Member Info for tonynorstrom1

Https://oilprice.com/Energy/Energy-General/OPEC-Sees-Global-Oil-Demand-Surging-23-By-2045.html

that will keep the tree huggers busy through 2045 - they better load up on glue and tomato ketchup ! Eric Nuttall thinks that OPEC has the best research team in the Industry - or at least that's what he says.

OPEC completely at odds with the EIA - no wonder we're all confused !

Would be sweet if that happened but how does that maths work:

production 24k boepd = 16.4p

production 29k boepd = 30p

hmmm ?

@eri****tall

there are 2 markets for oil. the physical market, which is the largest commodity in the world, and the financial or paper market for oil, which is ~30x bigger than the physical market. there can be times when the physical market is healthy, as measured by inventory trajectory, yet the financial market for oil is weak, due to things like fears of a recession or regional bank failures. given this 30:1 ratio, the "tail can wag the dog", and weakness in the paper market can temporarily overwhelm positive underlying fundamentals in the physical market, leading to price falling below what can be fundamentally explained.

if we are directionally accurate in the magnitude of inventory draws coming in the second half of this year, we believe the strength in the physical market will overwhelm the unbelievably negative sentiment in the financial market for oil.

https://twitter.com/eri****tall/status/1672261470942375936

I think the SP is almost entirely down to the POO and Gas along with general market sentiment which is in the gutter with rumours of a recession, flailing Chinese demand etc.

I just plugged in i3e on an interactive graph and compared with Cardinal Energy, Tamarack Valley & Surge Energy over the last 3 months - i3e although dismal out performed all three and these are rated best or near best in class by Eric Nuttal & Shubham Garg. So the issues are not i3e specific !

GGG,

obviously the little bird is not from the Company or anyone related to the Company past or present. It's based purely on a comment made to me in response to a specific question I asked. I believe the "rumour" to be credible , however, I have no way of verifying the information directly myself -the source was very tight lipped. I have no details on the rumoured target and hence the the approximate transaction size. If I saw the comment myself on a BB - I would roll my eyes and dismiss.

Oil would be good, but how expensive would 5000 bopd Oil be in a decent asset. Gas would be ok also if it had a decent tax pool. Anyway, we should find out one way or the other shortly - who pays monthly interest on a CAD75m load without putting the money to work imminently !

HerbertDTurbot,

You can go back and review the RNS's on this website to see the acquisitions and then pull up a chart to see the impact on price. The first major one was done in Q3 2020 (Gain Energy), the second was done around midyear 2021 when they bought Cenovous's Central Alberta assets. You have to bear in mind that both transactions were done with dilutive equity although both accretive on many metrics on a per share basis. One was done at around 5p if my memory serves me correct and the second one at around 11p. There was no overnight explosion in the SP as many investors were caught off-guard with the scale of the dilution but bearing in mind i3e's equity was pretty much worthless at the time of the 1st acquisition - the share price appreciation moved steadily upwards over the course of the following 12 months to a high of over 30p. Even at the current 17p share price - this is a pretty handsome return for any investors buying in at that time.

What will happen this time round if they were to pull off another acquisition - the devil will be in the detail and the quality of the assets they buy, however, given they are in a pretty strong position financially and with their current acreage - there is no need for them to do another acquisition unless it’s an exceptional opportunity. Given Majid’s and the teams track record in Canada and the wealth of potential opportunities available - my bet is they pull off another doozy - I just hope they don’t use any further equity which i3e have not ruled out. Anyone paying attention last time round will have noted that their commitment was not to do any further "all equity" acquisitions i.e., a debt/equity could still happen if the opportunity / situation dictated.

So, what are the chances of a further acquisition:

1) CFO's acquisition and merger credentials were touted when he hired on and part of his share options are linked to pulling off a deal. Similarly, John Festivals expertise in the same area were also highlighted when he joined the board of directors.

2) They’ve already drawn CAD75m on loan facility. IMO you don’t do this is if the sole purpose is to shore up the balance sheet – this tells me the cheque book is out and ready. Similarly, you don’t need to draw the full $75m if the sole purpose was to fund the Capex program which I don think they will expand significantly at the current oil and gas price.

3) One of i3e’s strategies is to hoover up cheap assets when the market is depressed – the market seems pretty depressed to me.

4) Finally, a little bird tells me that i3e are running the rule over a potential target as I write.

So all in all – I think the chances of an imminent acquisition are pretty high. I am a little troubled as to the reason for the delay in releasing the Q1 operational update – I don’t see any good reason for it. I3e could learn a thing or two from Gain Energy about shareholder communications - they have just released their Ma

Stas,

I don't have a FCF figure yet - checking my model against the full year results - I have a few corrections to make including tax, hedges and gas prices. Last year I was about $1.5m light in H1 gas sales and about $7m heavy in H2. While

investigating this I discovered that i3e's sales are based on the 5A index and not the 7A which apparently explains the difference and I think goes a long way to correcting my error on hedging.

So I'm reasonably sure that they dont have a cash flow issue though I think they have significantly less cash than they forecast when they set the budgets. Joe is right about the well shut ins this month but this was already known and in their forecast but cannot be helping

In addition, I believe they are looking at an acquisition which has probably been on the cards for some time - so all in all, they probably have the calculator out re-checking numbers.

The capital reduction has virtually no relation to current cash flow or the availability of physical cash to pay out a dividend - it has not increased or decreased assets (including cash) and is merely an accounting exercise reallocating assets on the balance sheet in order to be in compliance with Company Law governing distributions to shareholders.

Its quite obvious that cash flow is lower than Management forecast when they formulated the 2023 Capex and dividend program - most will recall everything was based on $80 (WTI ) and CAD 4.50 (AECO) . To be clear, I'm not saying the dividend is not covered over a 12m period - but it is currently substantially above the 30% of FCF which is i3e's target payout.

It is indeed a puzzler - how long does it take to prepare a dividend RNS or indeed a 2 or 3 page quarterly update ? Timely communications with PI's has not been a strong point.

I do recall them being late with their January dividend declaration and then having two payments within a couple of weeks of each other so they do have form. That was for an increase - I cannot imagine there being any increase at this point or indeed a cut but perhaps they have to have a formal review of the 2023 Capex budget in order to reconfirm the dividend - a big chunk of the spending is in Q3 which is nearly upon us ?

Current monthly dividend is 0.171p or 2.052p on a yearly basis.

I doubt we will see any increase in the dividend unless we get an uptick in Oil & Gas prices and even then I would not expect them to look at this until the end of the year.

Based on current Capex plan - forecast to peak at around 26,000 boepd in Q4

Https://4043042.fs1.hubspotusercontent-na1.net/hubfs/4043042/Content%20Offers/2023.Q1%20Commentary/2023.Q1%20Goehring%20and%20Rozencwajg%20Market%20Commentary.pdf

Hubbert's Peak is Finally Here (gorozen.com)

An interesting read

The bull case for Oil:

“After many false starts, Hubbert’s Peak is finally here.”

“The only growing non-OPEC basin is the Permian in West Texas”

“The Wall Street Journal recently wrote a pivotal article (using data from NoviLabs) stating that Permian per-well productivity fell in 2022 for the first time in the field’s shale development history.”

“We are almost 100% dependent on the Permian basin for any supply growth, and the basin shows signs of depletion. Permian production could peak entirely sometime in the next twelve months. Disappointing supply, strong demand, falling inventories, and bearish psychology could result in attractive returns over the next 12 months for those willing to ignore the consensus.”

The bull case for Gas:

“The Gas Crisis is Coming to America,”

“we believe North American natural gas convergence with international prices could happen much faster than anyone expects”

“Considering Freeport, with its 2.0 bcf/d of capacity, was shut for nearly ten months, we estimate the US lost 600 bcf of total exports during the period. In other words, all the inventory builds resulted from the unexpected outage. With Freeport entirely back online, the question is where inventories, and by extension prices, go from here. Our modeling suggests the answer is lower and much higher, respectively.”

“If our thesis is correct, the upside potential is dramatic: Henry Hub could rise more than five-fold. At the same time, we believe the downside is limited. At current prices, few compaanies can generate attractive rates of return and many are laying down rigs. Henry Hub is only 30% above its all-time lows; any near-term weather-related weakness would likely result in much less drilling and lower supply. We cannot recall a commodity market with a five-fold potential upside and only a 30% potential downside. While enterprising traders might prefer to wait until late 2024 to make their investments, we believe the risk is that prices rally sooner.”

"Thank you for your email. The event did go well, and we had a good 90-minute interactive discussion between the key technical team and a variety of investors and city analysts. The slides do require commentary from the team to make sense, so we have decided not to upload the presentation. However, everything that was discussed is already in the public domain, the bulk of which can be found in the technical presentation that is already on our website (https://www.europaoil.com/wp-content/uploads/2023/05/FEL-4_19-Summary-Overview-nvn.pdf ).

In addition to this I expect that in the coming weeks we will be able to upload the new Wressle CPR that details the new reserve volumes associated with the development plan as well as the development plan itself. "

"I predicted the loan notes RNS (not hard I know), the next RNS should be an acquisition given the pullback in prices. If this does not happen then the loan will not be used and we will look to get loan notes at a lower rate in 2024 for the next pull back in the cycle."

" The documentation establishing the Facility includes the option for a CAD75 million advance which has been fully drawn by the Company and a CAD25 million accordion facility amount, which can be made available during the Facility's three-year term."

You may have predicted the RNS - but did you read it ?

Ok - three reasons, one good, one bad and the third and most likely - shoddy !

Simply Wall Street are not necessarily the most credible market commentators - but an interesting take nonetheless:

https://finance.yahoo.com/news/europa-oil-gas-holdings-plc-140512956.html

Its curious as to why i3e are so late in publishing their Q1 update - I can think of a reasons both positive and negative but it really doesn't make much sense sine the report is not audited, is only a couple of pages long and some peers will be publishing their Q2 report in a month and a half from now.

Always interesting to go back and re-read the Financials - you pick up on things you missed 1st time round.

Note 24 - Hedges placed post period

1500 bopd hedged at just over $74 per barrel. So a little over 30% of oil production hedged in H2 and the hedges currently in the money !!

10,000 mmBtu/Day of Gas Production hedged in H2 at a little under CAD 2.00 . So less than 15% of Gas hedged in H2.

Whisper it quietly but are AECO Gas prices heading upwards ?

https://www.gasalberta.com/gas-market/market-prices

Entirely expected - SP will only push up if the news is new or exceeds expectations - correct ?