RE: upsideI think the most important thing going forward for IAE is the BERR’s approval for the Athena (Upper Leek sands) development. IAE already has the Environmental Impact Approval for Athena, which is a pre-cursor for the final development approval. I’ve read somewhere that it is expected sometime this summer. After that RBS will pony up the main development capital and that is what the market really wants at this time. This tells the market that Athena comes online and that the credit crunch didn’t affect IAE as all juniors in this sector have been painted with the same brush that they can’t get financing. It is a very stupid thing to do considering IAE has already gotten a $60 mm pre-development loan from RBS already in the middle of this credit crunch. That is a pre-cursor to getting a main development loan, just like getting the Environmental Impact approval is a pre-cursor to a final development approval.
If you’re not large and liquid in this market you’ve gotten hit. It’s not a N. Sea thing. It’s a company size thing. Once Athena is online the liquidity will really ratchet up and so will the SP. Any company producing 20,000+ bod in this market has had no problem with liquidity and they are participating in the run up. Before then I think when Jacky comes online and its production is added to that of current Beatrice production and restarting the Alpha Platform should put the company near 10,000 bod of production and that will trigger the move up in SP. Until then I will accumulate what I can and add it to my current position as I am looking to 2010 for huge upside, many multiples of where we now trade. Not looking at next month for a 10% percent here and there. The markets are way too-short sighted.
Any smaller player out there with good assets, but little to no CF from production are falling by the waist side. A move to the TSX main board should also help with the SP as small Venture stocks are getting creamed more compared to similar sized energy names on the TSX. This move will happen down the road and will bring with it some institutional buying.
I’ve always said that IAE is a company with more assets and a much smaller share structure compared to Oilexco prior to OIL getting an RBS development loan for Brenda/Nicol. OIL had more of a concentrated focus on 2 nearby assets (Brenda + Nicol) while IAE has had a more diversified focus to this point.
Oilexco had 32mmbo (2P) in reserves compared to IAE’s 26 mmbo (2P). IAE’s number doesn’t include anything from Beatrice or Stella as the reserve report excluded these b/c the Beatrice acquisition hadn’t closed yet and Stella was acquired after the report was written. So at a similar timeframe IAE has greater reserves. Oil had about 200 million shares (diluted) to IAE’s current (117 million diluted). OIL had very little in terms of other exploration plays and Brenda/Nicol was already delineated compared to IAE’s oil exploration plays of Pallas, Triton and Athena East (Leek Sands) and they are still appraisal drilling and/or trying to find the oil/water or gas/water contacts in Athena, Athena East and Stella. There is also Harrier Shallow in the background as well.
As for when is the next interesting well? - Who knows? There is supposed to be another Athena well in 2008 and a Stella well possibly in 2008 from the last NR so those would both be important to the company. The last presentation said something about a Pallas well in H2-2008. I haven’t seen anything on Athena East to this point.
The drilling schedule changes all the time. But for me I’d stick with lower risk appraisal drilling of Athena (Upper and Lower Leek sands) and Athena East since IAE are the operators on both and when Maersk Oil is ready to drill Stella you have 3rd appraisal play. There is no point to drill these smaller gas plays where they are not the operator and they have small working interest. To me it’s just a waste of time and money with small reserve upside. An updated presentation on their website would be nice and it should show what their intentions are going forward. Until that happens you could always email or call the company.