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UK fiscal uncertainty may be over emphasised by the stock market. The recent dip in the
JOG share price has coincided with a degree of UK oil and gas tax regime uncertainty. In the
recent UK budget, the Energy Profits Levy was extended to run for a further year, from 2028
to 2029. Prior to this, the Labour party (seen by many as the incoming UK government) had
released a statement proposing an increase in the EPL from 35% to 38%, extension to 2029
(now enacted by the existing Conservative-led government), and the addressing of what
Labour referred to as “loopholes” in the existing UK oil and gas tax regime. It has been
interpreted that these loopholes could refer to the investment uplift allowances in the EPL
regime.
When the EPL was originally brought in in 2022, it was designed with relatively generous
investment allowances (such that, overall, new UK upstream CAPEX investment could attract
up to 91p in the pound of tax relief). This has created a significant incentive for existing UK
producers to invest in new projects – indeed, our modelling estimates that it can increase the
value of a new UK project to an existing producer by up to 61% if tax allowances are able to
be used against existing production. As such, any government watering down of the EPL tax
allowances could impact industry decisions to invest in new projects, including potentially
Buchan.
In our view, the danger of changes to investment allowances may be limited. While we expect
that both the incumbent Conservative government and the Labour opposition are including
the significant benefit to the exchequer from the EPL in their fiscal calculations for the next
five years, we find it hard to believe neither would look beyond this period. Altering tax
allowances could have a more significant negative effect on future UK North Sea projects
and investment than the existing EPL regime (which, for all its faults, is relatively well
designed for encouraging new investment), and this could in turn have an impact on
government fiscal calculations beyond 2029. Damaging the UK oil and gas industry in the
longer term would be economically self-defeating for an incoming Labour government,
ultimately damaging government spending flexibility. This would be a choice that Labour
would have to face up to in government, with potential serious consequences if it were to
degrade UK oil and gas tax allowances. In our view, the move from campaign rhetoric to
implementing policy is more likely than not to see Labour take a moderate stance in practice.
We also consider the fact that 72% of total UK energy supply in 2022 was from oil and gas,
the c.200k well-paid UK jobs that UK oil and gas activity supports, and the substantially lower
emissions from domestic oil and gas production versus most imports (particularly LNG), as
further strong points in favour of a moderate government approach to oil and gas taxation.
We t
OOP'S sorry if that upset you DU that was not intentional. I'll shut up now.
Garbage seems to proliferate on the JOG forum these days. Constant price, price price. Give it a rest, will you?
Read what the Sage (of Omaha) says about it. "Price is what you pay; value is what you get".
Price is a measure of supply and demand. More people buy than sell and the price goes up. If it continues? The price goes up more. Still with me?? And vice versa.
Predicting what the scrambled and befuddled minds of a whole lot people, who wouldn't know what affects share prices if it stood up and slapped them in the face, will tell them about any number of real factors that are relevant to an understanding of what value should be put on (in this case) JOG's shares at a point in the future , is a very silly game. Let's all talk about what we want it to be, shall we? And tick up people who say it will be high. That's really clever.
If politicians don't prevent it (which they might) LTHs should get a good result. How good? Consider what various brokers and professional share commentators have to say - they're the ones who have put in the hours.
So have I and have come up with NPVs (based on DCF projections) for JOG, NEO and SQZ (the value is different for JOG because it won't have any Capex - fat lot of good this will do if NEO and SQZ decide it just isn't worth it).
Risk is what is holding back JOG's SP. The risk of virtue signalling, commercially inept, dishonest politicians deciding to ignore advice offered to them on the error of their ways - and proceeding with plans that will not only significantly damage our nation's energy security, but generate less revenue from NS taxes, trigger rampant energy inflation and destroy the jobs of countless thousands of highly skilled employees directly and indirectly in the industry, along with the plans and aspirations of all these people's families.
And all for what? I doubt there will be any measurable difference in anything in 26 years (ie in 2050). It is a flick of a finger in astronomical/geological time. The sun (the earth's only energy source) has been around for around 13.5bn years and the earth close to 5bn years. And Man can change what it falsely thinks is wrong in 2 minutes? Labour's plan is to turn GB into a shivering nation that either can't afford or can't buy countless items that rely on oil they are used to picking up off the shelf in a supermarket, or anywhere else. Wait 'til the fat and greedy masses can't get their cheap flights to Costa del Vomit. There'll be riots. So let's all vote Labour shall we? That Kweer Stoma seems ever such a nice man. And that lovely Rachel - it's not her fault her legs touch all the way up from the ankles. She used to be ever so good at chess, so she's bound to be a good chancellor. Oh, and there's that lovely Angie too..................
dyor/imo
PS: the 332p opening quote doesn't mean anything - it's a number put up by those who fix the markets - sorry: enable people to trade
Oh please MPO don’t make it sound like my £4 talk is unrealistic! I’m having enough trouble as it is :)) happy Thursday all. Should have sold and now doubled?!!! Good links alsop thanks so much. Happy Thursday all!
JOG opened at 332p (from YAHOO)
Will we ever see this again??
Nice little summary https://www.offshore-technology.com/projects/buchan-horst-oil-field-uk/?cf-view
Dividends after 78% tax. How much would that be?
Onthe6
You presume to think what other holders will be happy with.
Not wise.
There's a thing. Never use a left angle bracket (or 'less than' character) in your post as it will be truncated there.
Cyril 2 - " ...for what it's worth, here's mine. To the original question you bet it's worth 7 quid - "
I agree - let those want to get out at £2- go and dont worry about huge SP fluctations - those that would grab at £4- goodbye, you've been nice travelling companions
If no takeover - Oil will flow - big dividends will paid - and then there will be takeover bids
For some reason I got truncated in mid flow. Most uncomfortable. I went on to write........ at less than £8 and since then a great deal has been achieved. I see the issues as almost entirely political. Labour and the current lot communicate in words of one syllable to rally the tabloid reading masses. For many 'just stop oil' is a coherent strategy. There is another discourse only accessible to those prepared to apply effort and intellect. Once Labour get into power the front bench, most of whom have no real world experience of government, will be confronted with the actual realities. This is how u-turns happen.
For some reason I got truncated in mid flow. Most uncomfortable. I went on to write........ at
Onthe6: " Of course I pray that the £7 talk will come to pass and I can dine with Einstein. 699 actually. Enjoy your day all."
Prayer as an investment strategy - could put IC and lots of others out of business - and cheaper than a Wealth Manager.
For some reason I got truncated in mid flow. Most uncomfortable. I went on to write........ at
Of course I pray that the £7 talk will come to pass and I can dine with Einstein. 699 actually. Enjoy your day all.
Think most long time holders will be happy with £4. Bad investment unless bought in in the pennies. Agree with alibro.
Thing is if this gets to £2, those bought in recently around 150p, 160p will be selling then it’s back down again. The only way for our board to make sone money is to sell the company.
...for what it's worth, here's mine. To the original question you bet it's worth 7 quid - and some! Years ago I stated I wouldn't sell out at
This is what was announced woth respect to contracts for the refurb Onthe6 https://www.pressandjournal.co.uk/fp/business/6269212/pivotal-work-on-giant-western-isles-vessel-is-happy-landing-for-apollo/
Labour must tread carefully on road towards UK’s clean, green future - https://on.ft.com/48i8fOc via @FT
Apologies was trying to post that. In short, if Labour kill the investment allowance you get redundancies like pit closures in 1980s
Maybe they will remove investment allowance but give a huge tax break on jobs, so even things out. Or quietly walk.
But for some it has nonetheless burst the bubble created by Labour’s overtures to win over investors. As one oil and gas executive put it:
Labour has been hawking itself around the City saying we are on the side of business and we want you to invest in the UK — then a few days later they are U-turning.
It’s a bad day for investors in the UK . . . Everything I’ve heard since Friday suggests they are rushing to the exit.
The sector’s backlash against higher taxes is to be expected, yet there is a lot at stake. The UK still gets about 75 per cent of its energy from oil and gas, and efforts to move towards cleaner energy are proving difficult and slow.
Transactions heating up since late last week because of the end of tax year. Presume will continue this whole week.
I don't believe Neo has committed much capex yet other than the success fee to JOG and operating costs of the project team. I do believe we will see movement on that soon.
I thought Neo has awarded the engineering work to a company? Or that’s just a study or conceptual work? It’s nothing to do with the physical side of the project? That will be later after fid? Too many dumb questions I know.
Tis an interesting question.
One thing I don't understand, is why someone would pay cash out of retained profits for oil revs, and not simply get a massive tax deduction on CAPEX to say, get incremental oil revs from existing assets. Obviously there is an answer to this and I'm happy to be sh@t on by some of the more experienced posters on this board. It's not enough to be right, it's that others must fail etc.
Another ponderance in my tiny mind is that can a contingent offer be made? Say on FID, or even first oil? Is that a thing in M&A? Take out the management team and essentially you have a financial derivate, so why not? Might be nice to snap off the target now when atmospherics are rubbish.
One thing I'd add is that if we want to see first oil Q4 2026, we're going to need to see activity pretty sharpish. Rig contracts (or at least options) need signing, long lead time items like er, infill tube thingys and errrr 'well heads' need ordering, building etc. These will likely be released by RNS and this must close the value gap? I see no risk from regulator, only a tiny risk from a partner getting cold feet - but these items would confirm that would not be true beyond all reasonable doubt.
Where is an M&A banker when you need one.
Dear Einstein, thank you for wise words to my very dumb question. All explained very nicely :-) 699p dinner on me, remember? Better than hot cross buns I promise. .