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If a recall correctly David Hobbs said at the end of last year that PANR hoped to update the market in Q1 about progress on project financing - the clock is ticking - will he deliver ?
And just to add a little different perspective - Gas is at multi-year lows - CAD 1.70 / GJ it averaged CAD 3.60 in 2021.
and something that not many people here may appreciate is that Edmonton Light traded at a $9 discount to WTI in January, $8 in February and about $7 currently. Last year the discount was in the more usual range of $3 - $4. So on average were currently getting about $4-$5 less than we were last year in comparison to WTI.
On the positive side:
1) were paying down the debt - each month, this alone adds 0.1p to NAV.
2) The dividend is relatively safe and were generating a little bit of cash after payment of the dividend and debt.
3) Macro for gas is improving - some of the big producers have cut production, some of the large basins are approaching peak production and LNG Canada is starting up this year.
4) The trans mountain pipeline should reduce the discounts on both Edmonton Light and WCS
As an aside a poster on the other BB called IR asking questions of the recent RNS - unfortunately he did not appear to fully understand what he was told and he jumbled the messaged- but one thing that did come out of the call was that the Capital Reduction currently has nothing to do with any Corporate Action eg asset sales and return of capital to shareholders.
Nomad,
I was typing out an email to ask i3e the question and something popped into my head - why would they need to do another capital reduction when they have recently completed one for £51m as you state - that's sufficient for 3 or more years of dividends.
The RNS starts with:
"(the "Capital Reduction"), being undertaken to ensure there are sufficient distributable reserves to facilitate dividend payments in the long term"
but goes on to say:
"The Board considers it highly desirable that the Company has the maximum flexibility to continue the payment of dividends in line with its dividend policy and otherwise to return value to Shareholders."
and otherwise return value to shareholders - could this be linked to a sale of non-core assets and a special dividend or significant share repurchase?
"I wonder if there is something unusual in the account set up that is leading i3e to do this every year. "
Distributable reserves have to be sufficient to allow distributions to shareholders and they ordinarily come from retained earnings. The parent company which pays the dividend doesn't generate any earnings hence the financial engineering between parent and group company accounts.
It is interesting why they needed to do another capital restructure so soon after the last - maybe a good question for i3e.
Whatcangowrong,
I dont think at current Oil & Gas Prices they are generating sufficient cash to pay out a special dividend - better to conserve cash for a better "tactical" choice as Jezzo infers but I am interested in what you mean by:
"Having said that there is always one consistent mgt say one thing then do a U Turn." The emphasis on always - off the top of my head I can only think of the u-turn on the dividend which was forced - they simply could not afford the dividend as it was.
"...but does open for a buyback if they so desired as there will a lot (£148,396,755) of distributable reserves."
I know you probably didn't mean to phase it exactly like that but distributable reserves has no direct relationship to how many shares they can buy back unless they have the cash.
They have about £17m in cash and are required to keep a minimum bank balance of about £6m so theoretically about £11m available but as i3e have reiterated recently - they don't think buybacks is the best use of cash.
The other restriction on what they can pay out in dividends and/or buybacks are the financial covenant checks done quarterly and distributable reserves play no part in those calculations.
Illuvise66,
There is no change in proceeds i.e cash in the bank. This is an accounting exercise affecting what is reflected in the Parent Company Accounts and the group Companies. In short you have to have distributable reserves shown in the Parent Company accounts to be "allowed" to pay dividends. These distributable reserves are not related to available cash and you will note that the RNS goes on to clarify that dividends will also be subject to the underlying profitability of the Company.
"Premium Buyback of 3p - nice"
There was a lot of discussion after the previous capital reduction and what it meant for the share price - which was nada !
The key points as stated in the RNS: there will be "no change in the number of ordinary shares in issue" and "will not reduce the Net Assets of the Company".
Net assets stay the same, number of shares stay the same means the net assets per share will stay the same and hence the SP. This is merely a change in how the capital structure is reflected in the accounts.
Maybe its an unsolved mystery to you - but for those that emailed in to find out what it was all about - i3e provided an explanation.
It was a typo - the Project was under consideration at the time the RNS was drafted but left in by mistake at the time of issue when they had already excluded the project from future plans. The wording in the RNS points to that (if i3e holds a working interest)
Https://pbs.twimg.com/media/GIHhbxFbEAAwKk6?format=jpg&name=360x360
great info if anyone wants to run comparisons with i3e
What is the unsolved mystery about options - what RNS are you referring to?
Not sure why you cannot open - It seems to open fine. Not much to it:
its issued by Odyssey Trust Company as agent for I3 Energy Plc
Meeting Type: Special Meeting
Meeting Date: 15th April 2024
Record Date for notice of meeting: 13th March 2024
Record Date for Voting (If applicable): 13th March 2024
Beneficial Ownership Determination Date: 13th March 2024
Aimshame,
I agree with your comments on a merger - I guess I didn't understand what was meant by "vending the company" - highlights the importance of using plain English to communicate your point or perhaps I'm just slow on the uptake. On the question of whether Management would be receptive - it would be a good question to ask Will Holland at some point - he's not shied away from difficult questions in the past.
It they were to execute this sort of move now - then you would dilute the impact of Inishkea and EQ - however, if we are still sitting in the same boat in say 8-12 months with no tangible progress then it would be harder to Will to justify his salary in a standalone entity
On Serenity - the 33rd Licensing Round is not complete yet and my understanding that a decision on Tain being awarded out of round would only be made after completion of the 33rd Round. I suspect the future of serenity would depend on the success of being awarded Tain. With regards to whether Eog could afford to fund their part of a Tain / Serenity development - imo almost certainly not as I think would be the case with i3e - both parties imo would have to farm down a further % or alternatively sell the licence.
The share price flatlining is entirely understandable Imo – Europa’s entire history is one of not delivering on any meaningful projects.
1) EQ whilst an exciting project and potentially transformative – I believe there is some skepticism on how Europa were able to acquire the Project ahead of the major players in the area who presumably have much better connections. Will Holland did explain this point and very eloquently but still? And how are Europa able to spend $4m acquiring the project, have their geologist give the data a quick once over and then immediately farm out a free carry on a $40m drill?
2) The license extension in Ireland was positive as is the apparent softening of political opposition to the Project – but still they’ve been working on the Project for years with minimal apparent progress and how is a $45m drill with a 30% COS low risk?
3) Wressle – hands up who is disappointed with the results of the Jet pump so far – how many months production did we lose due to installation primarily to mismanagement we understand and I’m sure I’m not the only one who was expecting higher production numbers post installation.
4) “The management should be looking at vending the company into a larger, more diverse entity, so we get exposure to more activity” – My assumption is this is what they are trying to do and what they have done with EQ for example – can you be more specific.
5) “but we all know this is not on their radar and why would it be?” Do we all know this and why would it not be???
If you have any good feedback - I will pass it onto Will if you have not already done so.
And its Will Holland !
To be fair - you did start this thread with - "that's codswallop tony"
but I will grab a beer and go chill and try not to be condescending !
Genesis posted his 2 cents worth on the ADVFN BB and I responded with my thoughts - I have a 50% chance of being completely wrong.
Here’s an interesting Company to Compare i3e with: Pine Cliff Energy (lots of interesting info on Gas / Gas Outlook in their presentation)
https://boereport.com/2024/03/04/pine-cliff-energy-ltd-announces-2023-annual-results-filing-of-disclosure-documents-year-end-reserves-provides-2024-guidance-dividend-declaration-and-executive-update/
https://assets-global.website-files.com/64dcf83dc7b2e3793ab75d23/65bc0d458b2065bafa856d10_PNE%20Corporate%20Presentation%20Jan%202024%20Final.pdf
Key Take Aways:
Similar production to i3e at around 21,000 boepd, however 80% Gas
Low-cost producer – SG&A less than 50% 0f i3e’s, Opex around 15-20% less
Significantly lower revenues than i3e
Low declines – less than 10% v i3e at around 15%
Debt similar at around CAD 55m
Highly regarded Management
Market cap double that of i3e
Reserves of less than 50% of i3e’s both on a boe basis and NPV10.
March dividend CAD 0.005 = 5.5% running yield
Lower Capex requirement due to business model/low decline rates
Significantly higher (30-40%) long term decommissioning liabilities than i3e
Conclusions
I cannot understand why Pine Cliffs market cap sits at twice that of i3e – the numbers tell me that we should be rated no lower and perhaps at a premium to Pine Cliff. Whilst Pine Cliff have certain advantages such as lower costs (opex, capex & SG&A) – these are more than offset by i3e’s higher revenues, higher reserves and lower ARO’s - not to mention i3e’s higher dividend (which they can afford to pay - just). The only reason I can come up with is that perhaps their Management is rated higher by Investors. They also have their primary listing in Canada – should that make such a big difference??
All in my opinion - DYOR !
M22C - very clever - how long did it take you to come up with that ?
I didn't know you were good at maths 3LittleBirds !
All the wells were drilled nearly a year ago except the 2.5 net wells drilled in Q4 in Central Alberta which would have been in Clearwater but for the access issues. By your reasoning I'm assuming you consider Wapiti, Simonette and Clearwater all non-core and potentially up for sale !
"In Q1, i3 drilled 3 gross (2.5 net) multilateral horizontal Clearwater wells at Dawson and Marten Creek as part of its ongoing exploration and development portfolio of 144 gross sections (109 net sections, equivalent to 280 km2) of prospective Clearwater lands."
There you go d**b ar$e !
and anyone paying attention will have recalled i3e's intention to drill additional clearwater wells in Q4 but due to access issues they switched to Central Alberta. Probably a doubly good call since the discount on heavy oil is / was around $18 to WTI.