Member Info for tonynorstrom1

Take a look at the first link below from September - Gear energy announcing a strategic review with the aim of unlocking shareholder value - does it sound similar (clue - i3e). Second link provides the conclusion.

The review was led by Peters & Co who our Canadian friends reliably tell us are the experts in the Canadian Oil and Gas apace.

I'll let Majid know that GGG's 4m shares are available for 12p

https://f8d829.p3cdn1.secureserver.net/wp-content/uploads/2023/09/September-2023-SRP.pdf

https://f8d829.p3cdn1.secureserver.net/wp-content/uploads/2024/02/February-2024-SRP-Conclusion-Feb-6-2024.pdf

Interesting that the're not taking presubmitted questions for tomorrows meeting "and there MAY be an opportunity to ask questions during the meeting". Pity - I had a couple on the recent financing update.

These resource updates are great but the game changer is if and when they announce material progress on financing.

Stas20 - Interesting analysis - would be interesting to hear what scott would make of it.

My only comment is that was a lot of hype with the Reddit crowd when it reached its peak valuation. Was it a realistic valuation or was it overhyped ?

Personally I dont care whether Canadian Ownership is 10%, 20% or 2% - i'm interested in the share price and the real drivers of price. Generally its a plus to have a wider investment base but there's nothing to say that increasing Canadian ownership will increase the share price.

I've already alluded to the fact that I think that this is not always the case and provide data below to support my argument. The multiples of PDP that a Compant trades at is directly related to the number of buyers you have for the stock. I've already pointed to several Canadian peers that trade on Inferior PDP multiples despite having 10 investment banks following them.

Europa are adding Directors & Union Jack Oil are adding wells - check out the chart to see which Investors prefer !

IBB_Invest,

I’ve added 2023 revenues to the list of Companies you provided. I have the following comments:

1) Peer translates to “of equal standing” – BOEPD is misleading as you can see that Oil weighted stocks have significantly higher revenues than their Gas weighted counter parts. I would argue that Saturn, Surge and Cardinal with significantly higher revenues are not peers. I3e sits at 6th on the list based on revenues.

2) At the bottom of the list, I have included the PDP ratios that came from the excellent charts provided by @RockCreekFreak. You can see that Yangarra & Saturn Oil trade on a significantly lower multiple than i3e, Bonterra at the same multiple and Birchcliff only slightly above. So, despite these Companies throwing money at Investment Banks left right and centre – it does not appear that it’s done a lot for their rating – at least on this metric

3) Looking at other metrics – unfortunately Shubham Garg has not updated his cash flow multiples in over a year and Eric Nuttall only provides the numbers for a handful of Companies, however, looking at the numbers I have – Surge is down in the dumps with i3e, Tamarrack Valley and Vermillion which are not on your list also trade at low Cash Flow multiples and all these Companies have a large number of Analysts following.

4) Journey Energy appears to have only 1 analyst covering it – similar to i3e.

5) So given the above – it begs the question why i3e would throw a lot of money at Canadian Investment Banks to follow them when only 10% of the shares are held by Canadians. Remember were comparing against Canadian Companies where most if not all the holders are Canadian.

So, in conclusion – spending a lot of money on Investment Bank Coverage in Canada is not the magic bullet some think. Don’t get me wrong – it cannot do any harm to increase coverage as long as it's cost effective– but you only represent 10% of holders – UK holders call the shots – get used to it!

Crew energy (CR) 32,200 Rev CAD 327M

Saturn Oil (Soil) 26,890 Rev CAD 693M

Pinecliff Energy (PNE) 26,000 CAD 188M

Surge Energy (SGY) 24,438 CAD 670M

Cardinal Energy (CJ) 22,500 CAD 589M

Bonterra Energy (BNE) 14,204 CAD 319M

Journey Energy (JOY) 12,400 CAD 225M

Yangarra (YGR) 12,000 CAD 166M

Inplay Oil (IPO) 9,500 CAD 179M

Gear Energy (GXE) 6,000 CAD 148M

I3 Energy (i3e) 21,000 CAD 282M

YDR 0.3, SOIL 0.4, BNE 0.6 i3e 0.6, BIR 0.7 JOY 0.8

Good post IBB_Invest and hats off to you for spending the time to do the research and provide some back up for the points you were making. Most dont do it and parrot what others are saying.

"It is not up to generalist investors like me to convince management to do their job and market the company via investment bank and fund analyst coverage. As a CEO and President, they should know that this is an important part of their job......"

I have some more detailed comments on your post which I will put up later. But a couple of general comments on the above:

1) I agree with Stas20 - it maybe no your job, but its your investment - I would have thought it much more constructive to email your comments to i3e than to spend your time moaning on here.

2) "As a CEO and President, they should know that this is an important part of their job......" I'm sure he does and had you emailed him - you would have a better understanding of what he does and why.

I agree with you Sturm. I sent an article to i3e from Goehring & Rozencwajg which argued the case that mathematically, buybacks were more accretive to NAV than drilling new wells in the current low valuation environment. I.e. Companies should be prioritizing buyback rather than focusing on growth. Eric Nuttal obviously agrees because he advocates something very similar.

I3e disagrees and thinks that cash is better spent on growth and that after studying the situation small buybacks don’t have a significant impact on SP. I have a couple of comments on this:

1) I also agree that a focus on growth is probably more prudent than a large buyback

2) I’m not sure I agree with the conclusions from i3e’s study on small buy backs. First of all, by its very nature, a “small” buyback in theory should only have a “small” impact on SP. To measure this is difficult because there are a whole host of other factors that affect SP that are in play concurrently not least the POO. Also, its not like pushing a button where you get an immediate reaction. Buybacks indisputably increase the NAV per share and over time shares tend to more toward a multiple of this. I rate i3e Management highly but in the analysis of this kind of data, I would go with Goehring & Rozencwajg. I think a small buyback is a no lose proposition.

Interestingly a Company that was mentioned here earlier in the thread (Gear Energy) announced the results of its strategic review in February. The purpose of the review was to try to do something about its chronic undervaluation. They Contracted this super-duper Investment Bank – Peters & Co that our Canadian friends keep going on about to lead the review with all option on the table including but not limited to a sale of assets or even the whole company – sound familiar?

Conclusion: Conduct a Normal Course Issuer Bid (NCIB) – aka stock buyback !!!! I could have told them that without them having to pay all those fancy banking fees !!!

Interesting as well that despite have a large number of Investment Banks following them - they are still significantly undervalue like i3e.

Stas - why are you in 88e and not PANR ?

Are you advocating for cancelling the dividend and buy back stock ? I dont think you will get too many takers here supporting that idea.

i3e have addressed the issue of buying back stock several times and it does not look like it will happen which imo is a mistake.

There are two sets of numbers :

Opex - i've pointed you towards the correct numbers and i3's numbers are not terrible.

Development Capex - you've pulled off a number from the reserves report and completely misunderstood what it represents.

Lets use a bit of common sense and sense check what your trying to tell people (incorrectly). Take a look at the Q4 update - 8 net wells and $30m in Capex. Now go check the YE reserves report - not complicated - $30m in capex was sufficient to replenish reserves. Had they spent $60 m for example - they would have added significantly to reserves,

The S234m that you are referencing refers to something else entirely - I'm not going to explain it to you - your going to have to use your noddle and figure it out yourself and if you have any integrity - once youve figured it out - you should correct all the nonesense you are posting on twitter !

"Plus, GLJ estimates they have to spend $235M in capex in 2025 "n to"

I'm sorry but you have absolutely no idea what you are talking about !

Cannuck - whwre on earth do you get your figures from ?

As per page 11 of the 2023 interim report - i3e's opex includig transprtation is stated as S12.90 to $13.10 . Its possible also that the final figure for 2023 could be a little less as many Companies are announcing a reduction in 2023 opex costs.

As per the attached BOE report card - the average Opex plus transportation cost is about $11.90 (USD). Its a small sample size but indicates that i3e is about $1 more than average - personally i would not classify this as terrible - its about 10% more than average. You're also comparing to Peyto which has a multi billion dollar market cap and so is likely to benefit from scale.

It mystifies me that as a shareholder - you go out of your way to trash i3e and most of the time with incorrect data. Keep trying buddy - one day i'm sure you will get it right !

https://boereport.com/2024/04/02/boe-intel-q4-2023-earnings-season-report-card-part-2/

IBB_Invest,

Your post was debunked and your response is very poor. I only have one additional point to add to your latest post:

"UK investors have little knowledge of the Western Canadian oil basin" - This is a load of crap - an oil well is an oil well - there's nothing particularly special about a Canadan Oil Well . You may think you are smarter than the rest of the world - but you are not !

"There is something wrong that Canadian's are only 10%." - I agree, put your hand in your pocket an buy more shares - simples !!

Coincidently or Not - Rockcreekfreak updated his prior charts on reserve values and posted on his twitter page:

https://twitter.com/rockcreekfreak/status/1776353694973587723

My thoughts on Justfencings earlier question - there are many factors affecting valuations and analysts use multiple metrics to arrive at a blended valuation. I've listed some of the more important below:

1) Cash Flow / Free Cashlow is one of the most important. i3e is 50% Gas and 25% NGL's both of which have been at multi year lows, so I3e's cash flows have been impacted more than those of Oil weighted Companies.

2) Size - Large Oil and Gas Companies typically attract significant premiums over smaller companies on most metrics. You cannot expect i3e as a microcap to trade at large cap multiples. Perhaps my earlier email was a little misleading in that I was quoting an average without taking into account other factors such as market cap. Now that we have the link above - a better analysis can be done on where i3e sits in relation to small caps with similar Oil / Gas weightings.

3) Management - most agree that i3e has competent Management but there are quite a few that feel that PR is deficient. The handling of the dividend cut left a lot to be desired and shook confidence . This was by far the most impactful RNS in the last year or so and it will take time for confidence to be fully restored. We've not had an equivalent RNS to the upside. The financial/operational updates have been very solid but not spectacular - same for the reserves report. Perhaps the best RNS we have had recently was the new loan facility but not earth shaterring by itself - just incrementally good. Perhaps the upcoming Capex update will be that spark that helps drive the SP higher.

4) Debt -no need to delve into this but i3e's new facility has cut the interest payments and provides better liquidity which hopefully facilitates a crackerjack Capex update.

So to help close the valuation gap:

a) Continued operational excellence and no more nasty surprises

b) More visibility with PR / Coverage etc

c) Improved Gas prices (&NGL) - the difference between CAD 1.60/GJ and CAD 3.00/GJ is about $19m additional NOI. Most Industry Insiders are expecting better gas prices as we move into Q3/Q4. This is possibly the most important factor moving forward along with the continued strength of Oil.

I partially debunked a very similar post from Canuck 6 months:

“….but the reason why i3 Energy doesn’t trade at 110% of its PDP is because no one in the Alberta O&G industry has heard of us”

Couple of things wrong with this Imo and you probably wont like to hear it – Canadians only make up 10% of the shareholding, 90% are UK i.e. UK Investors call the shots. Secondly, your assertion that that this is the reason is purely speculation on your part yet you spit it out as fact. I will touch on a couple of reasons in a later response to another poster who asked me this question.

“Peters & Co, the leading Canadian O&G investment bank doesn’t include us in their small cap charts”

There are a few small caps that are not included. When Peters & Co held a conference last year, the question was asked why i3e was not in attendance/presenting. The response from the Company was that Peters & Co typically follow the larger names only and / or Companies that use Peter & Co’s banking services. This does not include I3e but it certainly includes a few small caps such as Gear Energy that do use their services. You will see from a link that I’ll put out later that Gear Energy also trades at the bottom end of the valuation multiples – how can that be if the're covered by Peters and Co??

I3e is covered by Canaccord Genuity Group Inc. who are a leading independent, full-service financial services firm with an international footprint and who by the way are headquartered in Canada with offices in London and elsewhere. They have put out several research notes. I would think also the new bank that that has provided the loan facility also cover them as possibly do others.

If anyone is interested in a proper response to IBB_Invests posts direct from the horses mouth– would suggest you copy it and email it into Investor relations at i3e and get their thoughts!

@rockcreekfreak posted an interesting graphic about 6 months back on his twitter page that listed the market cap as a percentage of the before tax reserve values for about 15 Companies.

Unfortunately, he took it down some time later – but from memory the average Company traded at 110% of PDP, 70% of 1P and 40% of 2P. I reposted at the time but have now updated based on the latest reserve report .

From i3e’s 2023 reserve report:

PDP $303m @ 110% = $333m (£264)

1P $501m @ 70% = $350m (£277)

2P $1026m @ 40% = $410 (£325)

On these metrics i3e would be trading at a between 21p to 27p

“Serenity was still hanging over us when we were 21p”

I don’t think so - The Serenity appraisal well was drilled in 2022 - 21p was April last year.

Anyone that says "My Bad" deserves being put on ignore.

I had a discussion with a well respected Canadian Anylsyt / Commentator about 88e and PANR and he actually took a position in 88e rather than PANR which surprised me. I asked him to explain the rationale and this was over a year ago before the latest reports / testing at PANR. He looked at the charts of both Companies, how they reacted to various events pre-drill, post drill etc highs, lows and average share price and concluded at that time - the downside risk in 88e was less.

He also stated that with these early stage Companies - it doesnt matter whether they have 4B barrels of oil in place or 20B barrels - they dont tend to get valued on a per barrel metric. His view was that they get valued by the market at a couple of hundred million dollars plus or minus regardless. I have not done an in depth study to confirm it with these Oil plays but i've seen this kind of thing with early stage miners - so I think there is some truth to it.

Full disclosure - ive owned 88e in the past as a very short term trading position as I had with PANR but have held PANR for the last year or so as I think the fundamentals are slightely better and they are further along with proving up their assets. But the issue for both Companies is funding and both Companies have work to do here else the Oil in Place will remain in place !

I was looking at the 12 month chart on yahoo and the high was just over 21p. At this time WTI was trading at about $78 / bbl and AECO at around CAD 2.35 / GJ.

Compare that to where we are trading now i.e. WTI at $85 and AECO at CAD 1.60 and an SP of around 11.5p

So revenuw would be pretty similar if not a tad higher now. Debt is lower at around £16m versus £26m back then and we now have a less restrictive loan facility with lower interest payments and about CAD 50m available to draw. I dont think i3e has been in a better position than it is now.

With the "initiatives" to be announced in the middle of the month and if AECO starts to move up in Q3/Q4 as many expect - is there any reason why i3e cannot surpass the 21p mark by the end of the year ?