Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Western Isles getting closer to returning for its refurb soon https://kingfisherbulletin.org/notice-map?noticeId=4100
I always wondered if JOG would look to pick up more licences in the 33rd round but after todays announcement it now looks almost certain they haven't https://www.nstauthority.co.uk/regulatory-information/licensing-and-consents/licensing/ I can see NEO have picked something up in the latest tranche. The way I see it JOG is now more or less a minority equity partner with Neo holding all the cards. Given verbier didn't turn out as planned when Equinor walked away I hoped they might have picked up a new licence to polish up like they did with Buchan and something to focus their efforts since Buchan is out of their hands. Does make you wonder what all the remaining JOG staff have to do day to day now Neo are running things.
Hello Dick,
You say -
"..........I've mugged up a NPV based on DCF, assuming Labour behaves as stupidly as they probably will because they're stupid (and disingenuous - think of a few more adjectives to describe these socialist cretins). There's a negative NPV for both NEO and SQZ through to 2033."
But to an amateur as I am, the extension of tax on oil companies from 75% to 78% and its new lifetime being extended from 4 years to 5 years looks like a very marginal further deterioration in prospects for oil companies.
Did not the 75% tax rate until 2028 already exist when Neo and Serica decided to hook up with JOG and would they therefore have been satisfied with their own prospects under that tax regime at that stage ?
We are told that a draft FDP has been submitted to the NSTA, and we have also been told to expect FDP approval in the second half of this year. NSTA approval of the FDP will trigger the remaining farmout payments from NEO and Serica so if they had any doubts about committing to a FID would they agree to submit the definitive FDP knowing that on approval they will have to pay up?
Thanks Dick, excellent post as always. Unless an offer is made for JOG it's hard to see the share price going anywhere until the final decision is made to go ahead with the project. If we're now at the bottom which I think you're suggesting a positive final investment decision should propel the share price much higher later this year. Naively I hadn't factored in the possibility (or given it much weighting) that the project might not go ahead at all. I shall continue to be patient and hope for a miracle at the polls in Oct/Nov.
The outgoing CEO (Mitch Flegg) said:
"Moreover, there are further growth opportunities within the Company's existing producing fields and other assets in Serica's portfolio, such as the potential Buchan Horst project".
How could he say any more when the FDP still hasn't been approved? His comment wasn't negative. He's right though.
Re Flegg's comment about FID in part being dependent on the impact on project economics of expectations for the future tax regime which will apply through the life of the project.........
..........I've mugged up a NPV based on DCF, assuming Labour behaves as stupidly as they probably will because they're stupid (and disingenuous - think of a few more adjectives to describe these socialist cretins). There's a negative NPV for both NEO and SQZ through to 2033. JOG gets a positive number valuing it (mostly 20% of Buchan) at around £4 a share. That's because JOG doesn't have any capex. Someone has to spend nearly £1bn to get any oil out, however, so JOG's NPV is notional only.
The hope is that Labour's clowns come to their senses, or a miracle happens and they don't get elected. The project works for everyone, although it's not sensational, under the Conservatives' proposals, incredibly unfair and disingenuous though they are.
If Buchan doesn't go ahead, JOG will still have a value that's no lower than its present market cap by virtue of the cash it will have when the FDP is approved, the cash value of its tax losses and whatever what will be categorised as 25mmboe of 2P reserves in a good NS post code is thought to be worth, bearing in mind a lot has to be spent to get the oil to the surface. Not sure the market will see "value" that way though.
Rumours are that NEO is up for sale. If it is, someone will buy the company I guess. Maybe whoever does buy it will also buy JOG to mitigate the cost? Buchan is a big project so one assumes whoever buys NEO will be committed to going ahead with Buchan. £4 would do for me in the circumstances.
JOG had no oil interests to speak of and about £1m in the bank when I first started adding to the 20k JOG shares I got for my 2m shares in TRAP (Aug 2015). I liked the chaps and added multiples between the time JOG's placing price of 22p fell to 8p in Feb 2016 (when it had a market cap of about £650k) and when it got to about 25p a few months later. I've added at less favourable prices since.
If the boys from Delmonte should say "no" come the time to make the FID, JOG might decide to revert to its original (unfulfilled) strategy of buying WIs in late-life producing assets with good tie back arrangements - who knows? This time just NOT IN THE F****** NORTH SEA or anywhere near it. Or it might decide to major on wind turbines, solar energy and the moon (which controls tidal movement). Make that a full moon.
Effing politicians - I'd hang 'em all.
What day is it? Sorry, nurse.