The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Hello Dick,
Thank you for those 2 links - quite absorbing stuff, particularly as 1 leads into an evidence based debate between opposing scientists.
If you believe in this global warming, net zero nonsense, I have a moon ladder in my garage for sale.
Just extend it out and a few steps later, you're the new Neil Armstrong....honest.
Https://www.verywellmind.com/an-overview-of-the-dunning-kruger-effect-4160740
Climate deniers?
Should we believe you in preference to these two deniers?
https://www.youtube.com/watch?v=9UEx_XqT3rE
https://www.youtube.com/watch?v=pj-Iu1i317E
China has as much installed wind as the next 7 countries combined
Solar - more than the rest of the world combined
Maybe they ARE doing something - just that they use a lot of energy making stuff for the rest of the world - we've exported much of our carbon production, and no reason why we shouldn't do something
Maybe stop listening to the Climate Change deniers?
It also occurred to me that it's possible (I don't say likely) that if NEO does find a buyer, maybe JOG could "piggy back" on the deal and provide a buyer with an offset to (net) cost of buying HitecVison's (HTv's) subsidiary, NEO Energy by selling alongside NEO. Now that Labour has confirmed its intentions to destroy the North Sea oil & gas industries (despite logic, the loss of countless billions of tax revenues in the short, medium and long term, the trashing of countless tens of thousands of high-skilled British workers' jobs, as well as their hopes and aspirations - their families' too - the need for Britain to look elsewhere at huge increased cost and carbon footprint for the energy it needs to keep the lights on and avoid mass hypothermia - forget energy security; we'll just increase our reliance on our friends and allies, like the US, Qatar, Saudi Arabia? Russia even .....NEO would wreck HTv's overall IRRs if HTv retained its interests in the UKCS, which now offers nil or worse returns for a great deal of effort and risk. Investors in HTv would be more than disappointed were HTv to sacrifice monetary returns for pious causes; let's face it, money talks. How much is enough for the high-rollers? "More" is the truthful answer.
I talked earlier about JOG's 350p per share using DCF numbers to get to NPV10 (10% risk factored into the numbers - cumulative; I didn't factor in "cost of money" - too fussy; I was only looking for ballpark values). Let's try to put some flesh on that bone.
Cash £35m post FDP
Tax losses: £65m @ 40% discounted by 50% = £13m
2P reserves post FDP - say $5pb (ultra conservative with no capex)
25mmmboe @ $5pb = $125m or £100m
Throw in Verbier Deep, Cortina and Wengen for nothing
I make that £148m divided by 36m shares (fully diluted) = near enough £4 a share.
I'd take it - with politicians out of control, the risks are just too great.
jmofwiw
dyor
It literally is - 'permanent destruction'. Even at pre-EPL conditions production declines much quicker than demand - because NS is one of the most expensive places in the world to extract oil on an OPEX basis. Much investment depends on legacy infrastructure - once it closes, it accelerates other things to close - and would never be profitable to re-establish.
I notice Waldorf is in the news looking extremely precarious on bond covenants. There will be more to follow. Politicians must come to their senses, but the longer it goes on the more embarrassing the U-turn.
To equate the global profits of super majors with NS tiddlers is one of the the most egregious needless deliberate misunderstandings ever. But we are a big, dumb post industrial democracy and will chase ourselves into obscurity whilst the developing world takes over.
Some type of clarity on taxation and positive signs on GBA progress will push the stock much higher. Here's hoping.
'Concerns over Global Warming' is honestly a joke. The UK currently contributes leas than 1% of man produced CO2 while China alone (whilst currently increasing coal burning in power stations) contributes 27%.
Lets tie ourselves up in enviromental knots and red tape whilst other countries like China do what they like and press on with their own agenda regardless.
Madness.
I'm tired of the rank mis-management in this country. You only have to look at the Migrant Crisis to see how utterly crap Government are in this country. Failed asylum seekers aren't even being deported, they are just left here in limbo wandering the streets living off charity handouts whilst they keep re-applying. It's honestly shocking.
Forgot to say that it might be good news if a buyer emerges for NEO (I mean the whole company, not its assets) because whoever was to buy it would presumably be reconciled to proceeding with the Buchan project, regardless of the insane levels of tax involved.
ITH is fav afaic but wdik? It's just a guess. Whatever happens JOG will end up a lot better off than it was when I first became a shareholder in 2015, having blown a stack buying 1% of TRAP that was worth sweet FA when AB and RL rode in with a bold plan but no chequebook. They won me over and I've somehow managed to keep the faith/ It's said you make your own luck in life and the shenanigans that went on as a result of stirring things up when it became clear certain people wanted TRAP buried would take some believing. I have it all in writing - just think it's best left in history. TRAP wasn't allowed to go bust and we know the rest.
It is a travesty that a risk that couldn't possibly have been foreseen (incompetent, morally bankrupt and downright dishonest politicians - from both main parties; the LibDems would be no different) deliberate scuttling one of Britain's most valuable industries, thus ending the hopes and aspirations of so many people who have put their all into this well-run company that has had so much thrown at it over the years, yet still fights on despite all the obstacles put in its way. Welcome to Britain in 2024.
What more can one say?
Contd:
Not only have Labour not backed off, but they have failed to make it clear that the disallowance of capital allowances will only apply to the EPL part of the overall tax charge, the same applying to interest cost and b/fwd losses, until now available for offset against ringfence profits. They have also threatened to backdate these draconian proposals to catch companies (perhaps like NEO and SQZ) who have the good sense and initiative to accelerate spend on the infrastructure, so that the major part of the overall spend is made before the Consevatives are kicked out.
My calculations show that the overall Buchan project has a negative NPV10 of £484m (I've taken the first 10 years of numbers - there's very little NPV effect after about year 7. In getting to this, I have applied what I think is the most likely approach Labour will take, which is to allow b/fwd losses at 40% and restrict decommissioning and interest cost allowances similarly - and not backdate the tax grab to whenever they had in mind - I'm pretty sure that would be illegal anyway - not that they would care).
It's the availability of the enhanced reinvestment relief that makes the difference. With it, the negative NPV10 reduces to £138m. But there's the FPSO to take into account. I'm talking about the whole project, so NEO's share is 50% and SQZ's 30%, although I can't quite get my head around whether this should be 62.5% and 32.5%, because NEO and SQZ are the ones spending all the money.
JOG's NPV10, by contrast, would give it a value per share of around 350p ps, the problem being it won't be able to lay its hands on any revenue from oil that's stuck about 11,000 ft below the surface because UK politicians want to buy in as much LNG and oil as possible to mitigate the shortfall in the oil and gas they've deliberately chosen to forfeit by making profitable NS extraction impossible.
All might not be lost, however, because there will still be organisations willing to pay the heinous taxes Labout has in store because they attach far more importance to the certianty of supply than how much tax they'll pay. ENI and VAR Energy (respectively owned or part owned by the Italian and Norwegian Governments) bought Neptune Energy (VC backed and 3rd biggest UKCS producer,)which sold out its UK UKCS assets pdq after Sunakhunt struck. It surprised me recently to learn that ITH had agreed to buy those same assets not two years later (they must have offered something tempting for ENI to sell). That was until I realised that ITH is 90% owned by Delek, which itself is owned by an Israeli outfit that has multiple interests across the board in Israel - one of its companies happens to be the biggest forecourt operator there. Is something happening there?
You might have heard of it, Einbert?
Someone seems to have the jitters and is unloading shares on an unreceptive market. Let's play "guess who".
"What are you? Man or mouse".
"Squeak, squeak"
Au revoir
dyor
Https://www.telegraph.co.uk/business/2024/04/14/britain-north-sea-oil-resources-protect-rising-fuel-prices/
....extract:
"As rising oil prices complicate the UK’s escape from this ghastly cost of living crisis, it was noteworthy a British energy company announced last week it is to start drilling at the biggest oil field discovered in the North Sea in at least 20 years.
EnQuest plans to bring two fields onstream with the potential to produce 500 million barrels of crude over coming decades. This reignites the political battle over the UK’s energy future, with the Tories having just extended the 75pc “windfall levy” on North Sea output and Labour threatening to block new production completely, citing environmental concerns.
This makes no sense. There are around 300 active North Sea oil and gas fields, over half of which will cease production by 2030. The North Sea currently delivers the equivalent of 83pc of UK oil demand and 54pc of our gas use. What are our plans to replace those supplies?
Even the Climate Change Committee, the official green watchdog, acknowledges fossil fuels will still account for around half of Britain’s energy needs by 2030 and a quarter by mid-century. And that’s if the proposed net zero 2050 transition to renewables is achieved, which looks pretty unlikely.
So if that’s the case, that we’ll be using oil and gas for at least the next three decades, why not drill our own? Even if such energy is exported, at least UK energy workers would keep their jobs and the Treasury would get the tax".
Returning to NEO and HitecVision, the later is a VC fund. It has $8bn under management from hi-rollers who demand better than average returns. HitechVision has under its umbrella a number of different entities, all looking to produce impressive IRRs. NEO is among them and (as far as I can tell) is the only one focused exclusively on the UKCS. Sunakhunt's EPL was already in place when NEO farmed into Buchan about 12 months ago. It must have been relying on either: (i) the Conservatives winning the next GE or (ii) much more likely, Labour coming to its senses and relaxing its punitive proposals, particularly those relating to the closure of so-called "loopholes" that allowed companies like NEO and SQZ to avoid 90% of the destructive EPL by investing in new infrastructure. This would have enabled NEO and SQZ to acquire infrastucture estimated to cost £900m for about 9p in the £ (£c.£80m - a saving of £820m.
tbc