I3 Energy Share Discussion Threads

[caters] 22/7/2018 23:11

FB,

My reply to your GKP/XEL/AFR comment is that those particular companies each came along with difficulties and/or lots of hype.

GKP: Kurdistan and with that Todd guy in charge. Great for a while if you got in early.

XEL: Yes, UK, but heavy oil (aka tar) offshore

AFR: Nigeria & Kurdistan.

You have to be fleet of foot with those types of shares and hold them in a well diversified portfolio.

I3E isn't a 100% all-in share, but you can certainly hold a much larger % in your portfolio than many of the other AIM O&G shares, imho.

Personally, I am holding a large % of my portfolio in I3E as I expect this company will deliver. I have already doubled my money here but I've not taken any off the table as I don't see any need as of yet.

Having been to the AGM and met NC & GH, I am more than happy to have a substantial sum of money tied up here. I believe that the funding deal will be okay - perhaps quite not what everyone wants or is expecting, but more than good enough to move this company onto the next phase. NC & GH are playing a short game from now - 18 to 24 months with a clear focus on production/appraisal/sale.

Given the similarity to Blake, Blake's recovery factors and that the single appraisal well will prove up (or otherwise) Liberator West and the appraisal well is being drilled in the contingent reserves area and after two development wells have been drilled, then I anticipate a significant rise in the share price. I may topslice then or I may just hold on. I will wait to see.

The risk here is how much give and take is there between Andrew Austin of RockRose and Neill Carson of I3. Andrew Austin is a smart cookie but so is Neill Carson. There doesn't have to be a winner and a loser between them, just a workable deal that gives something to each of them. This, of course, presumes that RRE is the JV partner. (Edit: There is also the risk of can the JV partner deliver on the deal.)

Opportunities like I3E don't come along very frequently in the UK AIM O&G world at this point in the commodity cycle.

From a portfolio performance point of view, the risk is actually being under-invested in I3E, as companies like I3E can make good a lot of the damage from the likes of GKP, XEL and AFR.

[caters] 22/7/2018 21:57

That's why it's best to have some diversity in your portfolio.

or

Put your whole portfolio onto I3E, wait 12 to 18 months and become a millionaire.

[fardels bear] 22/7/2018 21:07

Yes I understand all of that and that's why I'm invested. It's just that these investments can appeal to folk who will take everything for granted and will take this five and ten pound as a given.I've invested in the past in things that also seemed as if they were a dead certainty.. GKP, XEL, AFR to mention but three where things didn't go to plan.

[showme01] 22/7/2018 21:04

Caters, the funding package is key. GH has said for some time there were several deals to choose from. They stand to gain a lot more than anyone else. I have been very impressed with conversations with GH and NC and nothing is guaranteed but the future is looking bright and a lot brighter once funding details are known. If one doesn't deliver, we still have the reserves and a huge amount of potential reserves to be proved within 12 months. I think we will all be far happier once the detail is known but I'm not losing any sleep :-)

[caters] 22/7/2018 20:46

That's true, but there are some favourable factors with I3E:

* NC & GH owning 34% means that each will keep their eye on the ball and avoid further dilution where possible

* UK offshore is pretty safe regarding political risk

* Proven reserves and contingent reserves ready to go

* Strong likelihood of more reserves

* Good team working in I3E with plenty of North Sea experience

The potential fly in the ointment is what kind of funding deal can I3 get and can the JV partner deliver on the deal.

[fardels bear] 22/7/2018 20:17

Life is seldom as predictable as we'd hope and things rarely happen as we'd expect.A fiver and even less a tenner is by no means nailed on.

[duckdown] 22/7/2018 20:04

Agree showme, I think I3E will be bought within 18 months from now.

And I personally think it will be for in excess of £10 per share.

Ambitious I know but the fundamentals stack up.

[showme01] 22/7/2018 15:56

Cash, I was going to take some off at £5 but going to the end game now after chatting to Neill. Buy out in 2019/20 imo.

[cashandcard] 22/7/2018 15:01

Showme01,Lol, £5 is plenty. Let's hope the details of the deal are as expected and the market likes it.Cash

[showme01] 22/7/2018 14:48

Caters, could be a lot more but Neill did say that there needs to be plenty left in terms of upside for any buyer. I could live with £10 a share in 2019/20 :-)

[caters] 22/7/2018 14:41

Hi Showme,

We could easily see our 67% worth several hundred million pounds.

As little as that????

;-)

[rogerbirds] 22/7/2018 12:19

Appreciate the responses and good luck to all invested here.

RB

[showme01] 22/7/2018 10:21

I asked the specific question at the AGM. Is the deal still in line with the contents of the RNS at the end of January? Graham said it was. I suspect they will need most of it at the same time after talking to Graham and Neill after the AGM. The original funding plan was to just fund one production well and then drill the second using revenue from the first.
I think the increase in oil price has changed that as they are now talking about back to back drilling. 2 production wells and an appraisal well in the new block to prove up reserves. The appraisal well will then be a third production well. This will all happen in the space of a few months and I would expect that the cost of this will need to be available funds from the outset. Will it be as much as $200m? No idea but it will be something close I guess with 3 deep water drills, production hook ups and other associated costs.
2019 is going to be a crazy time for i3e. Plenty of capital expenditure, 3 drills back to back and production of 25-30,000 bopd. Throw in a huge uplift in reserves so long as the drilling proves what they believe is down there and we have a very lean and profitable oil company. Hello then to larger oil companies looking to off set tax losses in the North Sea!

Game over and very happy shareholders :-)
If all goes to plan I would expect the reserves could be worth $2-3bn (after extraction costs) depending on oil price and level of reserves and extraction percentages ( Neill thinks with the geology and improving technology, it could be over 50%). That is a lot of money to offset against tax losses in the North Sea.
We could easily see our 67% worth several hundred million pounds.
Whatever happens, this is still so much under the radar with private investors and I guess institutions will want funding in place and most will want the market cap north of £100m. Both should happen soon imo.

[ducati2345] 22/7/2018 09:57

Well common sense would suggest the funding will Come in tranches,why would you borrow or lend whole lot when it's not needed in one hit. That's not to say agreement wont be for circa 200m in total, but based on key performance targets.

[coscos] 22/7/2018 01:42

No reason to think anything has changed with regard to $200m funding, if anything has changed it will be in shareholders favour as securing West Liberator makes i3e's assets even more attractive an investment long term.I'm extremely confident the terms announced will be more than satisfactory.

[rogerbirds] 21/7/2018 18:21

Valid question for the people who attended the recent London AGM and after party: Was a lower figure than $200million ever mentioned?

In my opinion, RRE won’t be in a position to get close to funding that amount even with their daily production or wealthy connections. If RRE farm-in at say $65million, then might this explain the need for the recently approved authority for I3E to issue up to circa 14million new shares? Yes, I know the BoD have said non-dilutive going forward, which on AIM is a true joy to hear, but never say never. If the farm-in is for considerably less than the $200million anticipated, then might this also explain the never-ending 5000 sales if some people think the short-term share spike isn’t going to be the gusher most people here (myself included)foresee when the formalities are finally concluded?

Re-checking the 27/6/18 RNS there would appear to be no mention of the $200million, so any response to my question would be much appreciated.

RB

[showme01] 21/7/2018 09:54

The figure has never been £200m, it was $200m. They want to do all the drilling back to back. 2 production wells, 1 appraisal well which in turn they will produce from that as well. With cashflow from working capital once the current deal goes through for Rockrose and is back dated to 1.1 18, they would imo be able to take on debt to add to that working capital to fund the whole thing. With 10,000 boepd, they currently have no debt and with that level of income, they could service quite a bit of debt. That is if it is Rockrose, but my money is on them. Win win for both companies and RRE are all about driving income and production up.

I guess $200m was top end and now they have the 30th round block, they can do back to back drilling in the whole Liberator area and save cost. Costs of drilling deep water and setting up production with tie ins will not come cheap but I know from speaking to the BoD that they want to get production up as quickly as they can, hence wanting the whole funds available.

[fardels bear] 20/7/2018 19:15

Now when I suggested that they could do it in small tranches I was told they wanted to get the finance in place for the whole job.So which is it to be? RockRose doesn't appear to me to have GBP200m..

[caters] 20/7/2018 18:00

I think it's $200m in total, but it doesn't have to be all at once.

[fardels bear] 20/7/2018 15:41

I understood we were looking for £200m.RRE?

[d1nga] 20/7/2018 15:27

Fardels anything else would be a curved ball for me
I'll eat my hat if i3e don't use the bleo holm , its the most effective cost option IMO and therein lies the strength that RRE has re contract negotiations

[begorrah88] 20/7/2018 15:14

Whoever it is has been working on those complications for 6 months alreadyI think it is RRE as the timing of the announcement was just a bit too coincidental with RRE's AGM etc and I think there was a concern it would get out before a formal announcement

[fardels bear] 20/7/2018 15:07

That's assuming it's RRE.

[d1nga] 20/7/2018 14:57

the contract between rre , bleo holm owner and i3e will be a very complicated arrangement and will take some thrashing out to get all in agreement.

I can wait, and will continue to pick up more on weakness , oil industry overruns to be expected IMO