Member Info for VladamirPokrov

The point here is that the markets are not priced in for anything, the news agencies and short term traders are very short term in their view, they have no perspective on the longer term outcome. It is important not to assume that their perspective is linked to the longer term reality it is not. The equation is that shale will recover - fact, but not quickly, 2015 levels at some point in 2018, no sooner. Never enough to cover the combined effects of global depletion and insufficient investment to cover that depletion over the next 5 years, and that is without factoring in ongoing demand growth. There is no wisdom in the short term market fluctuations for oil, none at all, they simply price this weeks news headline. Vlad

It was always going to be this way. Economic necessity for OPEC ad Russia meant that they would do a deal and make it work. Should mop up the stockpiles quite quickly now before the effects of depletion linked to massive under investment begin to significantly dent supply outside of OPEC later this year. Given that this statement, although hardly a surprise, was the complete opposite of what the news peddlers have been saying for the past two weeks. Should be interesting when the oil futures market opens this evening, we could approach $60 quite quickly now. Vlad

bench is bench, an irrepressible optimist, nothing anyone says will change that. Remember that the two key skills in investing are being right (about where you put tour money) and being able to sit tight (knowing that you are in the right place). Bench is very good at both of these. The world is full of people who sit tight in the wrong stock or who find the right stock but can't sit tight, bench is not one of them. For all the infuriating ramping hogwash, bench does actually know what he/she is doing as an investor, I am certain of this. Vlad

Doubler Thanks for your feedback once again. Vlad

Doubler Any word on how things are going aboard FPF-1. Vlad

Pretty good day for Ithaca on Canadian exchange. Vlad

I don't think that there is any fantasizing here about a take out, we will make more money over the next couple of years if Ithaca stays independent. Mid caps have the same reasons for taking out smaller companies as the large caps do. A lot of Ithaca shareholders are sitting on a triple bagger now anyway, that is no fantasy. Vlad

Bench, I think re oil and OPEC that the die is already cast, not predicting a rampant oil price in the near future but gradual stuttering progress will continue, I think that $60 will become the new base soon, next month perhaps, which should coincide with Ithaca developments nicely. Vlad

Interesting article bench, thanks for that. Could get interesting in the sense that the majors have greatly under invested in exploration and development over the past two and a half years and they must replenish those pipelines quickly as the oil price recovers. The only way they can do this quickly is by acquisition. The problem they will have is that now, early stage, there are plenty of acquisition targets, but ultimately there are nowhere near enough to replenish their under invested in development pipelines. Therefore, the majors will soon end up competing with each other for too few quality potential acquisitions, this will soon push the cost of acquisitions right up. How can this assumption be made one could ask? Simply because there is now a global shortage of quality oil development assets to go around, two and a half years of under investment has caused this. If most of the majors go on the acquisition trail to fix their development pipelines, there is simply not going to be enough acquisitions to go around, they will end up bidding against each other for the best opportunities - good news for us of course. I think that full production figures for GSA in the Spring will draw a lot of attention to Ithaca. Vlad

Yes watch out for Enterprise value, it is effectively a debt adjustment to the PE ratio, makes the P part bigger if debt high therefore increasing the PE ratio for debt. If viewed in isolation it is highly misleading as one can get the impression the 'higher the better' whereas the opposite is the case. I do agree that £2 is the sort of area where Ithaca management would begin to consider bids. But I don't think that we will see a bid before full production is confirmed and measured in the Spring, this full production will likely be a little ahead of forecasts, the oil price will probably be above $60 by then. Ithaca's share price will race past £1.50 at that point and who wants to sell when the price is running. If the share price draws breath at say £1.80 in the summer, a bid could come then, but the bid would need to be in the £2.30 region at that point. Logic would say that a bid would come either now or on initial production, we must all think like that because we are here now. But sector mojo and bidding does not generally work like that, generally they will wait until sentiment is up, balance sheets are recovering and they end up paying twice what they would have the year before. We may well find that when Stella has been producing for 9 months, the next field development is well under way, the oil price is much higher, the sector is becoming optimistic again, Ithaca is selling for over £3, then a bid comes in. Vlad

I can't put a chart on this site but if you go to Google images and type in US shale rig count vs production charts, then go to the fifth row down and the third chart along from the left, the 18 to 24 month delay between rig count changes and the corresponding production change is clear. Frackers of course claim that this historic time lag is no longer applicable as they can drill multiple wells form one rig location etc etc. As usual there will be a little bit of fact in what they say but nobody 'spins it like the Frackers'. Even if their rig count continues to rise throughout this year, which I expect, there is no chance of the shale output reaching the 2015 highs again before 2018. At the end of the day, US shale is relatively small beer, there is no chance of US shale plugging the production gap that will arise in part due to ongoing demand growth, but primarily due to the depletion effect on the other 95% of global production for which the development pipeline is nowhere near adequate. News agencies just don't get the 4 to 5 year investment cycle for non-shale output. Only later this year will the impact of the under investment in recent years begin to show. Projects will be re-instated over the next couple of years as the oil price rises, of course they will, but it will be too late, no benefit for reinstated projects will be seen for another 4 to 5 years following reinstatement. Oil price moving up nicely again, steadily moving up to top of recent range, likely to break out above $58 over the coming weeks. Vlad

Ok, you may be right, I hope that you are, but having been around Ithaca for several years it would certainly be wise to assume that we are no less than a month or two away, although I remain confident that we will ultimately get there. Vlad

Bench Nobody has said that first oil will be with us at the end of Feb, the phrase 'by end of Feb' means before the end of Feb, i.e. between now and the end of Feb, which is what we have been told. Hypothetically, if you were offered a cast iron guaranteed first oil date - hypothetical of course, as opposed to the current situation, i.e. a date where first oil were absolutely certain to be delivered, what would you settle for? If I were offered a mid April guaranteed start and a guaranteed 3 month build up to full production, i.e. by mid July, I would take it now. Would you? Just a reality check. Vlad

We have had this discussion before. An RNS is quite expensive to put out and is only used to update shareholders when appropriate. If an RNS were used to update on tanker movement Ithaca would be effectively using the RNS as a twitter feed. This would be highly unusual and would certainly spook a lot of investors and analysts. There is also the legal aspect. When the 1 year delay occured for completion of FPF-1 there was the threat of court action for perceived delays in informing shareholders - there was no real basis here, the case never got going, the decision was just made late on. If Ithaca were to use the RNS to tell us that a tanker is on the way, then, if the tanker turned around, they would be obliged to give another RNS to tell us that also as the initial RNS would be incorrect - the whole thing would become a nonsense and it would make Ithaca look incompetent to all. Too many RNS's is not in anybody's interest. The same will apply with first oil. They probably won't tell us until a week or two after first oil in case they have an initial glitch and have to stop. We will probably see a tanker arrive and stay early to mid Feb and then hear a couple of weeks later. Vlad

Ithaca announced first oil by end of Feb this week. Whilst they could be a week or two early there is no reason to assume beginning of Jan start as far as I can see - is there any reason for your view here? Vlad

Interesting update, quite a lot of good news other than the FPF-1 update. I think that Les does not want to risk saying early Feb and then have to delay again, hence he is giving himself all of Feb to play with although he probably won't need it - I suspect - Doubler - is this a reasonable assumption do you think?. Work on the next field this year is very positive. Oil nearer $60 and Ithaca's chart less over bought by mid Feb will put us in a stronger position for good gains when production begins. Over bought indicators do need to unwind. All this means is that those who want to take profits do so and those for whom Ithaca has become too large a proportion of their total holdings can top slice a little. For what it is worth I look at the daily 12, 26, 9 MACD and the weekly 8, 17 9 MACD for over bought assessment. By early to mid Feb even the weekly indicator will be winding down just enough, combine this with a near $60 oil price and we have a good platform for major gains. Makes it sound like I am a technical trader, believe me, I am not, I am pure value/growth, technical very much a secondary or even tertiary consideration. Happy overall, increasingly of the view that although I will probably have to top slice Ithaca a little when we hit full production, Ithaca is going to be a solid longer term hold also, share price could easily be £4 to £5 by some time next year. Vlad

Bench. OPEC has failed to work only because it has not needed to work until now and the Saudis/russians between them can draw down supply if needed. Nothing personal Bench, just hypothesis testing. Anybody else hold Plexus, presented by an IC poster as a better alternative holding to IC annual tips in their big annual article, bit of good news at the same time on contracts though nothing earth shattering, price doubled from a few weeks ago in the past week, nice little company, I only held about £70k before the rise, wish I had held a little more. Any views on plexus going forward. Vlad

pattern over the last 9 months rather. Vlad

Real Storms building now on the Cumbria Northumberland border. A couple of weeks of share price hovering between £0.97 and £1 will undwind the indicators nicely, ready for the next move up - thios has been the pattern over the next 9 months but don't try to time it, sit tight. Vlad

Bench To paraphrase, what we are effectively saying here is that the market is always the fool. Terms like ' the market is not being fooled by OPEC' is the kind of thing that CNBC analysts say daily. They also see a higher oil price and a slight increase in overall US output as an immediate cause and effect when in reality, parts the Alaskan output is very on/off line for ops reasons. The point here is that that the depletion in Saudi reserves is at a level where markets are nervous, hence they have tried to protect reserves by piling on debt - this of course won't fool anyone, but the Saudi's know this, they know that they must move the oil price up. Putin also knows that the drain on the Russian economy and state income will force big spending cuts by later thus year that will greatly damage his popularity - in time could even threaten his position. Oil majors have protected their balance sheets by not developing. It is not just future global supply which is threatened here but the survival of the individual company making the cuts. Imagine a pharmaceutical company that spends say, 30% of its revenue on R&D. Due to a fall in drug prices it is making a 10% loss on turnover. So, it abandons most of its R&D spend, only spending, say, 10% of turnover on R&D. Voila, 10% profit, everybody is happy, in the short term at least. Within a decade or so, existing patents have run out and the firm no longer exists due to the cut in R&D spend and the destruction of the development pipeline. This is exactly what the oil majors are now at risk of, they must get development spend back up but cannot while the oil price is low. Majors cannot directly influence the price but their businesses will dismantle if the price stays low, it is already happening. However, you look at at, oil is going up - low oil prices are not sustainable. News agencies, traders and most investors cannot step back and take a longer term balanced view they cannot see through the short term noise. That is why we make money on the likes of Ithaca while most of the market does not. The OPEC deal will be declared a failure every day by some moronic analyst or news agency for the next year, they are all wrong, the oil price will remain volatile but will rise. Vlad