I3 Energy Share Discussion Threads

[hoper1] 06/7/2021 18:09

Nice find ArK!

[ark87] 06/7/2021 16:43

Tipped on fivefreesharetips . com

I3 Energy has turned things around - plenty of further potential considers Gary Newman...

I3 Energy (I3E) has been a great example of why past failure doesn’t necessarily point to a continuation of that in the future – in the same way that past success doesn’t mean that a company or management team will manage the same again. Obviously I feel a lot more comfortable investing in a company where I trust the management and operationally it has performed well previously, and when it comes to I3 Energy that certainly hasn’t been the case, having completely screwed up its North Sea operations and having been guilty of being very ‘overly optimistic’ in its internal expectations versus the independently assessed ones in the CPR. But at the same time you would be silly to ignore a complete change in the fundamentals - in the same way as you would if invested in a company that you like and bad news emerges that will have a longer term material impact on the business - and that is exactly what we saw with this company when it completed the acquisition of producing assets in Canada last year, and bought those at a time when oil prices were low.


I last covered I3 back in August last year, soon after that acquisition, when the share price was 5.5p and could see it going higher, although was still cautious until I saw some actual financials of how profitable the new operation would be. Since then it has done well operationally, as well as being well positioned to have taken advantage of the higher oil and gas prices, and now trades at around 14.5p, with a market cap of circa £104 million. The company has seen strong production from its assets, to the extent that it will soon pay out a special maiden dividend equating to around 0.16p per share - subject to a court hearing to approve that - and on top of that is intending to pay out up to 30% of free cash flow in dividends every six months. The company has consistently been averaging production of over 9,000boepd, and as at June 17 was at 9,353boepd following the Noel well coming online. That looks set to increase further as the drill at Clearwater C, on Marten Hills, has just completed and all of the horizontal sections encountered the expected reservoir formations. A second drill at Marten Hills is now underway, and both are expected to be tied into production by the end of this month, with expected rates of around 150bopd from each.


The reserves also look quite impressive, with 53mmboe of 2P and a further 23mmboe in reserves yet to be developed. It is worth bearing in mind that a fair percentage of those are gas, as current production comprises of roughly 59% gas; 24% NGLs (basically condensate); and 17% oil, and not only has the oil price grown strongly, but in recent months gas has also performed very well. In terms of where the company is financially it is very hard to get much of a grasp on that based on the last set of accounts, as those only went up to the end of 2020, and a lot has changed since then, including commodity prices. Previously there had been debt concerns here, as the company had borrowed a substantial amount of money (circa £22 million) to drill its North Sea assets, but the completion of the Gain Energy assets satisfied the terms of the renegotiation of those original loan notes, and new ones were issued with maturity date of May 31 2023, and as at the end of 2020 represented a liability of almost £17.9 million. The fact that the company is already intending to pay out a special dividend, as well as up to 30% of future free cash flows in six-monthly dividends, suggests to me though that there are no concerns about being able to settle its debts as they come due – there is no way that they’d gain approval to distribute cash in this way otherwise and for those loan holders to agree, although the likes of Bybrook do also have a large equity holding here at over 28.5%.



The share price now is a lot higher than when I last covered it, but this is one where I see further potential - especially if energy prices remain strong and reach the sort of levels that many analysts now seem to be predicting - and certainly can’t see any good reason to sell at the moment. I actually regret selling the shares that I held here when the share price hit 10p some time back, and only did so as I’d become over-exposed to oil at the time, and was happy with how it had performed from a sub-5p buy. I3 Energy is now a very different company to the one that I lost money in a couple of years back when the development of Liberator failed, as I know many other PIs did at that time as well, but I wouldn’t let that put you off taking another look at it now, as I’d expect it to continue developing and acquiring further assets.

[richie32] 06/7/2021 15:51

Understandable that some traders will use the lower oil price as a trigger to take profits.

Normal service will soon be resumed imho

[fandagle] 06/7/2021 15:45

Think the time for consolidation is after the Serenity and Divi results, or am i missing something?

[pretax2] 06/7/2021 15:33

Well Canada is defo in control of the i3e share price action.
So there’s a consolidation and investors head for the chill-out tent, enjoy a lazy breather before the next rally.

[goodday1] 06/7/2021 15:27

Hahaha, some mug pays on this BB so he can give the thumb down.HahahaOne couldn't sleep last night because of his thumb down.Now this man determined to make one's lose sleep while playing on this BB.LolHahaha, Jog on & bless your cotton socks.

[goodday1] 06/7/2021 15:16

41,484 my buy.

[jailbird] 06/7/2021 15:09

I think this is just pulling up because RSI is overbought MACD is still on the up trend Expect it move up a few more pence yet before consolidating between 15-20p range

[cashandcard] 06/7/2021 13:00

Spangle,


Yes some very good points as to the change in pricing environment and operational impact. I have factored the higher NOI they expect, growing boepd aswell as the matter of 3 divi's for the year. In fact, the income funds will really look at the divi, growth potential and its sustainability. Anything over 3% with planned growth is attractive.

Don't want it to be too cautious but not too frothy aswell. Amen to 3-4% divi. I'm happy with that - shareprice will have to be higher to achieve that.



Cash

[spangle93] 06/7/2021 12:51

Cash - are those your own calculations? When they first announced it in August last year, they said "Begin issuing annual dividend between 20% and 30% of free cash flow (increasing to 40% alongside growth)" and in the presentation, he said that this would be a yield of 6-9% increasing to 9-10% (my notes) based on the share price at the time (ca. 6p from memory).

Clearly the share price has risen from those levels, but then the oil price has also risen sharply from summer 2020, improving the FCF in a geared way (Breakeven then was quoted at $21/boe). Moreover, operational programs have kicked off, which reduces FCF.

[edgein] 06/7/2021 12:45

Steve,

What are those peers debt levels like? Substantially higher?

Regards,
Ed.

[cashandcard] 06/7/2021 12:41

From a divi perspective - yield is around 5-6% which is generous. I can see the marketcap continuing to grow until the yield is around 3-4% which it should be able to maintain given all the growth work going in now and $60+ oil prices.



Cash

[78steve] 06/7/2021 12:34

I can see peers with 10k bopd production around 20-30% higher market cap than here and so maybe still room to go up bit more from here

[imjustdandy] 06/7/2021 08:39

20p inbound next week without too much difficulty

[edgein] 06/7/2021 07:54

Goodday,

That's around the same time as they plan to complete the second Clearwater well. Should be a busy week next week for sure. Given the pipeline of news here there's going be many busy weeks ahead.

Regards,
Ed.

[pretax2] 06/7/2021 07:14

Oil at $77
Price sensitive info without an RNS.
My dividend is growing (ching ching)💰

[imjustdandy] 06/7/2021 05:21

Oil now $77.

[tidy 2] 05/7/2021 23:27

i3 expects to set the special dividend's ex-dividend date for 8 July 2021, with the payment being made in late July.

[jungmana] 05/7/2021 18:39

Pretax. Lol! Is a decent little company that should multibag soon. Onwards and upwards here. At this rate will have to adjust my 2021 target of 30p

[goodday1] 05/7/2021 17:01

You should be leading Canada.Canadian buy/sell is no more quarter of our daily buy/sell.In the next 9 sessions, we should have a few RNs.The farm-out could be tomorrow or in a week or a month.I would rather have a good deal (not Boris Johnson good deal type. Lol) rather than a rushed deal.So far the BoD did a very good job & I am very happy to wait for a water right deal.Gl all

[36redhill] 05/7/2021 16:55

I wouldn't base any decisions on those clowns!

[pretax2] 05/7/2021 16:30

EVE for folk who buy mattresses online, yeah?
Well you make your bed I suppose.

[imjustdandy] 05/7/2021 16:21

Big moves still to happen