The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Https://www.energyvoice.com/oilandgas/north-sea/542986/north-sea-licences-relinquished/ interesting context for the current state of the North Sea, 57% of licences so far from the 32nd round handed back to the NSTA, appears JOG got lucky with theirs from the 32nd round, I shudder to think where we'd be if they still only had Verbier. I still haven't seen anything to say if they applied for more licences under the 33rd round, and if not, what they plan to do with all their personnel now operatorship of the GBA has passed to Neo.
Thanks for that marineclark, interesting watching the CHAR shareprice reaction this morning after a transformative deal, albeit not exactly the same scenario with the muted response JOGs shareprice has had to its own deals over the last few weeks it feels to me like JOG won't be fully valued until dividends start flowing in from 2027. I suppose it comes down to 'a bird in the hand is worth two in the bush' and at the moment both the birds and the bush are still look quite a way off in the distance to me. I'll continue to hold in the hope they're taken over long before first dividends.
The SP behaviour is broadly in line with JOG.L, two farmout deals with full carry and FPSO deal signed and the SP there has hardly budged on that one, and that's from an oilco with a market cap half of CHAR. It also has been ramped to the moon in the IC and Malcy with SP predictions many mutiples of where it is currently, there would appear to be limited interest at the moment for small cap oilcos even on transformative news.
Https://www.energyvoice.com/oilandgas/north-sea/rigs-vessels/542425/dana-warned-by-hse-over-training-and-supervision-at-western-isles/ according to this FEED work started earlier this year https://www.energyvoice.com/oilandgas/north-sea/rigs-vessels/542028/pivotal-work-on-western-isles-fpso-is-happy-landing-for-apollo/ with these guys recently contracted to help deliver it. First oil '26 and presumably first dividends for JOG at some point in '27 and with so many things that could happen with government and tax between now and then a takeover in the next few months would be perfect as far as I'm concerned. Otherwise, I know they've said they seconded some of the team over to Neo but unless they have a new licence application or takeover of their own in the works I'm not sure what all the team and offices are for now there's two experienced oilcos involved, both with larger stakes than Jog's.
JOG would make sense for Harbour if acquisitions are tax deductible, I've never really understood how acquisitions can be as otherwise Harbour could acquire JOG essentially for free, although there have been people on here in the past who've stated with a lot of confidence acquisitions are deductible as part of the investment incentive
I was hoping to book some profits on 2nd farm out news but looks like I'll need to choose a different share to move a few on now. With FEED seemingly a forgone conclusion since the NSTA extended the licences the milestones left to trigger a re-rate are looking few and far between, assuming Neo don't try some private equity clever accounting jiggery pokery to delay reporting profits and paying a first dividend which I guess will be mid-'27 at the earliest, that £5 takeover is starting to look more and more appealing. Sorry for the dreary post but beyond dissapointed with the market reaction to recent news. Market value can sometimes be seen as only what someone else is prepared to pay and there just doesn't seem to be many out there at the moment who are happy to sit and wait what in the scheme of it isn't that long. I'm starting to understand why UK based companies are increasingly looking to the US to list their shares. Given the share are 'tightly held' it feels almost impossible a few wouldn't have bought in recently to propel the price upwards, yet here we are.
The SP is still bobbing around less than I originally bought in around 5 years ago, if it doesn't break £3 by this time next week my faith in investing and fundamentals over trading will be severely shaken. The news over the past week should have made transparent the worth of JOG and crystallised the value, we've had much bigger gains off far more sketchy news. It seems sentiment and short termism are the only things that matter when it comes to SP these days rather than numbers and facts. Given what has put a rocket up in the past there doesn't seem any logic for it to have not to have broken a minimum £4+ today based on previous reactions to less impactful news. I was made up this morning with the RNS but who knows now what milestone needs to be hit for the SP to reflect the inherent value.
They have a few roles currently advertised with an application closing date of 30th Oct https://www.neweuropeanoffshore.com/careers/
It could also be coincidence but the Western Isles was originally not meant to return until 2024 https://www.offshore-mag.com/production/article/14296946/north-sea-western-isles-production-set-to-cease-next-year , this could have been brought forward to meet the Buchan timeliness. As much as I'd love Benitz to provide a running commentary I'm currently as relaxed as I have been holding these, although I'd appreciate a 2nd farm-out and fpso agreement earlier in Q4 than the usual cutting it down to the last moment. Not sure if Neo being a private company will have any bearing on how much they're prepared to go public with and regularity of disclosures with only communicating what they absolutely have to.
I personally don't think it would rule it out, it could just be a precautionary submission in the event it isn't sold on, I've read FPSO decommissioning can taken 3 years but can't see a refurbishment being anything like that, especially given it was inly in use from 2017 accoridng to this so after refurbishment it should have plenty of life left in it https://www.nsenergybusiness.com/projects/western-isles-fpso-decommissioning-project/#
I'm leaning towards they did apply for a new licence(s) in the 33rd round otherwise they may as well have TUPE'd the individuals Neo wanted/needed across to the project team rather than send them over as secondees, suggesting to me there is a need for them to return to JOG at some point, I could on the other hand be jumping to a conclusion there and reading too much into that
"The formal transfer of operatorship to NEO was approved by the NSTA in July 2023. In tandem, NEO has established the necessary project management team" and with JOG seconding people into the Neo team that to me suggests Neo are now running the show and JOG are more or less an equity partner on the expectation they will farm out further and become a minority holder, if they were more than an equity partner then why the need to send secondees to Neo, albeit I appreciate Dick did find that idea highly amusing last time I suggested it could be the case, but if I'm correct being a tad over simplistic just leaves Benitz to focus onto he 2nd farm out who could well be waiting for Neo to agree the fpso first hence the radio silence. If they are merely an equity partner now however, then it would be welcome to me to hear they applied for a new licence in the 33rd round so there's a new focus while they wait for the milestone payments then dividends. In the meantime we have the usual pump and dump following the ST article and looking like we'll be back down to 170 soon enough.
Exert aken from the article Greener provided; Dana, the firm that owns 77% of the vessel, says: “The FPSO is not required to perform any further decommissioning related activities on the subsea infrastructure after completion of the decommissioning activities.”
Dana says: “The FPSO is suitable for reuse and is not needed for decommissioning activities within the field so it will be removed from station.”
There may be a reuse option for the FPSO, which has a 20-year design life.
Dana reports: “The FPSO will be disconnected from its mooring system and risers.
“Following disconnection, the FPSO will be towed to shore for potential reuse, subject to evaluation of reuse options.
Dana explains that if the Wester Isles vessel is not reused it “will be recycled or disposed of, whether in the UK or elsewhere” in order to comply with UK law “or any other jurisdiction in which the FPSO vessel is to be recycled or disposed of.”
However, if a reuse option is identified, the UK regulator OPRED “will be advised as part of the post-decommissioning approval process reporting regime,” the vessel operator says.
Dana adds: “Should no reuse option be identified OPRED will be advised on the fate of the vessel.”
I'm obviously missing something but why is the price of oil right now important? Isn't the 2026 futures price when hopefully Buchan will actually be producing more relevant which at the moment is around only $75 according to this https://www.ice.com/products/219/Brent-Crude-Futures/data?marketId=5430848&span=3 plus coupled with some likely strong taxation headwinds in '26 I'm struggling to muster the enthusiasm for when this will break out that some others clearly have, hopefully I'm just missing a trick here, I still agree the price should be much higher and continue to hold but I also have some sympathy for those who are selling
"NEO has established the necessary project management team, including JOG secondees, and recently finalised the plan and contracting strategy to move the Buchan redevelopment into the Front End Engineering and Design" with Neo now running the Buchan show and even some JOG employees seconded out to them there doesn't seem much left for Benitz to do other than secure the 2nd farm out, hopefully means it will happen sooner rather than later, not holding my breath it will do much for the SP though, my prefence is increasingly they just sell up, if the 2nd farm out doesn't trigger a re-rate we could be waiting another 3 years and at the mercy of an even more hostile tax environment otherwise.
Https://www.telegraph.co.uk/business/2023/09/06/north-sea-oil-production-falls-at-fastest-pace-in-a-decade/ there seems to be too much downward pressure and negative sentiment against the industry at the moment, even cigarette companies look to get an easier ride than oil companies these days. I personally can't see Neo shelling out millions on an FPSO giving a sustained boost, and if the first farm out including the clause to pick up the extra share if JOG can't find anyone else hasn't brought the rerate we want I'm growing increasingly pessimistic a 2nd fsrm out will bring much different. Looks to me like the only things that could stick a rocket up the SP in the next 12 minths are materially positive tax changes (seems unlikely to me) or they sell the whole company (increasingly my prefrence) or we hang in for first oil. We can post Zeus and ST articles and rationale on why it's grossly undervalued until the cows come home but they never seem to make a bit of difference to the only thing that really matters, the SP
Looks like Neo have a quite a but on at the moment https://aberdeenbusinessnews.co.uk/green-light-for-redevelopment-of-north-sea-field/ https://www.upstreamonline.com/field-development/uk-regulator-endorses-environment-plan-for-north-sea-oil-project/2-1-1507797 if nothing else a positive sign they have recent experience of getting redevelopment plans approved
Https://www.offshore-technology.com/news/shell-north-sea-assets-sale/ not directly related to JOG but does give some idea who are currently looking to expand their NS portfolios through acquisition