INA.v, IONAF - Iona Energy
Let me try this again. Awhile back, I spotted Crucible posting about this on IV. When he mentioned it was a "Double-fisted table pounder" I had to take a look.
I'm sure you are all familar with the success we've had with Mart Resources..and this looks like it has the potential to repeat similar success.
----snipped from Crucible on IV----
"Why am I confident? Let me count the ways:
1) Uber cheap on all metrics. Trading ~33% of ~$650MM 2P NPV10 after tax reserves. Trading ~0.5x 2013 cf assuming conservative oil/gas prices (no, not a typo). Current EV is roughly $180MM (counting all of their currently unused $130MM debt facility, offset by ~$100+MM cash). EV/Flowing 2013 ave production (assuming ~15K boed) is uber cheap ~$12K. Remember, they get Brent pricing and enjoy ~$10mcf gas prices, so buying high value barrels at ~$12K per flowing in politically safe area is nearly unheard of.
2) Big near-term production ramp that is self-funded from current ~$100+MM cash and untapped $130MM debt facility (hugely important in this market). Ramping from current ~600 boed natgas to ~8K boed (mostly oil) early next year when they bring on their 100% WI past-producing Kells field (formerly named Staffa). Kells was shut-in in the early '90s when oil was ~$15 bbl and they had pipeline clogging issues that were too expensive to justify repairing at the time. The field was producing ~6K boed (mostly oil) at the time of shut-in (down from 10K boed IP a few years earlier). As such, Kells is a low risk development as they already have good understanding of the reservoir characteristics. Once Kells is online, INA is self-funding from existing cash low so no worries about new debt/dilution that plagues the junior sector.
Iona will then ramp to ~15K boed (probably higher) when Orlando comes online in Q3 2013. Both Kells and Orlando will use the same export route via nearby existing platform that has excess capacity, so will have synergies. The host platform operator wants the new natgas production to reduce their operating costs (platform currently uses much more expensive imported diesel for power). Also the two fields will extend platform life, so very attractive for the host platform owner - as such, I expect good cooperation to ensure modifications go as smoothly as possible. Modification work for both field's developments will be done when the host platform goes down for annual maintenance this summer/early fall.
2013 cash flow per bbl should be around $50 (assuming conservative prices) = ~$0.90 share assuming ~15K boed ave. Compare to current $0.47 price.
Iona also has ownership in the currently producing Trent and Tyne natgas fields that could add 3-5K boed in the next year if the upcoming appraisal wells are successful. First sidetrack is to be drilled in July. Again, fully funded (but success not included in my assumptions - management is optimistic and thinks ~80% chance of success is likely)
3) Large reserves - with news that they just bought out their partners at Orlando, they now have 100% of the field and now have 3 sizable fields going in to development. Reserves (including West Wick) should be around ~33MM 2P with 2P NPV10 after tax around ~$650-$700MM ($1.85-$2.00 sh fd). Updated numbers including West Wick should be announced in near future.
4) Big midterm production ramp to over 20K boed in next few years - all self-funded. Iona will be one of the fastest growing plays in the NS and almost nobody knows it - yet. Hence the opportunity to make a handsome, relatively low risk return.
Cash flow should be around $250-$300MM in 2013 depending on first production from Orlando (vs current EV of only $180MM) and should exit at higher annualized rates as Orlando will come on in Q3/Q4. In 2014, West Wick should add another ~6K, getting them to ~20K boed and ~$400MM cf annualized.
5) For those who put great stock into management, Iona has a well-proven team. INA founders also started Ithaca, so know how to drive similar NS projects into development even during very rough times (much more difficult than current conditions).
Add it all up and I think Iona is the most attractive value/risk-reward of any play I've seen since the panic in 2008. Think there is relatively safe multi-bagger in the offing at current prices. I think conservative/realistic price target is ~$1.50+ range. Casimir has a $2.40 target (and will surely be increasing their target on the back of Iona's news that they are buying 100% ownership in Orlando). If markets wake up and INA executes well, would not be surprised to see $2+ share price in next 18 months. For those with modest patience, INA should be a nice winner.
Casimir's recent report is more optimistic and gives more details (only a few days old but doesn't reflect just-announced 100% ownership of Orlando - as such, 2013 production/cash flow numbers are only based on ~10K boed ave - will be substantially higher with 100% ownership vs previous ~35%)
There is a INA board for those who are interested. "
