Member Info for tonynorstrom1

Its not worth reading - he's really all about trying to promote his subscription news letter - Oilman Jim. He been at it for the last 6 months on various BB's pretending to be a sensible voice and directing you to his blog where he apparently predicted various predicaments long ago:

https://twitter.com/Adz_UK22/status/1635704491755307008?t=79AZqKjJCaVqp3V7boeFNA&s=19

Lets see what Eric makes of this !

https://oilprice.com/Latest-Energy-News/World-News/Goldman-Sachs-Slashes-Year-End-Oil-Price-Forecast-To-86.html

Thanks Stas - I had seen this before but obviously did not pay much attention and forgot about it.

My model works except for hedging gains / losses so I will need to fix that but NOI is before the adjustments for hedging so I will be able to approximate within a couple of million dollars where they stand on H1 NOI.

Louis (Jim)

Still pushing your paid blog I see - what a deceitful person you are !

https://twitter.com/Adz_UK22/status/1635704491755307008?t=79AZqKjJCaVqp3V7boeFNA&s=19

Have they given any guidance for this year - I must have missed it if they have - where are you seeing that ?

I'm not sure what NOI guidance you are talking about - they have already released the full year results so now we have the actuals and they have misssed although it is not clear as they reported the figure in pounds whereas in the quarterly updates - the guidance was given in USD. Converting at the applicable exchange rates - actuals came in at about $169m v $172m guidance.

Previously I said that I think they would meet guidance, however, comparing my model against the results:

1) Opex was considerably higher in H2 which was not fully reflected in the numbers I used in the spread sheet and no way of knowing until they published full year results

2) NGL prices were lower than I modelled - again no way of knowing until they publish results since there is no index like WTI to price at.

Good news is that FCF was higher than I modelled as Hedging losses were eliminated in H2.

Other good points in the results were:

1) decommissioning liabilities were down significantly primarily due to re-estimation but also due to reduction in inactive well count.

2) SG&A costs were significantly lower in H2 although still significantly higher than many peers.

So as WH Ireland said - a solid set of results and no real negatives except a slight miss on NOI for reasons largely beyond their control although I think they need to do better in communicating guidance.

Yes - Nuttall says that at current valuations - it doesn’t make sense for any Canadian Oiler to be drilling wells at the moment - thats the conversation he is having with all the companies he is invested in or looking to invest in.

WCS discount - it applies to heavy Oil of which I3E produces about 500 bopd - all Clearwater. So that’s probably about an average of $8-$10 more than I3E were getting in H2 last year.

Jim - do you have any arguments - usually not but lets see !

With regards to share buybacks - one of the resolutions in the upcoming AGM is to renew the mandate to purchase up to 10% of i3e's outstanding shares. The agenda and proposed resolutions are posted on i3e's website.

I'm more convinced than ever that i3e should be buying back stock at these levels and the reasons are spelled out here:

https://4043042.fs1.hubspotusercontent-na1.net/hubfs/4043042/Content%20Offers/2022.Q3%20Commentary/2022.Q3%20GR%20Market%20Commentary.pdf

Union Jack Oil is showing us the way - Capex, dividends and buybacks !

We definitely have the cash now - i saw someone post on the other BB that buybacks are definetly off the cards and one of the reasons was that they should not be doing it with borrowed cash. The last part of this assertion is incorrect in my view - cash should be utilized on the highest return projects which in this case might be buybacks if you accept the maths in the above article !

There seems to be a misconception on some BB's as to the underlying reasons for shifting "share account premium" to " retained earnings" and perhaps being an indicator that i3e does not generate enough FCF to cover its dividend - this is incorrect. One of the requirements of UK Company law is that distributions to shareholders can only be made out of "accumulated realized profits". i3e up until a few years ago was an exploration company so had "accumulated net losses". To get around this and with an accounting quirk - they are able to shift some of the share premium account to "retained earnings" to allow payment of a dividend. Because its UK Company law - it must be with approvals of the Courts providing they can demonstate that the Company generates profits.

I'm surprised there has been no real discussion on here about the year end results - there are a few interesting little nuggets in there but not mentioned here !

One relevent to GGG's posts below:

i3e are carrying £62m of Intangible Assets on the Balance Sheet(North Sea Exploration Costs). It was an Audit finding and so looked at by the auditors as to why no Impairment Charges have been applied :

Note 13 states:

"The estimated recoverable amount exceeded the carrying amount of the Group’s UK E&E assets

as at 31 December 2022, and accordingly no impairment was recognised. Further discussion is provided in note 2"

So I3e believe they can recover £62m or more for their North Sea Assets - the auditors agree that this is currently a reasonable assumption.

I can get Jim back here if you want GGG - he's around somewhere.

So this is what Malcy made of the year end results:

"Nothing much to add here as the figures are historical but they do serve to remind investors that i3 looks like a seriously good value, high yielding stock and is worth a close look. "

Olderandwiser - it’s quite likely that if Repsol decides not to proceed then I3E’s stake is worthless - $0 or $40m - what would you choose?

I also think my estimate is missing a couple of items that potentially add to the cost.

Https://www.kaieteurnewsonline.com/2021/08/01/norway-gas-pipeline-cost-three-times-less-per-km-than-guyanas/#:~:text=Guyana%20is%20paying%20just%20about,the%20gas%20to%20shore%20taskforce.

Isdeer,

Costs are pretty tricky to estimate with various factors including the actual development plan and latest costing / estimating information but here’s my stab at it.

Assumptions:

Unitized field with Tain, 2 producers & 1 Injector Well – assume $13m per well including mobilization = $40m

As per the Tain Development plan – 19 km new pipeline back to the Bleo Holm. Add a couple of km for tieing in the Serenity well = 21km.

Taking the estimate from the Liza pipeline in Guyana ($3m per km – see link below) = 21 x 3 = $63m (Round up to $70m to allow for higher mob costs as a percentage of overall)

Total Project Cost = $110m

The partners would have to agree the estimated reserves contributed to the unitized field from Serenity and Tain – I’m assuming 10m bbl each meaning ownership would be approximately:

Repsol 50%

I3e 37.5%

EOG 12.5%

I don’t think that i3e or EOG would be prepared to stump up 37.5% or 12.5% of $110m so imo would have to be looking to farm down an additional 50% of their stake if they were moving to development. Would Repsol offer 37.5% of $110m to buy out i3e ($41m approx. and $13.5m to EOG)

Very rough and ready calculations all the way through but at least a starting point.

https://www.kaieteurnewsonline.com/2021/08/01/norway-gas-pipeline-cost-three-times-less-per-km-than-guyanas/#:~:text=Guyana%20is%20paying%20just%20about,the%20gas%20to%20shore%20taskforce.

Noel,

You also have the attention of Oilman Jim here although i suspect his only interest is in promoting his subscription news letter.

https://twitter.com/i/status/1635704491755307008

No its not Jim - all your trying to do is sell an over priced subscription to a pretty low quality news letter !

"I'd also argue that whatever the cost is to develop Serenity for 4kbopd could probably generate the same (or more) within a much faster time period in Canada."

I'm not sure that's right - for a start the very best well that i3e has drilled in Canada is the one in South Simonette which had an IP30 of about 800 boepd (70% Oil). The decline rates onshore Canada are much higher than the North Sea (30-50% in the 1st year versus 7-10% in the North Sea ). Also these Simonette Wells are not cheap - $9 to $12m. The preliminary figures on the North Simonette Well I think are about 450 - 500 boepd and I believe are 30-35% liquids. Also at about $10m a well - the economics on this particular well are not all that great - I will have to run a discounted cash flow to see if it even makes money.

Anyway - I will not argue the point based on opinion - I will run a discounted CF to compare these Simonette Wells with a potential Serenity Well.

Its true that Canadian Wells can be brought online much quicker than a simple North Sea Development - a matter of a couple of months in the case of non-fracked wells like Clearwater and up to 6 months in the case of fracked wells like Simonette (versus an estimated 18 months from sanction for a single well Serenity Development)

i3e has a lot of great low risk Canadian Acreage to drill so I think its right that the main focus is there - i'm just saying that Serenity should not be written off until i3e Management write it off.

"An acquisition of EOG does not align with the bonus structure of the CFO. I3E will need to buy something like AXL."

I dont think so Mr Fibbles - no synergy at all with i3e's assets and in Columbia FFS - might as well put a bet on Red Rum !

Nice Marketting Isdeer - I dont think that you're going attract many buyers for Europa here although I think there Iniskea Asset is very interesting.

People here are too negative on Sernity here imo - Canada is not without its risks also.

Good thing for North Sea sceptics here is the new debt facility I would imagine excludes any of the funds being used on North Sea ventures and likely also includes Canadian cash flows - not sure about the lat point but I will dig into it.