500

H1 interims (issued 12th Sept) they stated average production for the period is 18950 but closed out at 21,000.

So the takeaway for me is that don't pay too much attention to the production on any given day - its the average over the period that counts and this is what they need to prove and are in the process of proving but have not done it yet convincingly imo - I expect them to do it Q3 but lets see (and its the average for the period that counts!)

And where is your protest letter/email - I thought you were marshalling a Dividend Action Group !

pmanual - I think you need to go back and listen to what Majid actually said and put it into the correct context:

1) "so there is still a POTENTIALLY viable development plan"....." the Capital costs will be really really low.....$10/bbl and opex even less than that...."........"so you only need a SMALL VOLUME to have break even".

So he's not guaranteed a development 1st off - notice the use of the word "potentially". Secondly he's offered his opinion on the most likely "development plan" but its not certain and it still has to be confirmed with interested parties such as Repsol - so until you have an approved development plan - you wont be able to estimate the cost. Thirdly he's said you need "only small volumes to have break even". So he's not defined the volume because he doest know what volumes he has and also he doesnt have a FDP to cost. He will have in due course and then let the market know i'm sure.

2) It does not matter what credibility I give the remapping exercise- its what the market think and I wouldn't necessarily be looking for what i3e says - I would be looking at the revised Independent Reserve Auditors report (CPR). The CPR is what the Industry make their decisions by.

3) Refer to 2) above - CPR is the reference document.

4) Canada has a great risk reward profile so I'm all for drilling up Canada but its not without its risks also - the Simonette wells cost up to $14m each and there's no guarantee that they will all meet expectation although initial indications are good. Also we dont know the risk / reward profile on the "potential" Serenity Development now until i3e release the results of their re-mapping and set forth their strategy.

Paul,

I didn’t say it was a near miss - I said I don’t know and I’m also saying YOU don’t know. Your kidding others here if your trying to claim you do know.

Majid in the interview said the Captain Sands pinches out at some point between SA-01 & SA-02 - location presently unknown. Thats all that can be said at this point.

“But how can they go ahead with a "smaller" development at SA 1, when they don't know how many barrels of oil are actually there? To my mind, the fact that I3E estimate 8m - 20m bbls around SA 1, means they do not know. “

You obviously did not listen to the CEO’s interview on Proactive Investors- it’s clears they don’t know and Majid said the same - He also said they have to remap and come up with a new volume . He also gave no assurances either.

“I fail to see how any "data" from SA2 can help to determine the size of the field around SA1.”

Are you a Geologist or Petrochemical Engineer - if the answer is no - how would you see?

Majid gave you a clue - they have drill cuttings and other data. With drill cuttings they can calibrate / refine the Seismic Interpretation. Their will be other information in the drill cutting such as trace oil, sand type etc all of which can be used to update the model.

So bottom line is we won’t know until I3E come back after the remapping exercise and issue an RNS.

Personally I’m not betting my house on it but it’s not over until the fat lady sings.

And for your information - Tain has no proven Reserves either - all contingent resources and I do recall seeing a report in the past where a range had been put on these resources (something like 6-18m bbl if my memory serves correct).

GGG - the production jumps are paying your dividend and they have already upped the dividend once this year so not sure at all where you are coming from.

I agree with one of the previous posters here that keep growing production - the SP will follow and also allow incremental dividend raises (provide oil price is supportive and the macro outlook is favourable)