Member Info for tonynorstrom1

You didn’t go anywhere near a large Container shop did you?

Fastfood,

I cannot believe you keep claiming it - there's no obvious connection to $64 to me.

You have'nt been on holiday in the Red Sea area by any chance in the last week ?

https://www.reddit.com/r/Canadapennystocks/comments/mdtcw3/i3_energy_small_cap_oil_w_long_time_investment/

i3 Energy - Small Cap Oil w/ Long Time Investment

Would like to bring forward what I like to think is a good long term Canadian penny stock on the TSX, i3 Energy (ITE.TO or I3E on the LSE). Based out of the UK, i3 Energy is a small cap oil company with huge assets and (imo) 2-3x potential. It is currently at 0.17, and as I'm bullish on oil, this play ticks a lot of boxes. I don't think this is a short term play, rather a year at the minimum, or even longer. So for anyone looking for a get rich quick, this is not it (though if it went up 10x tomorrow, I can't say I'd be mad). This stock is something I found from this article, so I'd like to give credit to this. As I've found, the author, Dr. Jim Jones is super knowledgeable in the field, and is extremely bullish. (I'm probably not as bullish) Please take the time to read through it, there's genuinely a lot of great information in there. Also if you're reading this Dr. Jones, appreciate your article, and prefer I'd take this down, will gladly do so.

Positives:

Recently acquired Toscana Energy's assets. This company was going out of business and they basically bought out their assets for pennies on the dollar which have been HUGE. This raises their asset value immensely, and brings in a lot of oil production potential

Oil as a sector is still doing well. A lot of their presentations and expectations previously are based on lower prices. As someone bullish on oil for the future, short term, summer could present a big opportunity. Even if oil prices drop down to 50, this is still above the expectations that were forecasted.

As of late, volume for the stock has picked up quite a bit. I see this as bullish, with more eyes and investors

Analysts have this targetted way higher than current price. You can find this across the board in oil, but there are targets for 26 pence (trading @ 9.6 pence on the LSE). Some value this way higher, but this is the most recent number I can find out of WH Ireland.

Those are just my points, and below are Dr. Jones' points. I'll take his TLDR and expand on it a bit where necessary:

Debt light, FCF 2021 is +2x net debt

High-Quality Asset Heavy

High Liquids Production

High-Quality FCF

Low-Cost Producer

Only JR. with jurisdictional Asset Diversity (Canada and UK)

Leverage to international Brent Oil Market

Policy to payout 20-30% of FCF in dividends to shareholders completely unknown to North American investors (This is planned for 2021 Q1, as per the company. It is not yet confirmed at what rate)

NAV of +$700 Million USD, trades at a massive discount to every multiple used to evaluate Oil and Gas Companies in Canada

Looking to pay a healthy dividend that will grow

WCS oil and EDM. SWEET are at/near 7 year highs in Canadian Currency

CLEARWATER, CLEARWATER, CLEARWATER, IRR's over 350%. To many this may make no sens

An interesting interview. Eric Nuttal talks about what's driving the Oil Price and its future direction along with various Companies within the Canadian Oil & Gas Sector. Some interesting stuff on small cap valuations. One of the guys on Docs board said he emailed in a question for Eric on I3e but unfortunately it was not discussed. He sees Canadian small caps as particularly undervalued and has bought into several including Tamarack on valuation and exposure to Clearwater.

A lot of the Companies he was covering he thought would double over the next year at $60 - $65 oil despite their recent rises due to bouncing off historic lows and growing into more normalized fcf multiples. I think i3e fits into this mold and more especially coming off such a low production base with the ability to grow significantly. Worth a listen.

https://www.bnnbloomberg.ca/video/full-episode-market-call-for-friday-march-26-2021~2163101

GGG,

I was surprised no one pulled me up sooner - I made a couple of mistakes with Brent v WTI and the correct discounts. I have re-run with WTI at $58 & Gas at $2.5. I think this will be a good base to compare scenarios. Current SP indicates that we're currently valued at about 3.5x FCF. I was trying to find the graph that showed valuation FCF multiples of I3E peers - couldn't find it but from memory - most of the companies sat at around x4 FCF. IMO - due to I3E's lower debt - it may attract a slightly higher multiple.

Effect of adding 1,000 bbl of oil from clearwater at current prices (WTI = $58, Gas = 2.5, DIV 30% of FCF)

SP-------FCF------DIV-------FCFx
9.6p----$34M----0.83p-----3.5 ---(at current production 9200 and mix)
13.1p---$46m---1.14p-----3.5----(add 1000bbl oil, estimated SP at same FCF multiple x3)
16.9p-----$46m---1.14p-----4.5----(estimated SP for modest rerate to x4 FCF)

Just fiddling around with the spread sheet to see what effect adding 1,000 bbl of oil from clearwater will have at current prices (WTI = $63, Gas = 2.5, DIV 30% of FCF)

SP-------FCF------DIV-------FCFx
9.6p----$34M----0.98p-----3 ---(at current production 9200 and mix)
13.4p---$46m---1.38p-----3----(add 1000bbl oil, estimated SP at same FCF multiple x3)
18p------$46m---1.38p-----4----(estimated SP for modest rerate to x4 FCF)

"......payment early Q2" per operational update. I guess they can "declare" a dividend "subject to Court and SH" approval this quarter. In that case I wonder why the delay in announcing.

Tuggy,

Your source wouldn't happen to know whether the FO/Appraisal of Serenity will happen this year ? One of your colleagues here has cast serious doubt on it after talking with his source and sent the BB into a spin.

test

Fastfood,

Did I miss something - the RNS states previous position as 7.98% whereas i3E's website states position as 8.64%. I dont recall Lombard selling previously.

So you think that Lombards decision to sell indicates a negative on the FID ? As someone has already said - it could well be purely risk mitigation - recover your stake and have a free ride on the upside. Do you think Lombard are better informed than WHI. WHI 's addition of 6p to the fair value calculation is solely down to their assessment that the odds of a FO has increased due to the current POO. Don't go wobbly on me now Ronnie!

Did I miss something - the RNS states previous position as 7.98% whereas i3E's website states position as 8.64%. I dont recall Lombard selling previously.

JAdam,

Didnt see the rest of you post. All factors as follows:

6 (conversion of mmbtu to boe) - i'll probably change to exact conversion
Oil = WTI - $3
NGL = 0.6 x Oil
Production 350 days
Opex = $9/bbl
SGA = $7.5m
Abandonment = $2.5m
Interest = 2.4m
Maintenace Capex = $7.5m
Royalties = 10% revenues (its probably less - KEL for example paid 5% approx but the calculation depends on many variables - maybe look at reducing to 7.5 until we get a better number from i3e)

Alberta Nat Gas - 0.4

In the case of the calculation below 2.6 - 0.4 = 2.2 then converted to $/Boe

Just correcting the figures - I had the wrong discount to WTI. Adding Oil will significantly increase revenue. It just depends where the oil comes from. Most of i3e's 1656 bbl is priced at WTI - $3. If they add from Clearwater this discount increases to WTI - $15 I think.

57.0% Gas 5244 $24,227,280 $24,227,280
18.0% Oil 1656 $27,241,200 $33,037,200
25.0% NGL 2300 $22,701,000 $27,531,000
100.0% 9200 $74,169,480 $84,795,480
FCF $20M $30M

Doc,

Agreed - Oil is about 40% revenue. Figures below run at WTI $50 & $60, Gas $2.6

This is what I3E have said - they need to scale and oil.

$50.00 $60.00

57.0% Gas 5244 $24,227,280 $24,227,280
18.0% Oil 1656 $25,502,400 $31,298,400
25.0% NGL 2300 $21,252,000 $26,082,000
100.0% 9200 $70,981,680 $81,607,680
FCF S17M $26M

i assume you are talking Gas / NGL's / Oil:

57.0% Gas 5244
18.0% Oil 1656
25.0% NGL 2300
100.0% 9200

Doc,

Good morning - not a lot of information in the whi report - did you manage to pick out anything new?

Couple of questions on your post.

1) you have thrown out $0.4 as achievable over the next 18-24 months. Whilst a nice multiple on the current sp, this number is less than you have talked about recently. Referring to your report for example- you give a 6-8 month and 24 month target of $0.48 & $1.10 respectively. Has anything changed or is this just a result of looking at the numbers more closely since the Mirabaud report?

2) Do you update the "10 bagger report" on your channel or is this frozen.

regards

"Confirmation Bias"

Barnyards,

I was actually thinking about whether to call you in this morning and give us all a refresher on Conformational Bias.

Fastfood,

One of i3E's Canada's target for options was to add 25m bbl of reserves. Is it possible some of the good news might come from an upgrade to Toscanna / Gain reserves. Noel cannot be the only drilling i3e have done can it ?

JAdam,

I think your stretching it - the jist of the question I'm sure is clear to most i.e. why was the share worth 128p back then and only 9.6p now. Well I think the market answered that question over time and marked the shares were rerated down to a low of about 3.7p with the same assets they had in 2018.

Whatever the answer to that question is - the denominator in the equation was +/- 40m shares back then and 700m now with warrants and options yet to come.

Now to add the balance you talk about - imo the shares are worth more than the 9.6p they are now - its just a pity that the pizza has been cut into 700m pieces rather than the 40m back then. Admittedly the Pizza could be twice as large as it was potentially back them but as GGG has eloquently stated - its time for the BOD to deliver and show us what the've got

And talking of balance - you have significantly misstated the warrants and options on more than one occasion - not sure why this was and whether you have read the company filings .