Member Info for tonynorstrom1

https://www.energyvoice.com/oilandgas/north-sea/exploration-production/424530/repsol-sinopec-kicks-tain-fid-down-the-road-again/?fbclid=IwAR3tGhhXBlZZL51ah5SR7Y1lU1hh4_814wrVrJ_zd4d_z-kjky8ZITbeZmk

FID Tain delayed until Q2 next year - any link to Serenity ?

https://1drv.ms/b/s!AoSqKfvcR4IMgYMjavd3jbS7xd4mtA

I have run two scenario’s here - one at $75 oil and one at $85 with I3E paying out 40% of FCF. The estimated dividend would be 0.145p and 0.185p per month respectively. So deep value to be had her e which in itself should offer some down side protection - how low can we go?

Stas20 - Good post with some interesting thoughts.

Toad - blah blah blah

"The bottom line is, all the talk about fundamentals is a silly waste of time during a selloff" - what a silly comment !

"Be fearful when others are greedy and greedy when others are fearful" - Warrent Buffet !

Fundamentals are nearly everything - its one of the reasons that i3e seem to be holding up better than a handful of Canadian peers I cross checked. If you're overly concerned by a recession / short term price volatility - have you thought about putting your money in premium bonds or a post office savings account ?

Also - what is your interest here - are you still invested - if not (and more interestingly if you still are) - why are you posting an oil futures prices for 2025 !! Seems a little odd if not irrelevant.

I thought Toad said a month or so back that he had written his last post on this board ? I agree picking out a random number in 2025 - does it mean anything ?

We're at around $100 Oil - if you go back and look at the charts - it was about the end of February when the POO broke through this level. If you look at the i3e chart - the SP was around 23p. What has changed since then:

1) i3e have doubled their Capital Program and are forecasting year end production of 23-24k boepd
2) Announced the Serenity Farmin

If the thesis of a structural supply deficit plays out - it could still be a very good few years for i3e. I think the dividend is well covered even at lower oil prices than today. If Oil prices do go down significantly - my guess is that they would cut back on Capex but possibly spend on maintenance capex to hold production and pay out a healthy dividend even beyond the current guidance of up to 30% of FCF.

I'm expecting a pretty decent update by the end of this month.

Older and very wiser

Points noted on uber bulls which is why I said you should read / follow various analysts and form your own view. I'm not sure I agree with your comments on Silver and other PM's - you cannot fill your tank with Silver !

If Eric and a growing chorus of other analysts are correct - this could be a generational opportunity for O&G Investors. I'm not hearing many bearish views at present which is unusual - normally for every Bull theirs a Bear. About the only bearish views i've seen recently is from Citi Group and their still talking about a POO of $70.

Even at this very depressed Oil Price of $100 - were still making pots of money. I've had a request to post my spread sheet again - Ill do it shortly with forcasted FCF and Dividend. Both measures I think are stiil pretty healthy even at Oil prices significantly lower than present.

Olderandwiser - you say that but he seems to be doing pretty well for himself and for Nine Point Capital ! Are you saying you know better than him and people should be listening to you ?

The other thing and mentioned below - everyone should DYOR - read what the various experts say - good and bad and try to form your own opinion.

Even Warren Buffet doesnt get it right 100% of the time - you dont need to - you only have to be more right than you are wrong!

Energy Aspects: "we can only say in so many different ways that this is the tightest crude and products market ever, and prices will need to be high to kill demand. Any sell-off (while possible in this macro environment) will be limited and unsustainable."

Eric Nuttall - "The FINANCIAL demand for oil can at times collapse even when the PHYSICAL demand for oil remains strong, and this can be one of the biggest confusions/frustrations for energy investors to have to endure. Just like free cashflow, the physical wins out in the end."

For what's it's worth Eric Nuttall disagrees with anyone that says buys backs dont work - he's calling for 75% minimum return of FCF to shareholders via buybacks and dividends and i think I've heard him mention roughly 50/50 buybacks v dividends.

Half year results - are they going to move the needle bearing in mind they're reported 3 1/3 months past the cut off date and after several intermediate operational updates including NOI - I think its doubtful.

I would also like to see them increase the dividend and plough money back into development as longer term I see this as better value for SH and I think i3e Management have said similar - so no worries there - I personally think we will see another 20-30% dividend raise before year end.

However - I think it would also be positive for Management to draw a line in the sand and say we are not going to dilute shareholders anymore and have a plan to offset options and warrant exercise by having a small buy back program. I think it would also be positive to bring the share count below a billion - typically blue chip companies and growing companies with a market cap of UKP 300m dont have a share counts of 1.1 billion and growing.

Also - share consolidation - no effect on earning per share so theoretically no impact on SP. However it should be borne in mind - its typically done in 2 scenarios:

1) Rapidly growing companies such as Tesla and Amazon to make there share more affordable to the general investor.
2) Weak Companies with a declining SP and increasing share count.

Most of us recognize that i3e don't slot immediately into either category but what would new investors think looking at the long term graph - its not immediately clear - in my opinion a consolidation would not be a good look !

Dartron - the one more point was meant to refer to "take over target"

LOL - how old are you - 11 ?

To be clear - I believe we are worth more that 40p - however, currently and presumably because of the threat of recession - the market is currently valuing us at 25.5p so 40p would be a significant premium as of today.

On valuations - as per Eric Nuttall - Oil Companies have traditionally traded at 6-9x FCF at the top of the cycle. Shubham Garg has target SP's based on 8x. Will we ever get to these multiples again - there's got to be a question mark because of the push towards renewables buts is possible. However, as of today Companies are trading at closer to 2.5x FCF.

I also agree that there's a lot more value to be realized from Serenity but most of that wont come until we get much closer to development / production and even more so with Minos High which is not even an at appraisal stage.

I think you have to remember that were heading into a recession according to many market commentators and also I dont think we were in the mid thirties - was about 32p I think.

40p is a premium of about 55% to todays price - your saying no one would be interested ?? I think its about double what GGG once said he would sell up at !

Hard to say - i3e dont have a consistent schedule for quarterly reports - logically you would think a minimum 2-3 weeks after the quarter end i.e. 3 weeks or more from now. Could be earlier if they have a lot of well results to publish or it could be later if they want to take a big bang approach and include a Serenity update. Its funny, the news flow seems to be slower now that there is more to update than it was 6 -8 months ago when there was less to report.

Anyone following Eric Nuttall on twitter - he has a graph with the estimated FCF yield of about 40 producers for 2023 - this is most of the Companies in the Oil & Gas space. The average yield is about 33% - I have i3e at about 48% i.e. about 45% cheaper than the average Company in 2023.

A related topic - I compared i3e over the last 3 months against Baytex, Surge Energy & Tamarack Valley (randomly chosen) - I3e significantly outperformed these companies.

One final point - on the ADVFN board they were talking about the AGM and apparently one or two people attended. One of the items mentioned (perhaps an informal discussion after the order of business - if you believe it) is that Management believe we are significantly undervalued (i think most of us agree) and that they see themselves as a take over target ( they are currently too small for Institutions to take a meaningful stake). This makes sense and if you were following the ADVFN board you will have seen a rig moving towards the Blake Field (for Repsol). Repsol also have significant assets in Canada.

Does it make sense for Repsol to buy i3e ? - perhaps ?

If they were to offer 40p/share now - that would be pretty tempting to many shareholders right ?

The update if it is the quarterly update is not overdue - we have yet to get to the end of the 2nd quarter and i3e are very inconsistent with when they send out these updates - sometimes its 3-4 weeks after quarter end and sometimes its 6-8 weeks after.

Interesting to note that they renewing the authorization to buy back shares but also state the they have no current plans to do so.

Also renewing the resolution to issue new shares also with the note that there are no current plans to do so.

The eye catching thing for me was increasing the options limit. I remember at one time BP buying back shares with a note that this was being done to compensate shareholders for options issue. I think this is something i3e need to consider because they have been open to criticism in the past for the number of options they grant - and not an unfair criticism in my opinion - options are not free and dilute shareholders.

Parge,

I dont have any more insight than anyone else here but I would refer back to what Majid said on this same subject which was basically that i3e were open to all options with the aim of maximizing shareholder value. i.e. that they were open to selling the asset or taking through to development and production. That said - they way I see it is that confidence in the NS is rising all the time but still not where it was a number of years back so I think they are likely to see Serenity through to development where they should realize more of the value.

I also think that Repsol are still in the picture and though they have not updated the market recently - in press releases 8 months or so back were still identifying the NS as one of their strategic focuses. They are due to advise on FID Tain by the 3rd quarter so lets see. I think if Repsol Sinopec were on board - it helps secure development funding and that in itself should release more value.

And of course it depends on the results of the appraisal drill - which hopefully will add value and could potentially be spectacular - so exciting times!

https://www.energyvoice.com/oilandgas/north-sea/415572/i3-energy-hands-petrofac-contract-on-company-maker-serenity-well/

"CEO Majid Shafiq has described it as a “company-maker” and the “gem” in Aberdeenshire-headquartered i3’s portfolio."

I keep hearing people say that Serenity is the cherry on the top of the cake - I'm not sure I agree with that - if it lives up to expectation - its the whole pie !

Sharesahoy,

The idea of sharebuy backs is to reduce the sharecount and hence increase the FCF/Earnings/Dividends per share. This should theoretically lead to an SP increase if the share maintains the same multiple of the above measures. The danger as you point out is the SP does not always increase particularly where you have high share counts and in sectors where you have poor sentiment.

However, I suspect a meaningful buyback program will work here and Eric Nuttall has already touted the outperformance of some of his shares that have announced large buyback programs versus those companies that have not.

I don’t agree with Bunkatron by the way - even though I3E are spending heavily on Capex - they still have plenty of cash available for buybacks.!I think it’s more a case of I3E believing that Capex spend is a more effective use of cash at the moment in terms of investor returns.

I’ll say again - i3e like several other Canadian peers are in the sweet spot:
1) weak Canadian dollar = low cost
2) low cost low decline wells that can be funded via internal FCF (no need for financing which is scarce)
3) very short lead times from drilling to production.
4) Historically low valuations and i3e getting cheaper.
5) good and inceasing dividends
6) and particular to i3e - Serenity and other transformative catalysts.

What’s not to like !

Micktrick - great article - good find.

Eric Nuttall for those that don't know is the Partner and Senior Portfolio Manager for NinePoint Capital which is the largest and top ranked energy fund in Canada. He rates Energy Aspects as one of the foremost Energy Analysts in the Energy Sector with a track record of producing the most accurate forecasts in recent years

In no particular order - some of the key points from the above Webinar:

1) We're in a 7 to 10 year structural bull market where the demand / supply balance remains tight to under supplied leading to favourable pricing.
2) Capital spending is $100 to $150B short of what is required to maintain production levels
3) Base case projection is considers a mild recession next year in the US and a more severe recession in Europe - despite this, demand expected to increase by around 900,000 bbl / day. Energy Aspects is one of the most conservative projections - i.e. other forecasters expect larger supply deficits / demand growth
4) Only 4 times since the 70's has oil demand fallen year over year and one of those occasions was Covid.
5) Prices over $140 and perhaps nearer $180 needed for demand destruction
6) Demand in Asia Soaring and China yet to emerge from Covid restrictions.

For me - this all appears to point to a very favorable back-drop for Oil Companies - particularly Companies like i3e. IMO - only a matter of time before the market recognizes the increasing FCF and dividends and re-rates the sector.

Check out Eric Nuttall on twitter - there is a link to a webinar he is hosting tomorrow with an Industry expert. One of the questions answered is what effect a recession will have on oil demand. There is also the opportunity to email in questions. I think the webinar is around 4:30 uk time (11:30 EDT)

I3e cannot purchase whatever they want - they have to have shareholder approval and it is usually about 10% maximum of the outstanding shares so just over 100,000,000 from memory. Look at the resolutions in the shareholder circular for the last AGM.

Assuming TSSZ's statement about Bybrook holding 26% of the shares is correct - then a repurchase of 10% of the outstanding stock would not take them over the 30% thresh hold and therefore one would assume is nothing to do with Bybrook reducing their holding from 26% to 20% - just keeping it real !