Member Info for Andy144

From the start of the month HUR hur should have been pumping 20kbopd. Oil price c$55p/b. Op.ex (from their last presentation report) is $25p/b. Profit per day $600k.

Free cash in bank c$170m
Market Cap £350m. Therefore valuation of assets £220m. ($1.3 / £)
Assets producing free cash of £460k a day.
Assuming 85% efficiency, it will take less than 2 years of production to make free cash = current market cap, all else being equal. The Bonds have not been considered in the above.

How about a nice special dividend? - 2p would only be £40m of their cash pile or about 1 1/2 months of revenue at the increased output. In the end, investing boils down to get money back as income.

=definately

The clarification that this is fefinately perched water rather than them simply being confident that it is. There is quite a big difference.

I suspect they are simply trying to discover what is actually happening and this can take time. I would expect some comment before their next scheduled news flow - in March? Water cuts can change rapidly and any comment will need careful data gathering.
I am certainly looking to pick up some more shares when things stabalize.

I would rate them now as a hold. Without clarification as to the issues at hand, we cannot really make any meaningful judgement. The story changes and investors must change with it. My personal concern is that the RNS water cut % as recently described, does not tally with the OGA figures which appear to be considerably higher.

Regards

Although I am positive on HUR, if you look at the OGA output chart, they were producing 2000BOE water per day (in October - and rising) on an oil production of about 14kBOE/day. Assuming this is all coming from the one well thats quite a percentage water cut. From the way the share is going, it looks like some think one of the wells is not going to last. However, from recent RNS the other well is producing no water and this should be a comfort. From the OGA chart the water output is rising quite sharply. This will need to be addressed shortly.

Well it's a london listed company with liquidity issues......BURF has 300m in the bank, only 25% of the sovereign wealth fund used and 63% of the recent finance fund used. I don't think that equals liquidity issues.

Revenue for '18 was $289m at an average daily exit rate of 41k BOE. (page 3). The daily exit rate for Dec '18 was 70K BOE. The presentation seems to suggest this is now the new daily rate. Assuming realised prices remains the same @ $21.71 then that's a revenue of $550m, getting on for twice the 2018 figure.

This is perfect scenario of course and it will be up and down but there will be further efficiencies and cost cutting to help.

Annualised dividend is 13.6c (page 3 again) giving a divi at todays price of just under 10%

Any thoughts as to my figures?

Regards, Andy

As I mentioned in my first post today, I rarely follow BB's but I thought I would highlight an interesting and perhaps important point from todays presentation.

When I first ready the precis results prior to the opening bell I was convinced of a good rise. I have been scratching my head as to the drop and it might well be found on page 45 of the presentation. After an hour scanning the results the interesting point is the Bargain Purchase in the accounts of c$173m. This has been added to the income statement as per accountng rules but it is not revenue. So the earnings per share are not entirely true and the bargain purchase should really be stripped out to get a proper revenue based EPS. If you do this you get a much lower EPS and the fact that they have to pay tax on the BP does not help.
I assume this will not appear on next years accounts. A final point is that they only seem to have $1m in cash floating about.

I'm not knocking the company. it's one of my favorites and I picked up more today. Just thought this was an interesting point.

regards, Andy

"I agree in the long run that this could be a winner maybe, just overvalued atm IMO. Can someone answer as to why boe realised price is only $21.71?"

The important bit is is BOE...The E is for equivolent. When gas is measured against oil in this way it is to do with the thermal energy equivolent not the price equivolent. Have a google and it will explain it much better than I can. DGOC is mainly a gas producer and they use BOE rather than just BO. You cannot use the price of oil to work out their income.

As an aside, Very good oil co's are usually valued at about 5 x earnings as a very basic rule of thumb. DGOC is slightly different as they don't drill and are mainly gas. I would put DGO in the "very good" catagory but are held back by the slightly de-com of wells. Presentation at 9am today.

I have owned DGO since a month after they floated. I rarely post or respond on boards.

regards. Andy