Iofina Share Discussion Threads

[testuser123] 22/7/2013 16:50

Maca - I'm pretty sure I went through this point with you just last week but for the benefit of newbies and lurkers I'll do it again.

Basically there are two sets of contracts in OK, one between iofina and the landowners, and one between iofina and the oil companies. It is the one with the landowners which is what grants Iofina the rights to the iodine, the one with the oil companies is merely for access to brine.

The distinction is important because it means that the moment the iodine comes out of the ground it is owned by Iofina. It might be contained within pipes owned by MIdstates, but it is owned by IOF. Now if they wanted Midstates could extract the iodine themselves, but it doesn't make much sense to do so, as all they could legally do with the iodine once they've extracted it, is give it to IOF.

[beercapafn] 22/7/2013 16:19

boogle1
thanks mate, very sad day, postman missed me this morning, no cards, no notes (high value) that usually carry me through the lunch time sesssion on the day... all the wives claim to have sent the wonderfull card I seek. ..
took last years cards, sent up a small display of both of them, and the sobbing, no body loves me got one free drink..
please give me an RNS for my birthday...

[superg1] 22/7/2013 16:17

It looks like the hot weather has taken it's toll looking at some of the posts.

Good to see the water side of things is causing complete confusion again. :-)

Halliburton want water, IOF said Yep we can supply that. IOF apply to take it from a river, Hal pay for it. The original deal was that Hal paid for all the depots and ran the water side. For that they would give IOF $5m up front and pay IOF half the value of the water purchase cost. Back then it was estimated at 60cents to $1 pb so iof would have got 30c to 50c pb on a 200k bpd deal.
Hal also wanted a 50% share of the Atlantis water resource for $10m. Hal took too long, the boom came, so IOF dropped the JV deal in that form.

So now IOF are in a market with the first potential depot in arrange of $1 to $6 pb depending on whether the customer wants hot or cold water. That alone is near the complete value of the original deal. Then potentially we have 2 more depots to come on 75k bpd each in Montana, and more in ND.

In the future if rights are fully appropriated, IOF could add the rights swap if the demand for water is there. Then the final add on of being able to produce water from Atlantis for use, if it ever came to that. I assume that part could amount to 500k bpd as that is what the daily storage capacity of the Fresno is.

It's complete madness that one applies and gets the rights for free, then sells the water to another. It doesn't make sense as there is nothing like it in the UK.

IOF put themselves in the water market with that discharge permit.


Clear as mud isn't it, but very lucrative.

I believe once rights are achieved, the countdown will start to an enhanced JV with someone or IOF water div gone altogether.

[pcjoe] 22/7/2013 16:11

Maca you sure do keep up a strong interest in the share & have researched it in depth - Unusual for someone dead set against investing - I happen to agree with you that the Oilies will be looking for their cut - This is not always allowed for in peoples calcs that I have seen - But they will also not want to scare of Iofina as a partner - There is only one IOF & and quite a few different high PPM oilies in the making - The ball is in IOFs court to some extent

Conservatively (& much more so than SG & some others) I reckon IOF will be on a minimum run rate of 3300T at the end of 2014 - If the BOD delivers on at least 12 plants & minis

Based on a respectable 25% of iodine profits cut to the oilies( based on market spot price?) - This will still produced an share price of substantially more than where we are today - Where I am not conservative is on the P/E at the end of 2014 - Given the growth potential i will be looking for 30 plus

Maca as a matter of interest - in what circumstances would you be buying in?

[the librarian] 22/7/2013 16:06

Maca, it's good to see the alternative view .... but the question remains, why are you wasting so much time with the subtle de-ramping? Not a problem, but going over the same old ground does get a little tedious.

Now, if you want to invest why not send your thoughts in an e mail to IOF and they will probably have the answers to your questions. What you don't seem to take on board is that if Iofina do not use the oilie brines they will be throwing it down a hole for nothing. If someone is offering to extract from your rubbish and pay you for it, it would be daft not to accept .... no?

[bogg1e] 22/7/2013 16:02

One last question. We have (from IO#3 onwards) opex at approximately $10-15 per kilo. I have therefore used this figure when calculating the value for derivatives. What i overlooked is that to make an iodine derivative, IOF must have to buy in other chemicals to combine with the iodine. SG1 quoted $10-50 dollars value added per kilo. Does this markup include the costs of bought in chemicals? Tia.

[bogg1e] 22/7/2013 15:56

maca, pc thanks.

beercap - happy birthday mate!

[pcjoe] 22/7/2013 15:51

Forget USF&W Bogg that is all tied up with the aquafer sceme - It is Haliburton we reckon

[bogg1e] 22/7/2013 15:47

pcjoe excellent thanks. I take it then that the water permits for the end of july apply to culbertson and so the customer is not halliburton, but the USFW, then do we know the costs and profits per barrel pumped? I imagine it would be a lot less than for a corporate customer, especially if the water is free to pump!!

[maca1212] 22/7/2013 15:47

Bogg1e,

The water marketing permit being sought by IOF is for 75-80k bwpd (an abstraction rate of 5 cubic feet per second).

No further applications have been made and the strategy is apparently under review - probably given the ultra competitive state of the ND market and the lowness of the barriers to entry (IMO this will also happen in Montana as the drilling focus moves westwards and every farmer/community with a functioning well or abstraction facility starts to see $ signs, but we will see), in the end it's all about economics and the rather interesting balancing act state governments have to play between the interests of their electors (landowners, communities, native american reservations etc.) on the one hand and the 'new entrepreneurs' who are competing over the right to sell that most basic yet precious of commodities - water to the fracking industry.

Their waste water discharge permit for Atlantis (the gas/iodine field) is 30Kbpd, any substantial increase in this is unlikely unless the NaCI content of 6,500 (about a fifth as salty as seawater) of the water from the Atlantis field is reduced. However strange as it may sound (and I really don't want to start any more hares, there are already so many running on here) this water resource coupled with modern desalination techniques could be a BIG future moneymaker if the dry plains continue to get drier, but the problem there IMO, is keeping commercial control of it.

Similarly, I would really love to believe that IOF have stitched up the Oakie oilies by skimming off circa 20% of the economic value of their wells' output (assuming 300ppm, 10% boe/water cut, $50 per kilo of iodine, $100 per BOE) at practically nil cost. But - I just don't buy the fact that the oilies are that stupid, particularly those operating in the Anadarko basin where the value of iodine in brine has been a well known and well trodden path these last 40 years.

If Midstates have not secured a substantial slice of the gross margin in whatever iodine is produced by IOF from the brine pumped up and pumped back by them then IMO they are muppets, and their shareholders should be baying for blood. But I'm afraid I just can't see them messing up in that way.

The fact that no mention has been made to date by Midstates of this derivative revenue opportunity indicates (to me) that as far as they are concerned either; 1) This is probably a bit of a possible bluebird that has yet to prove itself, or
2) They don't want to publicly compromise their service partner's opex figures (which as I recall don't include royalties?) prior to IOF getting the necessary funding to deliver on the brine stream.

However if the more grandiose projections being bandied about on here come to pass I think that will change rapidly, after all if you'd spent $3.0-4.0M+ putting a well in, $200K putting another in for disposal and were paying all the bills for extraction, separation and disposal, how would you feel?

In any Future Value / DCF model I constructed I'd certainly be factoring in even if only as a risk factor, sensible 'facilitation' payments to the upstream partners who IOF are piggybacking and leasing costs/ mineral royalties to the surface rights owners on top of the guided $10-15 dollar opex cost per kilo.

But what the hell maybe I'm wrong and those these oilies are just "Good 'ole boys".

Just think - all that wasted time watching Dallas.

Be lucky.

M

[nellyb] 22/7/2013 15:42

big swings. hopefully some positive news tomorrow.

[pcjoe] 22/7/2013 15:36

Bogg1e - Historically the Atlantis field (Way west of Culbertson where we are attempting to currently gain access for Mississipi river water) was Iofina`s original preferred choice for one of its earliest Iodine extraction operations ( at very low PPM compared to Oklahoma) Including the recovery of natural gas - You have heard of Iofinas 200k acres (now a little reduced) of O&G rights? - A lot of this land is in the Atlantis field area

Within the Atlantis field lies a huge underwater H2o reservoir containing natural gas - The water is surprisingly pure and would be ideal for fracking purposes for any O&G interests in the area - There are none at this time & not much sign of same at this time - some of Iofinas O&G lease interests further out are showing some decent promise we think on the oil side

Please do not let this dormant ( but potentially valuable) proposition get mixed up with the river water extraction application at Culbertson & any future similar in North Dakota


Our water extractions application at Culbertson just happens to gain credibility because Iofina have a deal with the United States Fish & wildlife Dept to release water from the aquafer into the Fresno reservoir for subsequent re-release to a nature reserve at Bowdoin at time of drought - In other words we are officially in the water supply business - USF&W have promised to swap their water rights further down the Mississipi system for this deal - We have not taken this offer up at this time

All very confusing I know - Most of us here took months to get our heads around it & the above is only the basics of the story

Read the Iofina website for more info re the Atlantis aquafer

EDIT

Ansana you are correct - The iodine story is the main deal & driver of the share price - Everything else (Oil or water etc) will just be a happy bonus on top of the companies major focus

[bogg1e] 22/7/2013 15:24

thanks noli, i know it was high. Encouraging to think that IOF turned down a £2 per share offer before they were extracting thier own iodine at a fraction of the previous costs. What would the offer be now? Yum yum.

[ansana] 22/7/2013 15:24

Would if be an idea to focus on the Iodine and wait for the expected news. I do wonder if this busy busy board is too busy sometimes and we may draw people in and then immediately confuse them. Just a thought I am not trying to offend anyone.

[noli] 22/7/2013 15:18

I cant remember that one bogg1e, SG will know though or an approx, i thought 58 but could be wrong.

[bogg1e] 22/7/2013 15:17

Madmarky, naphar...err everyone... thanks. I have grasped it now. Phew.

[naphar] 22/7/2013 15:14

Bogg1e

Atlantis is confusing. there is the Atlantis field, which contains an aquifer, which could be pumped out and fed into the Fresno.

Then there is Atlantis Water Solutions, the company which has submitted the first of 3 Montana water rights applications.

Atlantis Water Solutions does not necessarily need the atlantis field, it will hopefully just extract water from the Missouri.

However they are linked, I think because the fact the Atlantis field gained rights to put water into the Fresno for extraction downstream, makes Iofina a water provider, which allows them top apply for the water rights.

All very complicated. For now think iof the Atlantis field as separate to the 3 Montana water applications. I suspect the water (incl the Atlantis field) would all be wrapped up under the Atlantis Water Solutions umbrella.

[bogg1e] 22/7/2013 15:13

noli thanks. do we know the price per kilo of this 400 ton bulk buy? (ithought i had it noted but cant find it through the reems of data i have collected!!)

[1madmarky] 22/7/2013 15:13

Water rights in Montana are nothing to do with Atlantis. They are just applying for the rights to draw water for beneficial use. Atlantis comes into play much later on.

[noli] 22/7/2013 15:12

No bogg1e, montana 3 x 75,000 bdp is seperate to the Atlantis, atlantis is just 30 billion barrels of water/gas/iodine located in montana.

[the librarian] 22/7/2013 15:11

The current permit is to suck water from the river, nothing to do with Atlantis original but they have called themselves Atlantis Water Solutions for this permit and the ensuing envisaged other applications to suck water from the Missouri.

[noli] 22/7/2013 15:09

I would say more than that, the reason is they were buying 400 in, so they must be assuming they could cover their customers and assuming some took more/less plus new customers coming on board.

If i had to guess i would say around 500+.

[bogg1e] 22/7/2013 15:02

Lastly (I think.....) I am now totally confused about the Atlantis field!!! I know we are applying for rights in Montana (Atlantis) and North Dakota. North Dakota is on the back burner for now.

So, Atlantis...expecting rights for first of 3 x 75,000 bdp plants by end july (28th). Customer Halliburton for cold and/or hot water. I assumed that this water source is actually underground and requires drilling to access. Is this correct? I have an iodine ppm at 50-70 for the atlantis water asset so i assume drilled. Or is this the old licence permit? and therefore is there a new permit whereby Iofina simply suck the water from a river???

[bogg1e] 22/7/2013 14:54

Thanks chaps. The numbers for 2013 were just not making sense as i recalculated iodine production from all sources to equal less than 500 tons. And i had previously calculated revenue for 2013 on 1500 tons minus 800 tons for chemical derivatives, which were calculated separately. At 500 tons output Iofina couldnt produce 800 tons of derivative, without buying from an external source, which carries much higher costs. Shame we don't know exact figures, but big thanks for the above.

Would it be fair to assume 400 tons derivatives output for 2013?