Member Info for tonynorstrom1

Pirate Pete,

If these are the same option referred to in the readmission document LAST YEAR then your comment is out of order and perhaps a more pertinent observation might be - when did you wake up !

Your a shareholder - you've approved the options and it is a bit rich to object to them now !

Hey and Miss Whats Her Face said you should pay attention to my posts - so pay attention !

GGG,

There are several of us here with significant holdings so we know how you are feeling with regards to the SP dropping from 16p to 11p - I think you're letting your emotions get the better of you. The markets reaction in no way validates your argument or indeed invalidates how good a deal this is for PI's. The market has got it wrong in my opinion and will correct. Look at 88e - 6p one day and 1p the next (now 2p) - what does this say about how rational the market is.

Because of the scale of this deal and the visibility this will bring to all investors (PI's & II's) - I don't think the share overhang will be too much of a problem.

You keep talking about access to debt - you have no idea, zero, zilch, nada and if you are saying otherwise you are misleading fellow investors. You could be right but the fact is you don't know.

I've already outlined why they might have gone down the equity route - if you accept my analysis on cash and cash burn is somewhere in the ballpark, add in £30m of additional debt you are so desperate to put onto the balance sheet, throw in a big spending commitment on Simonette and then overlay an oil price collapse - things all of a sudden would look a lot less rosy.

It's either a great deal or its a poor deal - i'm saying its a great deal for all shareholders and that all things considered PI's have not been shafted - I cannot be any clearer than that.

I'm a little confused with what you are saying - lets focus just on the PI - is it a good deal or a bad deal for PI's ? You keep saying its a good deal - its not a good deal if you think it is poor for PI's.

If its a good deal - what are you complaining about?

put the handbags away boys - I think were all on the same side !

GGG should contact i3e and if he still feels the same way after a response - then I guess were going to have to agree to disagree !

final thoughts for today:

I have already given my thoughts on available cash and indeed posted my estimate a few weeks ago. Whilst healthy - available cash was nowhere near what some here thought mainly because of the money i3e have already spent / committed on development ($16,000,000).

I3e’s debt (or indeed net debt) is not nearly zero as some have said - its approximately $30m and it is not the only liability on the balance sheet.

If you look at i3e’s progress over the last several months, it’s been impressive but slow & steady and its drained the cash balance to below the level at the start of the year. I3e could have continued like this building scale, but would have probably had to slow a little and wait on FCF to build a little before kicking on. I3e certainly don’t have enough cash to develop these elephant projects such as the South 18,000 boepd Simonette Drill Program that they have been discussing in their presentations which is why they talk about looking for a partner.

It’s clear i3e are cash constrained if they are looking to scale up the development program - if they were to take on additional debt – this would certainly not help the cash position.

One thing that people here may not have been aware of (I certainly wasn’t until recently) is that the wells in South Simonette cost between $4 and $8 million to drill – they are high impact wells which goes someway to explaining why they are not already out there drilling!!

Anyway – in the words of Barnyards – toodle pips.

GGG,

I have read your last post carefully and still don't get where you are coming from.

Put yourself in the II's shoes - when this deal was first being discussed I'm sure the SP was in the 8p range. They've managed to get the placing away at 11p !!! Yes we have given away a piece of i3e but you have to look carefully at what we have gained to judge whether existing PI's have been sold short.

I would have preferred some debt to finance this but i3e have selected the equity route. I don't think for one moment that that the primary reason was to line II's pockets - I'm not sure why they went this route and have asked the question - but my assumption as of now is that it was the best route available. You are well aware that I3E's management will have substantial shareholding after the exercise of options - its not in their interest to dilute their shareholding unnecessarily.

In case anyone has missed the advantages of this deal:

1) We get substantial savings at the corporate level eg we don't need an additional CEO, head office and other fixed costs to manage the additional assets. This will lead to a significant per share saving and a higher SP in relation to the added assets. Graham reference this in the Vox market podcast - i.e. virtually all the NOI falls to the bottom line i.e. FCF.

2) We get operational efficiencies due to the proximity to existing assets which again mean lower costs on a per share basis and higher SP.

3) We are told that the assets were non core and have been underfunded meaning that there is significant upside in low cost work overs, reinstatements, high impact drilling etc which will add significantly to production and FCF.

4) It more than doubles (yes doubles !!!) existing reserves and adds 200 plus potential drilling locations.

5) All adds up to significantly higher free cash flow which will allow a material scaling up of i3e's planned drilling which I believe was already showing signs of being constrained by available cash (current available cash was a lot less than many here thought due to the cash i3e have already spent on development)

Justbe - the chances are zero - i3e will have obviously already received the support major shareholders otherwise they would not have announced

every shareholder should do their own due diligence - but the numbers and i3e say this:

1) At the same cash flow multiple as priot to the tranaction - the shares should be trading at 21p today. The market has not understood the story yet and the shares are mispriced relatively to pre-transaction.

2) Upside is maintained and now they have the scale and CF to start exploiting the potential within the Canadian Assets faster.

3) Dividends will be higher in the future due to this deal.

other than raising a protest vote - why would you say no ?

GaryBains,

Good post and some valid comments - I cannot speak for all here but I know that a few here might agree - we have not missed the point GGG has made - he's made it very clearly and forcefully and whilst a few points resonate - generally in my opinion he's added 2 plus 2 and come up with 5.

The transaction, the funding and the circumstances whilst not complex are certainly not 100% straight forward and there is context and reasoning behind what has happened which as PI's we are not 100% party to.

I have contacted i3e about some of these issues and already received a response - what I can tell you is that i feel a whole lot better about the deal.

Bwana,

I know that you probably understand this, but I just wanted to address the "discounted equity placing" comment. When an equity placing is done, the placing price is normally done at a price considering and average over a proceeding period of time. This period could be a month or more. The placing price here has been done at the average of the proceeding 10 days. Considering that the price during this period had only just climbed to 16p (rapidly I might add), then the placing price is actually quite a good deal for existing shareholders.

GGG for example admitted that he felt that the SP had got ahead of itself at 16p and sold out a small portion with a view to buying back at a lower price when it corrected which it did. I was thinking of doing the same thing. So to look at 16p and think that you've got a raw deal when institutions are putting in over $60m at 11p which is above the price it was at 10 days earlier is a little misplaced.

sorry last bit cut off.

What I was going to say was that if what you are buying has the same or greater value than what you have relative to the price you pay - then effectively you have not been diluted. This is I believe is what i3e are telling us.

GGG,

I don't think it matters if anyone cares to argue any point with you - your not listening. If you were interested in being fair and balanced - you would send an email to i3e and have them address your concerns rather than bashing Management without being in full possession of the facts / context. There are a number of things you are stating as "fact" which are merely your opinion.

From what we know and the numbers i3e have shared its a great deal and all shareholders will benefit. Yes we didnt have the same opportunity as ii's at the placing but I don't see how in an overall sense you can say PI's have been shafted - I really don't understand.

I'm all for freedom of speech and if someone wants to moan on for days about an issue - so be it, but its not constructive particularly if you are an existing shareholder - the right thing to do imo is address your concerns to Management and refrain from bashing them any further until you receive a response.

t sense, yes we have been diluted in terms of number of shares but if what you have bought buys you the same value and potential as what you already have - then

Listened to it already - excellent interview and explains the rationale behind the recent acquisition. i3e clearly believe that this deal is transformational - CFO says that the SP would be at 21p now if you apply the same multiples to forecasted Net Operating Income (NOI) as when the shares were trading at 16p.

I thinks its possible that the SP might lag for a short while due to the additional shares but I'm confident that any concerns will dissipate rapidly due to news flow/execution of drilling plans, dividends and additional II interest. I think it is more than possible we could be back at 16p and trending up in a month or so.

GGG - in the circumstances and as a shareholder yourself, I don't think your repeated posts on this are constructive (in my humble opinion). People do pay some attention to your comments - I think you would be better served sending off an email to i3e to clarify your issues and make sure that your take is accurate and balanced.

GGG,

I usually agree almost entirely with what you post but not today particularly your comments on debt, funding and alternate deals which I think are off the mark.

You have no idea along with me or others on this board whether there were better funding structures out there - you are speculating. I do know from the numbers provided by Management that i3e is worth more today on a per share basis than it was prior to the deal being announced - some might ask (and have already done so) how is this a bad deal for PI's.

I agree there are a couple of aspects that raise questions / require clarification, but one reason Institutions are treated different to PI's is that they have the money !!!

I complained to i3e about the previous raise and I got a response back from i3e that acknowledged my concerns but pointed out that PI's had not even taken up the full allocation of shares available to them - i.e. you can not reply on PI's on an equity raise in a fast track deal.

GGG,

When I say time sensitive - I also mean confidential. If you accept that this is a very attractive package to buy at historically low metrics, its a pretty safe bet that there were many potentially suitors. Discussions were almost certainly done at speed (relatively) in secret and with parties that Management Trusted i.e. not in the market potentially inviting rival bids. This is what I think happened and why private investors were given about 30 minutes before the market opened to get on board i.e. the deal was already done at the time its out in the market.

If your saying that they could have negotiated debt - this is an assumption and contrary to what has been stated by i3e and market commentators in general i.e. that access to capital is difficult.

When you look at the offer price - sure its disappointing when the SP was 16p a few days before, but consider the following:

1) 10 days ago (28 June) we were at 10.5p and a few days earlier than that we were at less than 10p
2) 10 - 11p valued i3e somewhere close to the mean of our Canadian peer group.

I wonder what he's got to say - he usually cannot resist the opportunity to take a shot at Management - lets see if he can write something intelligent for once !

GGG,

1) I'm not happy that PI's were not given a real opportunity to participate in the placing, in fact we were given effectively no opportunity. I have sent an email to i3e expressing this opinion and asking them to make it right - lets see if they have the time to respond.

2) Were there other ways of doing the deal - maybe, maybe not - I'm going to give management the benefit of the doubt and assume that the deal was time sensitive and there was no other way or at least this was the best way.

3) You were proved 100% correct last time round when you predicted that we would be anchored around 5p when most other people including myself were predicting higher. This time round, I think it will be different - we were already a different company prior to this deal, this deal just puts us in a different ballpark and coincides with a dividend and also a £100m market cap. I don't think we will be anchored to 11p for very long.

4) I definitely think this deal has slowed the momentum in the SP and in fact pushed us back a little, but having had time to absorb the numbers - IMO its a great deal and probably more than compensates for any dilution and I don't think it will be long before it is reflected in the SP.

5) I have queried the wording of resolution 10 with regards to issue of new shares. I hope that there is a satisfactory explanation to square what was written with what has happened - trust is important - lets see !

Tomhuk2000,

Good post and yes you have flagged a really good point - the acquisition has significantly increased i3e's Oil & NGL's which means at some point you will see a significant jump in revenues.

I plugged the new numbers into my spread sheet and it seems to flag a discrepancy - i.e. the NOI should be significantly higher than i3e have reported. The only explanation I have is that the production is hedged which could mean that as the hedges unwind you might see a significant jump in NOI.

The other thing of note (if I heard correctly in the Proactive Interview) is that transaction is effective from April. If correct this could bump up the dividend a little.

Hang on GGG - I thought Miss Whatever Her Name Was said I was the most intelligible poster !

Low-decline production: The acquisition will increase i3 Energy’s production by circa 8,418 boe/d of low decline, stable production. Pro forma the acquisition i3 Energy’s production of circa 18,470 boe/d will consist of oil 19%, NGLs 28% and natural gas 53%. ? Synergies: i3 Energy anticipates increasing the acquired asset’s cash flow by up to 20% via synergies – a considerable uplift that would add further to the attractiveness of the acquisition. ?

Low break-evens: The company estimates that its pro forma breakeven commodity price equates to $11.05/boe (exclusive of royalties) – low by any standards.
? Drilling locations: The acquisition adds circa 143 net drilling locations to i3 Energy’s drilling inventory. We anticipate i3 Energy’s drilling/development strategy will take shape over the near-term. The more drilling locations available to the company, the higher the requisite economic thresholds will be for well locations to warrant capital allocations for drilling. We believe that i3 Energy has a breadth of locations across its core regions and that the acquisition adds further to the company’s growth potential via drilling.
? Workovers: In respect of the company’s two major Canadian acquisitions, to date, we have been surprised by the gains made by i3 Energy through low-cost workovers, suggesting the acquired assets were low-priorities and starved of even modest capital allocations. We therefore believe it is highly noteworthy that i3 Energy has identified a total of 80 wells as targets for reactivations/workovers.
? Acquisition Metrics: Based on i3 Energy’s estimates, next twelve month’s cash flow was acquired for 1.73x, production was acquired for $6,381/boe/d and 2P reserves were acquired for $0.68/boe. We believe that it is a reflection of the peculiarity of this commodity price cycle that bottom of the cycle acquisition metrics can be achieved even as many commentators foresee a mid-term energy supply crisis.
? Overlap: The acquired assets directly overlap with i3 Energy’s existing production base in Central Alberta (one of i3 Energy’s core areas of operation from which it is producing circa 3,090 boe/d). As a result of the transaction, the company anticipates material scope to both reduce unit operating costs and to increase third-party tariffs. The acquisition of largely operated production (83%), a network of 1,140km of operated pipelines and key processing facilities strengthens i3 Energy’s strategic presence in the area.
? Valuation: We recently placed our 24.5p fair value estimate for i3 Energy under review for an upward revision. We remind investors that 1

Low-decline production: The acquisition will increase i3 Energy’s production by circa
8,418 boe/d of low decline, stable production. Pro forma the acquisition i3 Energy’s
production of circa 18,470 boe/d will consist of oil 19%, NGLs 28% and natural gas 53%.

? Synergies: i3 Energy anticipates increasing the acquired asset’s cash flow by up to 20%
via synergies – a considerable uplift that would add further to the attractiveness of the
acquisition.

? Low break-evens: The company estimates that its pro forma breakeven commodity
price equates to $11.05/boe (exclusive of royalties) – low by any standards.

? Drilling locations: The acquisition adds circa 143 net drilling locations to i3 Energy’s
drilling inventory. We anticipate i3 Energy’s drilling/development strategy will take
shape over the near-term. The more drilling locations available to the company, the
higher the requisite economic thresholds will be for well locations to warrant capital
allocations for drilling. We believe that i3 Energy has a breadth of locations across its
core regions and that the acquisition adds further to the company’s growth potential
via drilling.

? Workovers: In respect of the company’s two major Canadian acquisitions, to date, we
have been surprised by the gains made by i3 Energy through low-cost workovers,
suggesting the acquired assets were low-priorities and starved of even modest capital
allocations. We therefore believe it is highly noteworthy that i3 Energy has identified a
total of 80 wells as targets for reactivations/workovers.

? Acquisition Metrics: Based on i3 Energy’s estimates, next twelve month’s cash flow was
acquired for 1.73x, production was acquired for $6,381/boe/d and 2P reserves were
acquired for $0.68/boe. We believe that it is a reflection of the peculiarity of this
commodity price cycle that bottom of the cycle acquisition metrics can be achieved
even as many commentators foresee a mid-term energy supply crisis.

? Overlap: The acquired assets directly overlap with i3 Energy’s existing production base
in Central Alberta (one of i3 Energy’s core areas of operation from which it is producing
circa 3,090 boe/d). As a result of the transaction, the company anticipates material
scope to both reduce unit operating costs and to increase third-party tariffs. The
acquisition of largely operated production (83%), a network of 1,140km of operated
pipelines and key processing facilities strengthens i3 Energy’s strategic presence in the
area.

? Valuation: We recently placed our 24.5p fair value estimate for i3 Energy under review
for an upward revision. We remind investors that 15.7p of our fair value estimate
related to the company’s Canadian operations. i3 Energy’s strategic acquisition adds
further impetus for us to increase our fair value estimate.

? Conditional: The placing and the acquisition are conditional on shareholder approvals
and other customary conditions.

? Dividend: Today, i3 Energy