I3 Energy Share Discussion Threads

[tsmith2] 11/10/2018 08:50

Don't waste your time after Costa

[cashandcard] 11/10/2018 08:44

Costax,


Yes, could always be worse. But we have 11.7mln P2 here and 22mln contingent resources. All they had were big numbers on paper, which (again) have been proved not to be in the ground.

Following on from yesterdays discussion, the markets are quite jittery at the moment. Big fall in DOW overnight and many many stocks looking very frothy on Nasdaq and S&P.


Cash

[costax1654x] 11/10/2018 08:36

Char is -60% down today

[cashandcard] 11/10/2018 08:29

Great! we are back to where we were long before the license award. Hopefully spur management into getting on with hiring the A&D specialist.


Cash

[showme01] 11/10/2018 08:26

That's market makers for you. Create a market. Too many panic or have stop losses in place. 11.7m p2 in the North Sea. Estimated up to 80m. $25 costs to extract. Oil over $80 and that is valued pre funding at £25m. What a laugh.

[fardels bear] 11/10/2018 08:26

They are trying to get some cheap shares early doors. Then they'll bung the price up and sell them at a huge profit.

[tsmith2] 11/10/2018 08:23

How does £36k worth of sells allow MMs to drop market cap by 12%??

[begorrah88] 11/10/2018 08:09

Well 60p is here again quickly

Now it is a case of will it bounce?

[tsmith2] 11/10/2018 08:05

Look at volume. v v little

[caters] 11/10/2018 08:04

Ugh!Oh, well. At least the oil is still there.

[che7win] 10/10/2018 12:54

Agree MT,
Investment has been too low in oil in the last few years to meet demand, never mind replacement costs.

There is a one year payback on the I3E proposed wells according to their last presentation, low sweet 35 API and you can see that they expect a higher recovery rate than official figures.

I'm accumulating.

[mount teide] 10/10/2018 12:49

Look East to the ultra high population Nations of SE Asia, China and the Pacific Rim if you want to see where all the O&G consumption growth will continue to come from over the decades ahead.


Global / Regional Oil consumption 1965-2017 - 2018 BP Statistical Review of World Energy

United States consumption is 3.5 million BPD higher than in 1973, which amounts to growth of just under 15% in 45 years. Demand in the EU has declined by 13% since then.

But demand in the Asia Pacific region climbed from 9.1 million BPD in 1973 to 34.6 million BPD in 2017. This huge increase in demand is the primary reason the global demand curve has marched steadily higher.

Of course, Asia Pacific is where most of the world's population lives - therefore demand growth is being driven by billions of people who use a lot less oil per capita than the US, but whose per capita consumption is not only rising but rapidly accelerating.

Chinese demand has increased by 5.0 million BPD over the past decade, by far the most of any country. But Chinese per capita demand is still only 3.3 barrels per person per year.

The US consumes about 22 barrels per person per year. That is partially a result of a more mobile and affluent population, but US consumption also drives a much larger economy.

To put the current US demand in perspective: if Chinese per capita demand were as high, it would be nearly as great as the entire current global consumption.

In second place for the largest increase in oil demand during the past decade is India, which has seen its demand increase by 1.7 million BPD and whose growth is forecast to overtake China over then next decade. Third place will probably be a surprise to many - Saudi Arabia has increased its oil demand by 1.5 million BPD during the past decade.

The largest decrease in demand over the past decade was in Japan, which saw oil demand decline by 1.0 million BPD. Second place will be another surprise, as the US saw oil demand decline by 800,000 BPD. Italy was third with a decline of 493,000 BPD, while the entire EU saw demand fall by 1.7 million BPD.

So, all the demand growth in oil over the last 30 years has come from the ultra high population Emerging Nations - the EU, USA, NZ and Australia collectively only account for 12% of the global population and this is forecast to fall to just 8% by 2030. And the good news for O&G and copper investors is that the demand growth from these regions is still in the foothills due to its very high population, very low but rapidly rising consumption per capita compared to the West and need to reduce its energy generation reliance on high polluting coal for health reasons.

[cashandcard] 10/10/2018 12:47

Mount Teide,


I was only addressing the crash and the idea that it would not affect oil - it will, be it the benchmark or oil related equities, as mentioned look at what happened to Venture Production, one of the most successful north sea explorers at that time - it ended them.

I do not contest your thesis at all, rather agree with it. Oil did come back in 2009 and back upto $100/bbl within a year or two after that. The fundamentals for oil remain solid as long as world demand keeps growing and there has not been a major breakthrough in renewable tech and materials.

As for shale, some are very profitable even at lower prices (Eagleford, Permian etc), but even those plays cannot replace 'long-cycle' production as you rightly state. Its oil companies, including majors, taking advantage of relatively low outlay for quick cashflow and returns. Its funny, they do not want to spend billions on a ten year project, preferring millions on individual wells that will start to payback quick but also run low pretty quick.


Cash

[mount teide] 10/10/2018 12:25

Cash - you forgot to mention that after that very short term 'crash' Brent was back above $70 within a year, $90 within two years and over $100 within 2.5 years, where it stayed for another 3.5 years.

Oil averaged $95 between 2008 and 2015 and $80 between 2008 through to today. So those who are calling today's $85 price high need to do a little research.

In spite of industrial metal and oil prices rising from the 2016 lows by 60%-140% and close to 200% respectively by Q1/2018, the big players are still to yet invest serious money in the mega-project arena.

The oil mix needs these long-cycle barrels as these wells tend to flow at many multiples of the rate of the unconventional shale plays that continue to soak up the lion's share of new capex dollars. The copper market needs to address the rapidly declining head grades in the major mines(likewise the largest 20 mines generate 50% of current global production).

Intuitively we know major long-cycle oil and copper production must return. But, as the EIA and Kitco supply graphs show, it's way past due if we are to have any hope of replacing barrels lost to the decline of fields currently on stream/falling head grades at the major mines, never mind keep up with the relentless 30 year long 1.5%-4% annual growth in demand.

The good news is it's inevitable that it will happen as a result of market forces pushing up prices but such was the balance sheet impact of the depth and length of the last oil and gas and copper market recessions it may take another year or two before a meaningful return to higher capex levels is seen. And that is exactly why I believe there is another price super-spike in the offing. My guess is it's 18-36 months out and will be the catalyst for the 9 year equity bull market to roll over and severely correct.

There is little doubt we are living on borrowed time in the area of oil and copper supply. There is a gap in the pipeline to replace these supplies that cannot be filled in the short/medium run.

The oil, copper and shipping industries keep re-learning the same lessons. Which is good for investors in these sectors as once every 15-20 years it provides us with a recovery stage that is as close to a one way bet as the equity markets throw up, such is the scale of the boom and bust nature of these markets.

There are not many industries like quoted shipping companies that can can absorb the almost compete wipe out of their equity on global exchanges, as happened during 2008 to 2016 as a result of shipping rates dropping 98.2% peak to trough and still operate with the wider world in complete ignorance.


AIMHO/DYOR

[kingivor] 10/10/2018 12:08

is it that the partner said we are not wanting to continue discussions with Neil at the table, hence his remit to bring new acquisitions on board only
maybe Majid can bring home the deal
every day they don't appoint the advisor points to the deal news landing

[cashandcard] 10/10/2018 11:53

che7win,

That's not entirely accurate, oil went well over $100/bbl and finally spiked itself out at $140/bbl then had a mammoth crash all the way down to $33/bbl. This event made oil companies like Venture production (North Sea) go broke as their covenants got hit - thankfully was not in them at the time. Yes oil rose through the initial crash, but eventually went the same way as the rest of the market. Very few oil companies escaped that downturn, I do remember HOIL avoiding a big fall at the time because of success in Kurdistan.


Cash

[costax1654x] 10/10/2018 11:53

Why they didn't use the first option of finance to keep the oil just for themselves is what I don't understand!

[cashandcard] 10/10/2018 11:49

corgies,


Its certainly comparable with boepd production numbers. Both around 20k gross, of course I3E should end up with half or two thirds of that figure once a deal is done. Hur's not so concerned about the production numbers so long as they can sustain flows for a prolonged period at economic rates - that is key to their entire business model. The similarities do end there, reserves, resources and scaling up are very different propositions for both.


Cash

[che7win] 10/10/2018 11:47

Cash, Although in the 2007/2008 crash, oil was one of the few safe havens that kept on rising.

[cashandcard] 10/10/2018 11:40

Mount Teide,


I think any downturn will impact oil demand, but only for a shortwhile. What is going to help massively is the severe cuts to oil capex in the near 3year bear market oil has recently experienced. All that under-investment is going to lead to a supply side crunch and will help underpin prices. But any downturn will have some impact, it always does, price aswell as equity markets.



Cash

[corgies2] 10/10/2018 11:30

In all this gloom , there is perhaps encouragement from a comparison with HUR .
HUR s in many respects the complete opposite of I3E , It's geology is complex ,indeed controversial with much industry scepticism . Yet it still managed to get funded and more recently a farm in. I3E is a simpler proposition in almost every respect.....already drilled , infrastructure nearby etc .
But what type of deal given the need to crack on to get to next summers drilling season and by reducing the time in which a market downturn could occur.
Would cash be good enough? It would at least allow the directors get on with what they have proved they are good at.

[mount teide] 10/10/2018 11:25

Hi Che7win - good to some further Touchstones here.


If stock and commodity market history is a reliable guide - the risk of a future major index downturn negatively affecting the oil and copper sectors is much over-rated!

£100k invested in the FTSE in 2000 when the economy went into a two year downturn was worth just £80k some 6 years later, that's if you did't lose your nerve and bail out some 50% down when it bottomed in 2002/3.

Whereas, in 2000 and similar to today the oil and copper markets had only recently bottomed after a brutal 5 year recession which saw capex cut to bone in order to survive and resulted in £100k invested in oil and copper in 2000 being worth £252k and £498k respectively by 2006.

You would be swimming against the tide of 50 years of history if you thought commodities and their equities were not the place to be over the next half decade according to recent research.

[fardels bear] 10/10/2018 11:18

Afternoon, Mount Teide.... You got a better entry price than I did..OK, it's afternoon where I am..

[coscos] 10/10/2018 11:14

i3e stated in recent interview that talks with procrastinating JV partner have yet to conclude.Most likely scenario is for A&D appointment to coincide with conclusion of these talks.However, the appointment of Majid is I believe a last gasp effort to get a deal done. Similar to what's happened with Brexit talks recently with appointment of new man to lead negotiations. Sometimes it makes a difference, sometimes it don't but personalities do come into the equation when negotiating a business deal.I don't believe for one minute it's purely 'structural issues' that have caused this delay, something has gone wrong on i3's side when trying to conclude this deal.

[che7win] 10/10/2018 11:10

MT, Good to see you here.