RE: Re proposed HH farm-out, from Alba's final results RNS8 May 2024 19:45
I was looking for the valuation elsewhere in the report, so missed that missed and thank you.
From note 12 of Alba's report:
The majority owner and operator of HHDL, UK Oil & Gas plc (UKOG) recently announced its results for year ended 30 September 2023 maintaining its carrying values for the assets relating to the Horse Hill oil field and the HH1 well, based on net present value calculated utilizing an internally generated depletion curve that was independently reviewed. Costs were based on current costs less any anticipated savings. A long-term average Brent oil price of US$78/bbl was used being the Brent curve until 2031 and then kept flat at $75/bbl. A discount rate of 2.79% was based on a Capital Asset Pricing Model analysis being the weighted average costs of capital of Horse Hill Developments, the holding company of the producing well HH-1. There is inherent uncertainty in any oil field valuation due to the uncertainty of future oil price movements.
Management relies on the valuations of the majority owner of the project as they have access to fuller information and therefore have maintained the current valuation of the investment in HHDL, in line with UKOG.
On what basis are you able to value HH differently from Alba which relies upon UKOG in its published accounts?