I3 Energy Share Discussion Threads

[bigsi2] 11/9/2019 14:27

From SHAREPROPHETSInteresting read - although slightly sceptically the author was previously invested and sold out yesterday.The phase 1 CPR details reserves attributed to two development wells. LP1 and LP2. The CPR provides sectional details of each of these wells and attributes reserves to each. LP1 is given 5.8mm barrels and LP2 is given 6.2mm barrels – both on a 2P basis, and based on 38mm barrels of oil in place.Now one would have thought that the drill result announced this week (Well LPt-02) was related to the CPR well LP2. I think this is not the case. The company has provided a nominal plan of proposed wells (figure as included in Gary's article). This designates wells LP1 / LP2 and LP4. The CPR describes LP2 as being North West of the scheme, and the phase 2 CPR makes very clear what is phase 1 and phase 2. This combined with the sectional profile in the phase 1 CPR leads me to a very clear conclusion – LP2 in the CPR is LP4 in the company presentations. Why has that taken me sometime to fully appreciate? Was I being rather thick (always possible and probable – 2P Pete) or has the company chosen not to make it clear?So this latest drill result has no material impact to the CPR LP2 reserves number at 6.2mm barrels reported – as that is LP4 in the company descriptions.So that raises the question – is it the planned LP1 or LP2 (as the company describes) that this drill has thrown into question and more importantly what does it mean? I think I can see the answer - but frankly I would expect the company to communicate far more clearly on such matters.LP1 is shown close to drill site 13/23d – 8. The directors confirmed in that voxmarkets interview that well LPt-02 was close to the edge of the channel – I would take this to mean close to the company described LP2 well bore planned trajectory. It is clear to see – at least to me now.This was an exploration / appraisal well with the aim of proving up extra reserves over and above the CPR numbers for phase 1. It was not a "well optimisation" well as the company described. That is fundamental to me as an investor. Why has it taken me time to appreciate this? Why did the company not make this clear prior to drill?I also note the comment during the interview, the boundary of the lower sands has potentially moved north and this has seen some phase 1 scheme volume reduction. I think this is material.The next two wells are the A3 well – this is on the East part of the phase 2 CPR assessed acreage. The CPR tells us this has a potential 22mm barrels of 2C resource (with key risks of trap and reservoir presence and quality) with total oil in place of 64mm barrels. Phase 2 west has a further assessed 135mm barrels of 2U.Now I have to ask myself was the company correct to state the A3 well was targeting 285mm barrels of oil, as it did in that Voxmarkets webcast? That to me is playing fast and loose with the facts. Mixing 2C and 2U is just not being truthful in my view. Engineering assessment is simply not the same as "computer says yes".The phase 2 CPR states the key risk factors to each of these targets is volumetric on the East contingent resource targeted by the A3 drill (the low estimate is only 1 mm barrels) and the risk factors on the Liberator west 2U prospective resource is trap and sands presence & quality. Just how does the A3 drill in the success case de-risk the Liberator west CPR'ed volumes? I would suggest it does not. To appear to claim the A3 drill is a single de-risk event for 285mm barrels has to be wrong in my view. That is a massive red flag to me – 2C and 2U are very different. 2U is nothing more than "computer has solved the wave equation".So what is the investment case? I see an AIM oily minnow with 12mm barrels of 2P oil at best, allowing for that comment about the failed LPt-02 drill, but with debt in place to the tune of some £22 million. It tells us the plan is to raise a further c$90 million for fund the development of Liberator phase 1 via RBL. Sorry but I just do not see how that 12 million barrels of oil will readily support that proposed near $10 per barrel debt for oil the ground asset backing. If this LPt-02 well had worked and increased the 2P to 22mm barrels, then $5.3 per barrel looked far more achievable. I would suggest the company could also see that – hence this well being drilled first. If it had worked it would have changed the fundability of this scheme via debt only. It has not worked and I have to question the viability of the proposed funding route.Of course it is also going to drill the Serenity prospect. I can find no CPR on this. I understand the company considers this a Westley extension of the Tain oil field operated by Repsol Sinopec. It would appear to me this adds nothing to the funding options on Liberator at the current time. Success may add to farm in attraction on the overall company acreage, as would success with the A3 well, but does not add to the RBL facility asset backing the company is seeking.With a market cap of some £28 million, and a share price of 30p compared to 54p only last week, I am sure many will see this as a buying opportunity. I am not convinced. I do not see how the company can fund this development into production via RBL facilities for phase 1 or how success in the A3 well or the serenity well change this. Farm-in funding looks, to me, the best option for current shareholders – but reducing current equity upside in the process.With significant debt on the balance sheet already, this is not one for me. Of course the AIM oil and gas market valuations are totally mad far too often and it would not surprise me to see the share price move up in the short term regardless of my view on fundamentals. I did hold this share on a small scale - I sold most last week and the rest this week. I now consider this company as uninvestable due to lack of clarity of communications and funding risk.

[shorterofdoom] 11/9/2019 14:21

Just keep watching that ever ticking clock

[shorterofdoom] 11/9/2019 14:21

Just keep watching that ever ticking clock

[cashandcard] 11/9/2019 14:16

It was on hire once acceptance testing was completed (14th Aug). So still less than a month. I suspect they will be over LW or Serenity by the weekend. We are talking a short move here.


Cash

[tiler1] 11/9/2019 14:16

Shorter, I`m not saying you`re wrong. Just relaying what I was told, I do share your doubt towards the board. Unfortunately what they say and do is a massive issue

[shorterofdoom] 11/9/2019 14:11

The whole programme started when the rig become on hire in Norway. By the time they finish the P&A and rig demobilisation, they will be at 40 days, one day early. Then it’s another 40 days for A3. Not enough time to drill S1

[cashandcard] 11/9/2019 14:07

Shorter,


They have in total circa one month for each well. They have drilled the first well in 21days. What makes you think there will be over-runs over the 94day program? They are drilling in the same area, not wells thousands of miles apart.


Cash

[shorterofdoom] 11/9/2019 14:06

There are no games. There are however millions of placing shares to dispose. Now that what was suppose to be a production well (check previous RNS) became a pilot well without informing the market until last minute. Some confidence changing from production to pilot only. Little unsure were they? How to waste $20m in a month. Yum yum.

Dolphin will be laughing all the way. Paid to drag their rust bucket excuse of a rig back in to service.

[tsmith2] 11/9/2019 13:56

Give the sh*te a rest.

[shorterofdoom] 11/9/2019 13:55

Got to love predictive text, it’s about as good as the i3 BoD.

Carry on ramping away and believe in yourselves. But shame on you for sucking innocent investors in with blatant fabrications.

[ducati2345] 11/9/2019 13:54

Will it ever go above 30.50 lol been stuck at that high all day mm pjaying lots of games with this just wish I knew what games

[shorterofdoom] 11/9/2019 13:44

So you think the rid will work for few? Insane.

Ask the board and they will tell you. It’s also in the 9th April RNS

“On 9 April 2019, i3 and Dolphin Drilling Limited ("Dolphin") executed a contract to utilize the Borgland Dolphin semi-submersible drilling rig for a 94-day programme which is due to commence between 15 July and 15 August 2019”

94 day hire nothing more. So if they don’t have sufficient time as per the programme the regulators won’t grant a permit unless they have funds to compete the well. Really is simple

[glavey] 11/9/2019 13:40

Neither i3e! "next well result"? The last wasn't well at all.

[tiler1] 11/9/2019 13:39

Shorter, I think you`ll find the rig next client is Shell for another NS drill which is not booked until spring next year so if there was an over run they would accommodate it. This is what was explained to me and others at the AGM.

I`ve sold for the time being. So just passing on what I`ve been told.

[caters] 11/9/2019 13:37

Lol - see one every night but she never bothers with my health :-(

[glavey] 11/9/2019 13:35

Best see a doctor, abbot...

[caters] 11/9/2019 13:33

Bottom is in; up from here till next well result ... imo

[sbb1x] 11/9/2019 13:29

And we are blue.... 42p target here we go ....

[costax1654x] 11/9/2019 13:27

45 millions volume (yesterday and today),is Lombard's sold 30% from them,their entire holding might be gone!!!

[tsmith2] 11/9/2019 13:25

+10-15% finish?

[sbb1x] 11/9/2019 13:25

Yeah yeah yeah.... next your be telling us the world is flat.

[shorterofdoom] 11/9/2019 13:24

They also said they would strike 70ft oil column.

Ask them. They have paid for a set period of time on a day rate. It’s basic stuff. The board have said on May occasions there is no mechanism in the contract to extend. Both parties would have to agree terms. If Dolphin have something else, they won’t be interested. I suggest you ask them why they are giving false timelines to investors when in black and white on the regulatory permits quoting over 33% longer.

You really don’t know how the industry works do you.

[ducati2345] 11/9/2019 13:23

Yep that is correct just been looking again. Funding fir 2 drills in place , after that friends on results of drill I suppose , if there’s oil there’s backers

[tiler1] 11/9/2019 13:19

They have all funds for the next two drills and a contingency in place if there is a slight over-run. This was confirmed by Majid at the last AGM.