Member Info for tonynorstrom1

if it was a dead cert that the SP will be a minimum 56.85p in the near future - then the price would be more than 38p now. There are clearly some risks.

with the greatest of respect - that is not how you calculate NP10 values. Also the vast majority of junior oilers don't trade at anywhere near these numbers..

BBN,

A lot to digest in that RNS - pretty much all good news. The one thing that stands out to me since we spent a lot of time analyzing it was the funding i.e. the need to get deferred payments to cover the remainder of the program.

We both calculated that they had ample funding - it looks like our calculation was not as accurate as we thought - wonder what we missed.

Boom Boom,

I assume that confirmation is outdated - I emailed them two to three weeks ago and was told that all updates will be provided by RNS during the operational phase.

nGOk,

I stand corrected by someone who knows what the're talking about - went back on the internet to see what I was looking at (mid water semi submersible rig) - rate was correct, however the information was from 2014 /15 - I understand that Rig rates have fallen significantly over the last 4 to 5 years.

You wouldn't happen to know what the approximate breakdown of a typical $33M drilling program would be would you ?

regards

nG0,

If you refer to my 1st post on this subject - you will have seen that I had factored the deferred payment into my calculation - I also said that I thought there were sufficient funds though not as much as BBN. I'm not sure your day rate for the rig is correct - I went on the internet a couple of weeks back and saw some information that indicated average day rates for semi-submersible rigs were in the range of $350 - 400K per month - I could be wrong but this is what I read. This figure seems to tie in with the program cost plus or minus - $120K would mean we are funded for 240 days.

BBN,

"What you appear to be missing here is that the 94 day contract for the Borgland Dolphin had no cost associated with it at all, until the June presentation. That presentation stated $36m." - I have not missed this . I think what you have ignored is that the June presentation had no schedule visibly associated with it also as this was seen via the OGA submission in June / July as you stated - therefore its an assumption that $36m covers the 120 day schedule. Now it should be a good assumption provided that I3E did their job - but as various people including myself have pointed out - this would not be I3E's first miss step. Further - what do you make of the April RNS where there clearly state a 94 day program - was this a mistake? I think if we go back to one of your first posts on this subject - you did infer if I recall correctly that there were some educated assumptions in what you thought the costing / schedule covered but now you have gone further and are stating them as fact.

Anyway - I do appreciate the responses and have now been able to form a view on where the costs stand.

regards

BBN,

You could be right but I'm not 100% sure what you have written makes sense - a significant portion of the costs are time related i.e. equipment rental - I don't see how it matters whether you're drilling an L2 well an S3 well or no well - your still paying equipment charges. If your estimates are based on 94 day instead of 120 days - that's a problem. You reference a June presentation with an estimated cost and then a schedule that was issued in July. In addition you have a rig sitting idle for 10 days in September due to no permit and then again in for 7 in October due to a sidetrack - I'm sure neither of these events are part of the program whether 94 days or 120 days,

With regards to your comments on Seasoned Oil Men - having a $360,000 a day rig on hire and no well to drill - is there anything more to say?

BBN,

Thank you for the response and I stand corrected - indeed 120 days is now the current schedule. However, I do have a couple of doubts / questions:

1) $41m was referenced in 10th Jan 19 RNS which presumable formed the basis of the funding plan - no scheduled referenced.
2) April RNS stated a 94 day program no cost referenced
3) You have highlighted the 120 day plan sent to the OGS - what date was this filed ? If this was after April then it is not clear at all what the basis of $41m is. Logical assumption would be 94 days with contingency on top .
4) I ran some numbers based on $41M, 94 day plan, 15% contingency, 115 day forecast along with some other assumptions on standby rate and fixed / other one off costs. I calculate after deducting the $3M deferred payment a total cost of about $38M, This excludes G&A, finance costs and other potential commitments due such as LLI. Still shows a little leg room but not as much as your estimate assuming there are no significant additional costs.
5) Who is Redmires by the way ?

have a good day

BWM,

"The third option is that the market just doesn’t trust any information coming out of i3E any longer." - I don't see this as a third option - rather a function of the markets assessment of oil reserves and funding. The market may have overreacted - however, the L2 result is now more than a month old and investors have had a chance to re-access and are still pricing the assets at 18p / share??

"The failure of the pilot well could call into question the commerciality of Liberator but doesn’t affect Serenity. " - It does call into question Serenity as I3E mentioned during their POD cast after the L2 results - drilling plan based on same seismic data. How much it affects the outcome is still to be seen.

"I also think the hype around i3E took expectations to unrealistic levels." - I assume you are saying that I3E have overestimated / hyped their asset. Investors have applied industry metrics to the reserves and COS published in I3E reports and rightly come up with risked valuations which should be multiples of the current SP.

"I think there are several factors are work driving down sentiment - BOD overconfidence, PI high expectations, uncertainty over Liberator commerciality, uncertainty around seismic interpretation and how that affects Serenity, and funding doubts." - agreed.

Just a couple of comments on I3E's funding - in addition to the drilling costs , you have the following:
1) G&A - I believe these are not included in the $41M. Last year these were nearly $3M - I would expect them to be higher this year.
2) Finance Cost - Coupon on the loan notes is payable quarterly on the full UKP24M @ 8% PA
3) Survey - possibly included in the drilling cost - not sure.
4) Other costs including LLI ?

Bottom line whilst I think they have sufficient cash despite the overrun on schedule - we have no idea what other costs are due in this period. Also I3E's assumption may have been that the senior funding would be in place by now - so not sure how comfortable they will be if Serenity does not come in.

regards

BBN,

Thanks for the comprehensive response. I am in a slightly different boat that Blackwoodsman - I'm still invested and sitting on a hefty paper loss. At this stage I plan to see the story out, however, I must say that I agree with Blackwoodsmans concerns about what the market is telling us versus the supposed potential of I3E. Looking carefully at your response below which is a rosier take of the current state of affairs than the market - these are my comments:

1) I3E's 9th April 2019 RNS states : “On 9 April 2019, i3 and Dolphin Drilling Limited ("Dolphin") executed a contract to utilize the Borgland Dolphin semi-submersible drilling rig for a 94-day programme which is due to commence between 15 July and 15 August”. This is the update provided to I3E's shareholders and logically the basis of the costing to which one assumes they have added an appropriate contingency. The "120 day program" to which you refer is the dates lodged with the OGA - this may be nothing more than a permitting window - you have to have permits that cover the planned program - it cannot be less. To assert that costing is based on "120 days" I believe is an assumption on your part that may not be correct.
2) The 10th January 19 RNS states: "The Company expects its three-well 2019 drilling programme to cost c.US$41 million with additional capex to 2020 first oil of c.US$90 million, inclusive of considerable contingency." Does the considerable contingency refer to both amounts and was the order placed within the budget referenced in this RNS - these are both assumptions as the 9th April RNS does not reference cost. What does considerable contingency mean anyway - 15% of $131m may be thought of as considerable, however 120/94 = 27% - was this in the plan?
3) Trust and sentiment are surely down to the markets belief in whether I3E make a return on investment. The two factors in play are the funding and the oil- I cannot think of anything else. The market must therefore think that the oil is not there in commercial quantities or the funding is in question.

BBN / Alexios - thanks for the information on permits.

BBN - I had asked you thoughts on drilling rates and also the risks depressing the SP. I take it that you don't wish to speculate on that.

regards

There were permits submitted in August / Early September which are not approved - I could not see whether they were for the L2 or the A3 well. The L2 results came out 10th Sept after which they said they would incorporate the data to confirm / relocate the well. From this I would assume that they have either decided to keep the well in the same location or have yet to decide the location and therefore not submitted new permits

I would be interested on BBN's thoughts on this. On paper I3E could be worth some of these figures that have been touted about. Serenity alone could be estimated at 70m x $4 = $280m or more. The fact that that the current market cap is only $17m is a flag. What are the current risks:

1) They don't strike oil. If this is the reason then the market is effectively saying that the COS is less than 5% or something like this which would be strange because the wells are close to existing discoveries.
2) They run out of money due to not being able to complete the wells due to bad weather or some other reason either going bust of having to raise further funds resulting in massive dilution of existing shareholders.
3) Combination of 1 & 2
4) Market have completely got it wrong. This is possible - however its not like I3E are flying under the radar - they've been around a few years and Management have had success with other ventures.

All will be revealed shortly.

Day 70 of the planned 94 day program.

If you use the pilot drill as the baseline and deduct the potential days lost due to the side track / repermitting - could be another +/- 7 days for results. However, I was looking on the internet yesterday and saw that BP holds the record in the North Sea for drilling a well to 6000ft in 5 1/2 days. Can anyone enlighten the board to explain the differences in I3E's 18 days drilling time on the pilot well versus the BP well.

It could be a week or more away - remember that we possibly had a 1 week delay due to rermitting / sidetrack.

BBN,

Your logic appears sound, however, playing devils advocate - one thing that has changed since they signed off the update on the 29th Sept is +/- another 7 days of delay. If Serenity comes in then this is probably not to important, however, if it does not, options look a little tighter.

A question on the sonic logs - they have indicated that preliminary analysis confirms "a material asset". On a best case scenario - what other information do you think it might be able to confirm. For example is it possible that they may be able to say "we missed the channel by about xxx m but overall the field is even bigger than we thought and we have have been able to locate the S3 appraisal well and the phase 1 production well "?

Looking at the pilot well and factoring in the +/- 7 day delay on this drill - we have an estimated 8-10 day to go for results on this well. Do we know if permits are in place for the final well and if not when would they need to apply to avoid any delays to the drilling of the 3rd well.

I know this there is some speculation here and you may not like to get into speculation - but its fun isn't it.

JustBe,

"What happens if no oil is encountered" - that's a pretty easy one - I'm sure you know the answer.

valuation is what someone is prepared to pay i.e. "market" valuation. That said if we prove up 80m barrels and produce 20k bbl / day - you would think we should reach a market cap of at least $300M.

Not studied RRE's financials to see what might be depressing the price below "actual" valuation as you put it. Maybe they have high debt.

MTSparky,

How doe you come up with $9 ? You mentioned Rockrose - they are producing already at Circa 22K bbl/d, have about $80m in 2p & 2c reserves and are only valued at about $3.7 / bbl. What is the difference in valuation?

I’m not sure what the relevance is - they apply for the permit with the assumption they strike oil. It does not mean that they have struck oil.