Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Another positive RNS with dividends being a key factor in long term returns for shareholders in UJO.
Given the growth trajectory in place should we get developments on the 2 additional wells and gas export facilities moving ASAP the timings are lining up quite nicely (I would like to think even North Lincolnshire council would have a heightened awareness of energy security right now with geopolitical tensions at multi-year highs).
An interesting observation which I'm sure shareholders would have realized in the past week or so, is the diversification benefits of UJO / energy stocks more widely to portfolios in an environment where investors concern for inflation persistence / the effects of higher rates for longer. FTSE 100 over past week down 2%, SPX500 down 2%, UJO up 6%. This is another supportive catalyst for flows from a retail investor environment in the US and UK where the current market cap of the firm / balance sheet composition make it very much a stock specific story, given the strong pipeline of growth ahead as outlined above + US developments, things are looking very interesting for the next few months IMO.
Well done to management on execution and shareholders for the patience.
Pretty exciting week in store for shareholders that deserve it for their patience, the long standers on this page will know as I have mentioned in previous notes alongside other profiles expecting a re-rate on AIM listed shares is a pipedream due to the lack of institutional flow / demand from retail participants.
My central thesis for my inital investment here was centred around the positive fundamentals for the business allowing for share buybacks and dividends to support the share price over time eventually leading to a takeover.
HOWEVER with this move to US listing alongside the positive RNS / strong oil price it seems we have a perfect storm of positive catalysts to really get us moving (as already demonstrated in the past week),
Key point to note here, the restricted float of the company creates an inelasticity meaning that any large flow demand will likely lead to relatively significant mark ups in the share price fast, eyes on US open for clues but with the positive drivers for the firm alongside the factors we already know (strong balance sheet / FCF) if dividends and buybacks are announced this could be a 5x fast.
My preferred metric for valuation would be EV/NOPAT - Enterprise Value / Net Operating Profit After Tax, we are likely to see significant increase in NOPAT forecast once clarity is given on Oklahoma / West Newton + speed of this US drill resets the expectation on other projects the company can invest in and see returns on fast, all whilst the current market cap is around £20 million, always important to be realistic and manage risk within portfolios however I have added further this AM (weighted average price paid @ 18p), good luck to all and well done on the team on the US developments.
Gets a lot of stick but prices speak for themselves at this point lol
Heid and CT to get banned off this board surely, just bonkers content at this point
@Hydras keen to hear any of your insight on falling production at Wressle, pls elaborate.
As for SP DB shouldn't be surprised given lack of dividend. lets hope the US cash flows / sustained higher brent prices can aid in the respect. adding a little more today as I continue to see a private buy out as the only feasible end game here.
@Christine, whilst I admire and share your optimism your perspective is flawed in the fact that you are referring to a dividend of 0.3p per share + 0.8 special maiden (dividend yield of 3%) which would need to be improved for shareholders to benefit. For reference the majors are doing 5% so that should be seen as a minimum given the significant investment required on their operations compared to UJO.
From there the idea of just stating 'sp should go to 30 / 50 / 70' needs to have an actual basis / trigger oppose to just stating numbers and calculating what return that would represent. Again I love the optimism but as shareholders I am more of the opinion that we need to be realistic with what is actually going to be in our best interest oppose to making each other feel better with wishful thinking.
As I have mentioned on previous posts, for the people who read this board for other peoples stock analysis / views and not for bickering and childish insults.
The buck on UJO starts and stops with the dividend. That is the ONLY way (alongside share buybacks) the SP / Investors will see returns from here, previous posts outline the math, all else on directors dealing / UK council approval are all non starters / despite the surprising airtime it gets on this board (as longer term shareholders are all too aware off), Wressle has definitely turned the companies path from a FCF perspective, it is now on the leadership to choose whether shareholders will be rewarded or not.
SP is solely a function of supply and demand, expecting any sort of premium on earnings from a smid cap oil & gas company is a pipedream, however given the levels of FCF the potential income growth could drive sustainable returns for shareholders lets say for the sake of example reaching a 8-10% dividend yield and focusing on this oppose to investing in more projects that have been years in the making (especially applicable given the likelyhood of an upcoming labour government)
All views welcome on the probability of this actually happening, have a good eve all !
@carrot13 not to talk down on another company I haven't done full research on but the comparison UKOG is hardly apples with apples, continued negative cash flow from operations, significant investment building out hydrogen projects for renewable (good luck with that), not to say everything is rosy but key to be clear when comparing scenarios
Great to see another development announced in a jurisdiction that can actually deliver not held by bureaucracy, whilst we are all aware of the inefficiencies presented in these markets due to a lack of institutional interest, it is important to note that this doesn’t have to change for positive returns if the company is happy to deliver the value, acting in the interest we are seeing as shareholders. For e.g. If you want a 15% annualized return, you can get it by
1. Buying a company at 10x p/e and a 5% dividend yield and hoping investors bid you to 11x p/e
2. Buying a company at 5x p/e with a combined dividend and buyback yield of 20% and expecting other investors to sell it down to a 4.75x p/e
Clearly in the UJO case the latter is the more feasible scenario and recent RNS are great news due to the cash generative and relatively short-term nature of the investments as it potentially puts the leadership in a scenario to be able to deliver on dividends and buybacks at a higher level than previously seen given the now strong balance sheet of the firm. This is the central thesis to my current position (weighted average price of 18p) let’s hope the leadership team are quick to signal an attitude of openness to increase dividend and buyback programs to reward shareholders and accept that failing to do so and expecting the market to ‘re-rate’ small oil and gas firms is a pipe dream that’s never going to hold true.
Hang on in there guys, we are one step closer
Recently, initiated a relatively small position in UJO and thought I would gather some thoughts on actual catalysts to move the shares. As demonstrated by recent announcements its clear AIM and wider public markets are inefficient with regards to small cap oil name valuations (i.e. there is no institutional flow/demand).
Without going into the energy debate too deeply as I am sure everybody here is aware (it is scientifically proven that net zero targets are virtually impossible to achieve and declining capex into oil and gas will lead to supply/demand imbalances, not only leading to structurally higher energy prices but a need for more production over the medium term).
The conclusion becomes it is just a matter of time before any well-run operation (as UJO seems to be) will be taken into private ownership. Even if there is a change on gov policy (where we are seeing backtracking with every move) / development on West Newton I still see the institutional flow demand as a key block on any sustainable drive higher in the share price.
Is there anything I am missing that has specifically stopped this so far / are current shareholders just looking at this as a leveraged play on oil price. Keen to hear thoughts as always.