The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
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As the second largest gas accumulation drilled and tested in the UK onshore, Loxley’s potential peak
gas supply would have an energy equivalent to power around 200,000 homes per year and provide
up to £30 million/year in gas sales to hydrogen manufacture and carbon capture plants, all of which
are likely to be situated in key industrial hubs, well outside of the Loxley rural area ... (extract from SS's speech to the re-run of the planning committee on 27/11/20)
Natural gas price on the day before SS's speech, 26/11/20: 39.62p.
It can be seen that, if and when natural gas prices come back from their current levels (and there is nothing in futures prices to suggest that for the moment), Loxley will remain a potentially very valuable asset, an asset whose potential is totally absent from UKOG's share price at the present.
ocelot,
'As the second largest gas accumulation drilled and tested in the UK onshore'
Well it's yet to be proved that the Godley Bridge discovery is even connected to Loxley - even UKOG's mapping shows it's fairly tenuous.
So it's just in UKOG's opinion it's already been drilled and tested by GB-1. But everything else in that statement is predicated on a success that even the ever optimistic UKOG say is only 60 to 70% likely to happen - but why be suspicious of a company that has serially exaggerated likely outcomes for every project so far - and can't even get the previous day's closing price for the placing right.
Before rejoicing Loxley needs to be successful (and not just shows or an initial test). Even then it won't be possible to predict what the production leve,l will be or when Loxley might have sales gas - many many years if the time to sales gas for the already developed but stranded Saltfleetby Field is anything to go by. Any gas price you care to quote now is irrelevant
Nevertheless like previous projects the 'information' put out by UKOG will be the basis for P&Ds as it has previously - from posters like ocelot who refuse to acknowledge the downsides. The current SP indicates the gulf between UKOG's expectation and execution.
"As the second largest gas accumulation drilled and tested in the UK onshore, "
IF you believe Loxley , Gbr and Alfold are on the same structure that 's one successful well and 2 dry Ocelot - its as bad as Basur
UK Shares hit an all time low, ever, biggest number of shares in circulation. Ocelots only method of prediction is that the share is so low in value it must go higher because where else could it go? Trouble is the answer is very scary
"The biggest mistake an investor can make is to assume that when a share falls, it will rise again.
The second is that when a share rises, it will keep on rising."
Tidying up old papers, came across a quotation of SS's from 2020, stating that the Loxley gas project is "perhaps one of the UK onshore's most valuable undeveloped assets".
Wish UKOG well in their discussions concerning the pre-planned farm-out programme.
PS: obviously, that statement was made before the spectacular rise of natural gas prices had begun.
CORRECTION:
that quotation from SS comes from his brief video presentation on Basur-Resan of 20/01/21, available on UKOG's home page (scroll down, very near the bottom).
I was tidying up old papers (laugh) and came across this… S’s View, don’t make me laugh…here’s one of his many previous Views…Remember this "I am delighted to have witnessed first-hand the resumption of significant continuous and sustained oil flow from the Kimmeridge at Horse Hill. Whilst it has been a long wait since the successful flow tests, it has been made more momentous by the Kimmeridge's significantly increased performance and productivity.
Whilst these are early days in the planned KL3 EWT sequence, with the well still "cleaning-up", the continuous and sustained high oil rates can only be seen as highly encouraging for the overall EWT objective of establishing the commerciality of the Kimmeridge. The Directors consider that these positive KL3 test results now make it increasingly likely that both the Kimmeridge and Portland oil pools are set to make Horse Hill one of the UK's leading onshore producing oil fields. With oil at 60 dollars and
permanent production at Horse Hill we will all be in the Bahamas... Total bull Shiz
The full quotation from SS is as follows. Loxley is:
"... in my view, (is) perhaps one of the UK onshore's most valuable undeveloped assets". (From the video presentation on Basur-Resan of 20/01/21, available on UKOG's home page, very near the bottom of the page, the quotation being at the beginning of the video).
The price of natural gas on 19/01/21 was 57.77p. Yesterday, the front month, September, closed at 371p, more than 6 times higher, so "one of the UK onshore's most valuable undeveloped assets" has become much more valuable during the intervening period.
If UKOG can persuade the SoS of the encouraging prospects of its Loxley project, it can also persuade its peers of those prospects via the implementation of its pre-planned farm-out programme.
Loxley looks to be a potentially very valuable asset which, to date, has been overlooked by the market.
ocelot
Even with an oven ready site it is unlikely UKOG will get a take up given the time it will take them to get the site to fruition. I am sure those that may have been interested have looked at the future gas prices down the road and come to the same conclusion as IGas have with the Godley bridge prospect in that it is still not financially viable.
So bearing in mind that the high price of gas, we are told, is a temporary issue.., what's your point ?
Because UKOG still won't be producing it, commercially or to heat Arther Two-Sheds Sandercon's greenhouses, by the time the price has fallen again.
You must have changed your medicine this year because your quality of ramping has fallen off sharply.
It's sad to watch.
Nutter.
Ibug,
If Loxley was financially viable on 20/01/21 with the price of gas at 57.77p, it will still be financially viable today with the price of gas at 371p.
If there is as much gas as SS says there is - if its like Godley Bridge it's another dead duck
Ocelot - do you believe what Steve Sanderson says?
'in my view, (is) perhaps one of the UK onshore's most valuable undeveloped assets'
You have to realise that it's an opinion, not a fact - in the view of someone who's view has been decidedly dodgy previously.
If it were a fact UKOG, never knowingly pessimistic, would not have put a Probability of Success of 60 to 70%.
'If UKOG can persuade the SoS of the encouraging prospects of its Loxley project'
What persuasion - I think you presume too much that the SoS did anything but accept what UKOG told 'him', and it was a legel decision that the planning application should not have been rejected. It's a very different proposition to persuading experts in another company who will be expected to pay at least their share of the appraisal well.
Overlooked by the market? You know this? Perhaps they realise that every UKOG project has been preceeded by over optimistic projections, that any sales gas will be many years away and gas prices, like oil, can rise and fall.
If anyone is considering buying shares on Monday based on that statement from early 2021 rather then to sell on the first P&D that comes along, firstly I would be surprised, but just in case have a look at the results of every well UKOG has been involved in vs what was said before drilling and during drilling and testing.
ocelot
You may or may not have noticed that certain parts of what SS said to the Planning Committee never made it into the Appeal Submission by SS. This is what he submitted;
"3.3. The nature of the project is detailed at paragraphs 2.16-19 and this establishes that it has a very reasonable chance of proving the Deposit to be commercially viable, with a POS of 60-70%, a typical range for an appraisal project in a conventional anticlinal gas accumulation within a sandstone reservoir (see paragraph 2.7 & Figure 2 for technical definitions).
3.4. Using all available technical data (see section Primary Objective - Loxley Portland Gas Deposit at paragraphs 2.21-34) the Deposit has been assessed to be of a significant size by a third-party Competent Person, Xodus Group Ltd.9 The entire Deposit is estimated by Xodus to contain mean case recoverable resource of 44 bcf and an upside case of 70 bcf, with approximately 78% falling within the Appellant’s Licence. This would make the Deposit the second largest gas accumulation found in the UK onshore’s history. With the adjacent licensee’s permission, some of the Deposit’s gas reserves lying within the adjacent PEDL235 could also be recovered.
3.5. UKOG’s latest internal recoverable resource estimates are very similar, 43 bcf in the base case and 68 bcf in the upside case. Our estimated base case production rate of approximately 4-5 bcf per year from 4 producing wells at the Loxley site would produce an energy equivalent, assuming a 50% efficiency factor, to generate electricity to power over 200,000 homes per year (see paragraphs 3.8-9 below), a meaningful regional project size."
You will notice the words ;
"As the second largest gas accumulation drilled and tested in the UK onshore" and
"provide up to £30 million/year in gas sales to hydrogen manufacture"
are all missing from the latest missive on Loxley e.g.
the appeal submission.
I have no problems with them thinking of it "As the second largest gas accumulation" or "Loxley’s potential peak
gas supply would have an energy equivalent to power around 200,000 homes per year" as that could be possible given the figures in the Xodus report even if I don't believe it myself.
ocelot
But you know the projected price of gas is not going to be near any of those figures if and when UKOG get to producing 1st gas so why keep banging on about it. It is the same as oil. You only need to look how much that has varied recently to work out that no forecast is a done deal. I'm just glad you are playing with your own money and not anyone else's.
'If Loxley was financially viable on 20/01/21 with the price of gas at 57.77p, it will still be financially viable today with the price of gas at 371p.'
If - Yep, how much gas did they sell today though. It's starting to sound like the ANGSt board.
I haven't listened to the interview - wonder what he said about Basur-3 and Resan.
Ibug,
It is part of the oil and gas industry to make long-term investments without knowing where the price of oil and gas will be when those investments are completed.
If you don't like long-term investments, I think you have chosen the wrong industry to follow.
'I haven't listened to the interview - wonder what he said about Basur-3 and Resan.'
But this is what was said in the RNS that day:-
'As per the Company's 15 January 2021 announcement, the board views the Licence's forthcoming 2021 appraisal drilling programme to present a compelling and potentially transformational growth opportunity for the Company'
Presumably that was also in SS's view. Words are cheap especially caveated with 'in my view', potentially etc.
ocelot
I stopped doing long term investments a long time ago when I realised making quick bucks was easier and beneficial. Ever bought and sold shares just for the divi?
I guess what ocelot thinks, on P&D days with huge turnover of shares, are the gamblers selling to long investors who are buying for the long term, is really one lot of gamblers who hope they got it right selling to another lot that hope they haven't got it wrong.
Apart from ocelot I haven't seen any evidence of any long term holders on this board (look at the price predictio list) apart from those trapped by believing, or its just not worth selling them
'It is part of the oil and gas industry to make long-term investments without knowing where the price of oil and gas will be when those investments are completed'
Indeed, but that's why some posters actually look at the projects and assess how reasonable UKOG's public assessments of them are - you know the 'naysayers' who have been so lucky in the past, distant as well as recent, to get it right but not in hindsight - in predicting what might go wrong that UKOG for some reason didn't mention.
It might just be that it isn't the positive bits of UKOG RNS or interviews, gas price, oil price, chartists proclamations, what Bloomberg say or even the volume of shares traded or that the SP is at an all term low.
I am looking forward to the next pump and dump, although I would never take part in it, it’s the only way forward here, this company has nothing to offer as an investment, but get the timing right and ride the coattails of the pumpers…