Europa Oil & Gas (holdin... Share Discussion Threads

[enfranglais] 15/3/2022 16:05

Where & who are the large shareholders listed, as if only 23% are held by inst`s & directors, there are some larger shareholders who could sway the vote one way or the other, depending on their risk profile & if they want to avoid Oddie`s throw of the dice?!!!!!!!!!!

Shareholdings in the Company greater than 3% as at 09 December 2021.

Interactive Investor (EO) 12.83%
BGF 11.77%
Hargreaves Lansdown Stockbrokers (EO) 10.01%
HSDL Stockbrokers (EO) 8.84%
Jarvis Investment Management (EO) 7.82%
Directors 6.46%
Bo Kroll 4.52%
Barclays Smart Investor (EO) 4.39%
AJ Bell Stockbrokers (EO) 3.32%
Shares not in public hands 22.74%

[slicethepie] 15/3/2022 15:53

100% agree. If Oddie had any shares he would not have done this at a ludicrous discount and if competent understand that the likes of tin pot only interest is their slimy pockets.

[slicethepie] 15/3/2022 15:45

No vote from me

[currypasty] 15/3/2022 13:37

voted today, 10m no

[enfranglais] 15/3/2022 13:22

Well done p@ & volkswag & lets hope CURRY joins us & other disgruntled lth`s, to at least let Oddie know that we are not TURKEYS!!!!!!
Still hoping Bo Kroll & other large shareholders get on board & realise we are letting brokers & financiers in on the cheap & will become a plaything of the market for months or years & at the mercy of timings controlled by i3e!!!!!!!!!!!!!

[volkswag] 15/3/2022 12:09

The share volume and quantities are far higher than normal suggesting many of the proposed placing shares have already been sold. It will be fun watching the share price rise as they scramble to buy back shares they no longer have in the event of a NO vote. If I had my way I would sack the management retain a couple of staff and live of Wressle as ongoing income with any farm out of Ireland or Morocco as a bonus.

[p@] 15/3/2022 10:42

Just voted agaist all.

[enfranglais] 15/3/2022 09:42

This is what happens if you GIVE AWAY hundreds of millions of shares in a coin toss placing, it is like a magnet on the sp, right back to that give away price 1.8p!!! What about the overhang for ages after & those late declared sells going through?!!!
The LTH are the losers here & TURKEYS DO NOT VOTE FOR XMAS - SCUTTLE THIS GIVEAWAY!!

[theonewhoknows2] 15/3/2022 09:14

my 3p sales looking fantastic.

may come in soon for another go.

[moonshot3] 15/3/2022 09:13

Spangle, you are correct. The 13% COS was indicated in the last Tennysons note on the I3E website (not Arden). Thank you for your research.

[spangle93] 14/3/2022 22:13

Oh, and just to make a little tongue in cheek observation.

On 10 Jan 21, I3E issue options to employees and board members

"Of the options issued to employees of i3 North Sea Limited, one-third of the options vested immediately, with a further one-third vesting at the spud of the next Serenity / Liberator appraisal well, and 100 per cent will vest upon a third-party reserve auditor attributing 25 MMbbls 2P post drilling of a Serenity / Liberator appraisal well. The options will otherwise fully vest on the third anniversary.

Of the options issued to the executive and non-executive directors and one corporate employee, one-third of the options vested immediately, with a further one-third vesting upon the earlier of spud of the next Serenity or Liberator appraisal well; and July 2021 production exits being at or above 9,000 boepd, and 100% will vest upon the earlier of a third-party reserve auditor attributing 25 MMbbls 2P post drilling of a Serenity or Liberator appraisal well and the addition of 5,000 boepd or 25 MMboe 2P reserves. The options will otherwise fully vest on the third anniversary"



You'd have to imagine they were pretty confident of adding 25 MMbbl if they included it as a vesting criterion.... and is that a net value to I3E that is now increased if they've farmed out 25%

[spangle93] 14/3/2022 22:00

Moonshot - you raise an interesting point, so I've been trying to do some research.... which so far hasn't led me to Arden, so if you could point me at that source, I'd be grateful.

However, what I can find tells a story

So, WH Ireland has covered I3E for some time. In November 2020, they launched their own in-house valuation, rather than using that of the Canadian CPR. In it, they use a "net resource" (i.e. recoverable) of 115 MMboe for 3C, which gives them a value of $6.73/boe. HOWEVER, they assign 0% value in their Fair value estimate.

Fast forward to May 2021, and they note "The company indicated that discussions are ongoing in respect of the Serenity (UK North Sea oil discovery) farmout and that the company remains confident that a successful outcome will be achieved." All other factors remain the same, but they now included 10% of the total NPV in their fair value (6.6p/sh)

Curiously, over the last 17 months, in which the oil price has soared, they have not increase their unrisked value of $775MM.

Nor have they yet published a change to the amount (10%) of unrisked NPV included in their Fair Value which with issue of shares is now 4.7p. In their most recent wee note (4 Mar 22) coinciding with the farm out they state "We had been focusing on the upside success-case prospective resource potential of Serenity, or the 3C potential of the field, which equates to 115 million barrels (gross; source: TRACS). We estimate that would have a gross (100%) success case valuation of $775 million ($6.73/b) – assuming it its successful and that the upside case materialises. For reference, the 2C (best estimate) potential of the Serenity resource is 16.2 million barrels according to TRACS"


Meanwhile
The other brokers covering I3E was Mirabaud. In November 2020, they said Serenity 2P (not "2C" or 3C as WHI uses) was 17.5 MMboe, which at $10.34/boe in the ground and a 30% CoS was worth 4.9p/sh.

The Mirabaud lads outsourced themselves to Tennyson, whose reports are on the I3E site, in Jan 21. Not unsurprisingly, their first effort in May 21 was effectively the same numbers as Mirabaud, except that they increased value to $10.71/boe but with more shares, marginally lowerin pps.

The BIG shift comes with their next offering in August 21. Everything changes.
From 17.5 MMbbl, they are now at 69 MMbbl (similar to EOG's most likely figure). From $10.71, they rise to $10.98/boe (gross valuation $757MM cf WHI)
From 30% CoS,... they fall to 13%?!?

There's no real evidence on what the seismic shift is based, other than " Our Total NAV of 26.5p/shr also includes 5.3p/shr of value for Serenity, although this is based on a very conservative 12.5% chance of commercial suc"cess, which factors in future dilution risk in funding the work programme

The most recent update last month has all the same volumes and CoS, but more shares and a higher in the ground value (wake up WHI) of $13.85/boe.


Finally, I was trying to figure the source of the 4-fold leap last summer in volumes used. I hadn't seen any announcement but I thought it might have been a new reserves estimate as part of the annual reporting cycle in Canada.

However there's a wee distinction in volumes I highlighted earlier. In their annual 51-101 reserves disclosure to the TSX, I3E's independent consultants stated "Block 13/23c holds both the Liberator and Serentiy assets. 3 appraisal wells were drilled on Block 13/23c in 2019, all of which were abandonedBlock 13/23c has no attributed reserves and was not in scope of the GLJ report or disclosures elsewhere in this Form 51-101F1.

[moonshot3] 14/3/2022 18:06

Thank you, Spangle, for your commentary. On the I3E website, Arden provide some analysis and it appears that in their valuation of I3E assets, the Serenity well is given a 13% COS (Chance of Success)Do you know where they would have got this figure from?

[tommy241] 14/3/2022 17:51

Thank you Spangle, appreciate your thoughts

[enfranglais] 14/3/2022 17:19

spangle - Nice balanced view.
volks - Agreed but Egdon share structure very different to Europa - Europa have much greater pi shareholding, so possibility of NO VOTE, if they actually contact their brokers & exercise that right!!!!!!!!

[guesswhosback2] 14/3/2022 17:14

Spangle93 - your commentary is most appreciated. Im sure everyone on this board agrees. Thank you for making the time.

[gusto01] 14/3/2022 17:00

2p.... Is coming

[volkswag] 14/3/2022 16:21

Prior to the conditional fund raising for the farm in of Serenity drill Europa's share price more or less tracked Egdon Resources. Make what you like of that but unless the share performance since the announcement significantly improves to match that of Egdon Resources I will be voting NO!

[spangle93] 14/3/2022 13:46

[sorry to early birds, but this post had several edits so I didn't lose it]

Guesswhosback

I'm a holder of both I3E and EOG. I prefer to invest in companies that have some exploration/appraisal upside but are primarily developers and producers. I've probably invested about the same amount into each, but in different decades i.e. I wasn't in I3E when they were solely a North Sea explorer, but invested once they made a staggeringly cheap purchase of Canadian producing assets). You can probably guess that my I3E stake now significantly exceeds my EOG one.

My take/opinion is that the deal is good for I3E, because they have stated clearly that they will not drill Serenity sole risk, so unless they found a farminee, it was a stranded worthless asset for them. Moreover, the cost for them is barely more than a month's cashflow, and it's icing on a cake that's already rich with Canadian assets, so the risk:reward is good. However, the fact they've only managed to attract an AIM company that if it were a soccer club, it would be on the fringes of the relegation zone (no offence, but EOG has gone nowhere forwards for years under Hughie or Oddie) and they haven't even got 2:1 (i.e. they've given 25% but only for them to cover 46-1/4% of the cost, with a cap on this farm in at £15) doesn't point to the industry being overwhelmed with what was being offered. Of course, they say they are talking to others, in which case this downside might be premature.

From EOG's side, I've never really understood their fascination for getting involved in offshore plays where the cost of one well was always going to be greater than their market cap. I understood Ireland - Paul is good petroleum geologist, the Cretaceous graben and Tertiary turbidite plays around West Africa and Central America were the hot post code, and for a low cost entry it was possible to add value by working up the data to create an attractive proposition for a farminee to pay the costs (Kosmos). EOG shouldn't puu themselves in a position where they need to fund an offshore E&A well, whether it's Ireland, Morocco, or CNS, because to do so they'd need to raise a significant chunk of money at a low price when Wressle is throwing out cash. So I'd be against the idea in principle, though I'd agree with pjackson that it has all the hallmarks of an artificial price spike prior to a placing.

However, while the risk is much greater for EOG, so is the reward. I have never seen I3E issue an independent assessment of reserves for Serenity, only in house estimates of STOIIP of (up to 197MMbbl) by the company of which they expect to recover 50%. Paying £7MM to get 25 MMboe (less than 50c/bbl) if successful is a steal, when you consider that for producing assets KIST paid over $20/boe

Furthermore, in EOG's recent presentation, the volumes are higher than quoted by I3E, because the 197 MMbbl STOIIP is in fact the mid case.

Even if you take the low case (P90 STOIIP, lowest RF) , there is 22 MMboe recoverable, which is still only $2.25/boe. This confirms their statement "The volumes of the discovery and appraisal well alone could be commercially viable", because they have a relatively low cost tie-back route through Tain

The Serenity discovery well found high quality reservoir, good quality oil, at a significant height above the oil water contact, which they believe is the same across the region. So, they know the oil is present, and that flow rates if successful will be high. There are also a number of wells in the region, to constrain the seismic, so it shouldn't be an ADV situation of being so far away from prognosis. It's not like a rank wildcat.

Instead they quote themselves (i.e. not my opinion) "The reservoir is made up of high quality channel sands and the key uncertainty of the appraisal well is reservoir presence and thickness". Channel sands are high quality, well sorted, good porosity and permeability, but can snake around like the estuary river course in which they were laid down. So the well is trying to prove up that the sands exist and thicken to the west.

So in summary, I think EOG has secured good terms for a farm in for an extension of an existing discovery. It would boost the share price tremendously if they proved the hypothesis, so potential share price reward is better than for I3E, but the risk, particularly to existing shareholders is higher too, so I'm just not sure whether it's what EOG should be considering.

[guesswhosback2] 13/3/2022 21:14

It's not going to be No. Simply not enough people to vote it down. Probably muster 100m shares between us. Max. So rather than trash this further maybe we get behind it.

Dunder your honest appraisal of the potential on Serenity would be welcome. Or Spangle93. Please.

[pjackson2] 13/3/2022 21:08

Johnswan

EOG appears to me to have been pumped before placing announcements probably by those in the know.
Looking at the chart this will be back at 2 p or Boole if the vote is NO

[johnswan193] 13/3/2022 20:45

Funny that somebody on here said the market would not like a no vote - yet the placing caused the share price to drop 50%.... A no vote would take it back to the pre-placing level, or above imo.