Member Info for benguelaboy

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.