Member Info for tonynorstrom1

isdeer,

Starting with EOG cash generation - this is what you said in your post below:

".......generating circa net $900k a month....."

This is what the broker said :

".......US$1m of monthly sales at today’s oil price (US$119/bbl)......."

1) Firstly you don't need me to remind you that Brent is currently around $86 - so about 28% lower than the brokers assumption.
2) You still have to deduct Opex, SG&A, Finance Costs, Capex & TAX @ 40%" from Gross Profit before you get to Free Cash Flow which the broker thinks is closer to $300K per month - I happen to agree with the brokers figures +/-.

Where do you get the $900k from ?

And remember FCF yield is the most Important Measure of a Companies Profitability according to Warren Buffet !

isdeer,

there is virtually nothing correct in your post:

1) EOG is not earning $900k net per month - coblers, look at the brokers note and check the numbers yourself .

2) You heard from the EOG CEO that Serenity has a better than 50 / 50 chance of success - so quite likely but not nailed on and I think this is what the market is telling you. Also, if you had read the CPR - you might have a better understanding of why (you said you havent read the report - which is strange because you are telling people a different number to whats in the reports.

"Serenity will go into production whatever happens regarding the appraisal well" - I've not heard i3e or eog say this and in fact I thing you are incorrect and is not what the CPR says - you should read it !

0.4p on Success - what are you saying - share jumps from 23.4p to 23.8p on an Oil strike ? Is there a typo or have I misread?

harel - agreed with everything you said except NPV’s - there’s very few Oil Companies if any that trade anywhere near their calculated NPV’s. EOG & I3E are just 2 examples.

Isdeer,

Have you read the Competent Persons Report (CPR) and in particular the RESOURCE summary on page 64 - your comments indicate that you have not.

Repsol Sinopec are currently producing from the Blake Field (right next door to Tain & Serenity) via the Bleo Holm (FPSO) - so there are no issue with these vessels.

The Tain Development is also based on producing via the Bleo Holm and the idea is that if Serenity is found to be a small field - then i3e's plan is to unitize with Tain and also produce through the Bleo Holm.

However, if the field is as large as I3e hopes - then the Bleo Holm has insufficient processing capacity and a dedicated FPSO is required.

thanks for the response Spike.

Not sure that Orcadian Energy is a great Bench Mark - as you say it is Heavy Crude which is less valuable than Brent as well as requiring more opex / capex.

In addition Orcadian has no revenue and virtually no money - so how much of the 79 mmbbl will they have after a farmout ?

Tennyson use a much higher number in their recent valuation reports for both EOG and I3e - I think their number is pie in the sky in the short term but I would be disappointed if we did not see an minimum $2 / bbl value added to i3e's Market Cap in the days following a successful drill with more value accruing over time - we shall find out in 30 days!

Boom Boom - everyone is entitled to their belief / opinion and thats great - but what is it based on - would be nice to have some numbers / basis rather than just a belief.

isdeer - the report has not been updated which it probably should have been - perhaps Tennyson are a bit slow. I did take a look myself - a bit of a damp squid imo and i'm not sure by how much it will affect the numbers. Yes there is an increase in reserves but did not appear to impact the near term production profiles much if at all. The market didn't seem to get over excited.

And yes I agree that Serenity is the most exciting of any of the assets with a good chance of success - I think most of us are surprised at the markets muted response so far. It's possibly the reason that EOG didnt react much to the gaffney cline report - i.e the market is paying more attention to near term cash flows than future reserves.

All in my opinion of course - DYOR.

Ivan - I dont know whether you saw SelfishMcNimby asking Oilisthefuture to provide the basis of his post and quite rightly, it didnt look like it had much foundation. He's probably not going to ask you to do the same for obvious reasons but i'm going to ask you to justify your comments:

"our MCAP is very low compared to other Wressle players, EDR and UJO. "

Maybe there's a reason for it (and maybe not) - they all have different assets (not just wressle) with a different chance of successful development on different timelines. UJO for example has West Newton which their CEO believes could be transformative in the not to distant future - have you done a proper side by side analysis of their respective assets?

"i strongly believe our sp too low even on Wressle alone. so nothing has been priced in for Serenity. so , our sp is currently priced in Serenity as duster! which means i doubt sp will drop lower than here if no success in serenity (if)"

What is the basis of this remark - this is not consistent with EOG's House Brokers valuation - have you seen the report - it can be found on the EOG website and includes a valuation of all EOG's assets.

https://www.youtube.com/watch?v=86i_-EGWHBI

Lots of spelling and grammar mistakes - don’t known whether it’s my fat fingers or the auto correct on my top of the range iPhone 6S!

Spike,

1) Do you have a recent reference to what proved undeveloped reserves might be worth.

2) As I mentioned below -EOG is not necessarily a good bench mark on how I3E might react - i3e is currently have of the brokers target for the Canadian Assets only. EOG trades well above the broker estimate for its producing assets.

3) As far as splitting the assets - maybe, but personally I don’t see it happening until
I3e have further developed both Serenity and Canada to maximize value (imho)

4) I hear what you are saying about the likely
Jump in SP on successful appraisel but I think that Tain is next door and Repsol still seem keen to develop possible makes Serenity more valuable than it otherwise would be and if it’s a spectacular result then I do see I3E taking a decent hike up.

Anyway - only +\- 30 days to find our.

There’s a lot of hot Gusto1 about the wording of the Spud RNS - it looked ok to me!

I guess they could have said something along the lines of “its a big and beautiful Spud - the biggest -the likes of which the World has never seen before !”

Yanis - you have it wrong - its either a producer well or it is an appraisal well.

If its an appraisal well (and it is) - then it gets plugged and abandoned - there's no two ways about it. The Market knows this and if EOG shareholders read the EOG presentations (and i'm sure most of them have) - they know this also.

Dont agree with that at all Draft - see the WHI broker note below from a short while ago.

You will not that i3e's current valuation is sitting at about half the brokers estimate for i3e's Canadian assets alone. This is not the case for EOG which is sitting considerably above its brokers estimate for its producing assets (Wressle) - so it is current value is considerably higher than i3e on a revenue / income basis and therefore has theoretically further to fall in a weak market. For EOG its all about Serenity whereas ie3 has a "free option" on Serenity as per the brokers opinion below.

"FIRST LIGHT
i3 Energy (i3E) – Corporate – Serenity Drilling Commenced
Market Cap £292.8m Share Price 24.55p

i3 Energy announced that it has commenced drilling operations at the Serenity appraisal well. Drilling is expected to take 30 days. This announcement is consistent with that made on Tuesday in relation to preparations to commence drilling.
WHI View: Our success case valuation for Serenity amounts to 64.2p/sh (86.4 mmb 3C resource estimate net to i3 Energy’s 75% interest) of which we have included 12.8p in our fair value estimate for i3 Energy. For reference, 49.3p of value (net of balance sheet adjustments) in our 66p total fair value estimate is derived from the company’s Canadian operations.
We believe that Serenity represents something of a free option because its value is not reflected in the company’s share price, but it does have potential to deliver highly significant upside. We believe that the global energy crisis is particularly acute in Europe and that that the crisis is setting a favourable backdrop for UK North Sea oil & gas developments. In our opinion, i3 Energy has a track record of getting perfect bull’s eyes in terms of timing events to correspond with the psychology of the commodity price cycle and we see the company’s advancement of Serenity in that light."

https://www.europaoil.com/wp-content/uploads/2022/07/20220706-Proactive-FINAL.pdf

I think the PR from EOG on Serenity has been fine - some people here are either not reading the information that has been put out or not understanding it. This was always an appraisal well and not a producer and as per EOG's recent presentation could be the 1st of potentially 3 appraisal wells. Refer to page 14 of the attached. Also note that there could be up to 5 production wells ( 4 producers and 1 water injection).

And don't worry about Mcfishy - he's a keyboard warrior - just hope he doesn't drive any genuine posters wanting to learn something off this BB.

the side track if they do it will be done from the same well. Only once they finish the side track will the well be plugged and abandoned.

Canetoad,

Not sure I agree at all:

1) who's comparing with PTAL - my post highlighted that i3e was cheaper than the +/-57 other Oil Companies listed on the Canadian Exchanges.

2) Oil forecasts have come down a little but I don't see that they have been scaled back dramatically - i'm still seeing Goldman et al forecasting $90+ which is handsome.

3) https://oilprice.com/Energy/Energy-General/Wall-Street-Is-Increasingly-Bullish-On-Energy-Stocks.html

4) Eric Nuttall has been highlighting what he see's as the disconnect between the financial demand for oil v the physical demand. He still see's the physical demand exceeding supply and a long term structural deficit. This thesis still seems in tact although there is some uncertainty due to the economic slows down.

5) Agree that a negative Serenity result may cause some short term weakness but the consensus is that the result will be positive. The current SP is already about the cheapest on the Canadian Market based purely on FCF yield which excludes Serenity so in the worst case - any weakness should be short lived.

its in the interim report

For most of the last year I3E has moved in line or ahead of its Canadian Peers - in the last 3 weeks it has moved down relative to its Peers by up to 10-20% depending upon which stock you are comparing to. The only stock cheaper is PTAL. So the current malaise is largely I3E specific rather than sector/ market/economy related which I think is crazy considering how cheap I3E’s shares already are and it’s growth rate. I think GGG is right - the market has focused solely on the NOI “miss” and overlooked the fundamentals - so they missed an early Serenity spud and bringing 7-8 wells online in Q2 - it will happen in the coming days / weeks and I fully expect I3E’s SP to advance ahead of its peers when it does.

We have the following to look forward to:

1) 7-8 wells to be brought on line in the coming days / week adding significantly to production.
2) Additional 3 wells spud but not yet reported by I3E including a high impact Simonette Well.
3) Additional 2 wells licensed and to be spud in the coming weeks.
4) Up to +\- 10 additional wells to be spud by years end.
5) Serenity.

If I had more cash - I would be adding at these levels - recession aside I3E has never looked stronger or cheaper relative to peers and I think the market has got it wrong marking I3E down.