Stephan Bernstein, CEO of GreenRoc, details the PFS results for the new graphite processing plant. Watch the video here.
No show stoppers contained within these half-year results, just much of the same.
It's sad that UOG could run out of cash just before the remaining $ 1.2m is repaid before years end as you can see from the cash movements section, there cash flows would of been positive if the BP debt was paid off now.
Opening Cash at 1 January 2023
$1,345
Net cash inflow from operations
$3,463
Movements in working capital
$909
Exploration Expenditure
$(492)
Development Expenditure
$(2,992)
Repayment of Debt facility
$(1,158)
Exchange movements and other
$(521)
Closing Cash at 30 June 2023
$554
ASD-S-1X Exploration well to be drilled starting in October a plus point.
Hello Saintly,
I would say this is a good opportunity given the current conditions. Main thing to focus on is how many times does the operating profits cover interest cost with the first half profits of £3.5m covering interest costs of £0.71m almost five times.
The £41m loan facility with Canada Life Investments is repayable in October 2025 and has a low 3.19% weighted average interest rate. I would expect this to be refinanced but the big question is at what rate, maybe 5%?
The three interim and final dividends cost £4.9m.
There are a lot of rent reviews due later this year so hopefully good increases to be had. It is key that the dividend is maintained at this level at least and doesn’t go backwards, therefore I think rent increases from this point should offset a greater interest cost when the time comes to refinance the debt facility.
Not bad to buy a share which yields 10% at the current price and has an opportunity to increase. There is also a margin of safety built into the current share price, as one the share trades at a large discount to NAV and two the yield of 10% has a buffer of 5.5% against a 10-year Uk gilt at 4.5%.
Remember the price action of the stock tells you very little and has nothing to do with value.
Say in 5 years this share could be yielding 15% return on your money invested. Not bad in an Isa and it’s a tangible return as its in cash.
Interesting point there TheDogFather.
The update from Jesmond Capital Ltd on 30 May 2023 states the following:
• Jesmond Capital to acquire Quattro Energy limited with a extend date for completion of the transaction to September 15, 2023.
• Quattro has entered into an asset purchase agreement to acquire P2519 licence, which agreement has been extended to July 31, 2023. This is to provide sufficient time to meet the funding requirement under that asset purchase agreement.
Looking more closely, it doesn’t appear Quattro Energy acquiring the P2519 licence relies on Jesmond Capital acquiring Quattro Energy otherwise surely the completion dates for both the above should be the other way around.
North Sea Licence P2519 containing the Maria discovery
Due 31July, 2023
It appears back in February Quattro Energy Limited raised CAD$6m which is more than initial instalment of CAD$4m or £2,450,000m. This information is on Crunchbase.
There is no information/sign of a current round of fund raising going on with the company. There is also Jesmond Capital Ltd acquiring Quattro Energy Limited set to complete by 15th September 2023.
Anyone got any thoughts?
Jonno,
I agree, price sensitive information such as any offers which have been received for Jamaica should be passed onto shareholders of the company.
If you look at the Energy Advisors Group website, offers are still open at the moment for Jamaica, it appears. This may be a positive or a negative, but most of the projects on their website advertised are sold.
Very interesting few months ahead.
1. Long stop date extension for the sale of the Maria Discovery due 17/07/2023.
2. Update on the remaining drill plans in Egypt, most likely to be released last week of July as part of the Half year trading and operations update 2023.
3. There is the Jamaica farm out-process. Indicative offers due Q2 2023.
4. Potential share buy-back programme. Subject to the outcome of note 1.
Capital Allocation:
I see many comments on this chat forum regarding capital allocation decisions.
1. Buying a producing asset.
This may seem like a better decision than the 200mln share Buybacks announced due to the Company's profits being within the North Sea (UK). As we know, the company stated due to the wind-fall tax profits were basically wiped out. However, with the current oil price, it may not be the best time to purchase a producing asset due to the likelihood of an inflated purchase price. I think the best way around this is to buy out a cheap business on the market, which share price has also sold off too far.
2. Share Buybacks.
Share Buybacks should only be used when the company think their shares are lower than the intrinsic value of the business.
The share Buybacks were announced at a much higher price than today's. Therefore, it should make even more sense to buy back shares at these prices.
200mln share Buybacks
£3.20 = 62,500,000
£2.51 = 80,000,000
Share Buybacks at lower prices means shareholders' interest within the company increases without spending any money.
Jono44,
No great insights other than a few comments:
Moving into the H2 2022 the oil price has averaged around $90 which is lower than the $105.5 reported in H1 2022.
Production levels Full year
"The Company is revising its current 2022 full year production guidance for the Abu Sennan licence to 1,300-1,325 boepd."
Full year Production levels of 1,300 Boepd which was stated on 24th November 2022 so should be correct.
22 November 2022 Production level was at 1027 Boepd so I'll round down and say Production levels at January 1st 2023 are 1,000 Boepd.
Should have about $1.4m left to pay on the BP oil swap financing arrangement.
Lower production levels and oil price. Higher Capex H2 2022 $4.4m vs $3.4m H1 2022. These three items above will obviously weight heavy on the Cash balance/profit.
Would also be careful with working capital movement in and out of the business. This is why I don't acknowledge the BOD stating the cash balance was $4.7m on 23/9/2022. Do you think the BOD would have added a note in the 1H 2022 Financial summary if the Cash balance had of been lower than the $3.8m reported at H1 2022 end period.
For what it's worth the latest research note has a ending cash balance for 2022 of $6m with $5m of it being the divestment money.
It's cheaper to buy out the company than to invest in a percentage interest of Jamaica with the current market cap being £7m.
I will review my holding within the company after the January update.
The starting cash balance for H1 2022 was only $397,308. It is stated within the consolidated statement of cash flows. "Year ended 31 December 2021 - cash and cash equivalents at end of period/year $397,308.
Cash from disposal of business $3,887,275m
cash and cash equivalents at end of period/year $397,308.
cash and cash equivalents at end of period/year $3,806,121m
The business lost ($478,462) off its cash balance.
I did also say about break even give or take.
Hi Jono44,
I did only state that Egypt was funding the business up until H1 2022 which was end of June. Production levels were at 1552.
Half-year results statement "First half (1H) 2022 Group working interest production averaged 1,552 boepd net (1,290 bopd oil and 262 boepd gas). Group working interest production to 31 August averaged 1,478 boepd net".
Monday 9/12/2019
BP facility
BP has agreed to provide the Company with a pre-payment financing structure of up to US$8 million, transacted under a 2002 ISDA Master Agreement. Pursuant to the terms of the BP facility, the Company will make repayments over 30 calendar months based upon dated Brent market prices for an agreed volume, capped at an agreed level. The financing structure will generate an upfront payment to the Company that will be used to fund part of the Rockhopper Acquisition and in addition, will hedge a portion of the Company's production during the term of the pre-payment while allowing the Company to benefit from market prices above the capped price for the pre-payment volume. The Company intends to draw down the full amount under the BP facility (US$8 million), on or prior to Completion, to fund the Rockhopper Acquisition.
30/06/2020
Cash flows from financing activities
Proceeds on issue of swap financing arrangement 7,760,288
Repayments on swap financing arrangement (789,233)
Full Year 2021 Report
Cash flows from financing activities
Repayments on oil swap financing arrangement 2021 (3,518,359) 2020 (1,666,116)
$7,760,288M - ($ 3,518,359M + $1,666,116M) = $2,575,813 left at Dec 2021 year end
27/10/2022 Half year results
Cash flows from financing activities $ 710,824
Repayment to BP at 30/06/2022 $1,864,989m
Cash
From 27/09/2022 Half Year Report
Group Cash balance as at 23/9/2022 of $4.7m
Capital Expenditure
The Group engages in an active work programme across our portfolio of assets with forecast cash capital expenditure for the full year 2022 of $7.7m of which $3.4m was incurred in 1H 2022, including $2.9m on the drilling programme in Egypt and workover activity in addition to $0.5m on Jamaica and UK assets.
$3.4m paid in H1 so $4.3m to pay in H2.
CURRENT ASSETS
$10,712,613m
CURRENT LIABILITIES
$6,595,515m
$10,712,613m-$6,595,515m=$4,117,098m
$4,117,098m-Cash $3,806,121 = $310,977
Net cash from operating activities $4,927,589m
Cash from disposal of business $3,887,275m
Purchase of property, plant & equipment $(2,138,247)
Payments for intangible exploration assets $(1,318,314)
Net cash used in investing activities without disposal of business = $1,471,028m
Repayments on swap financing arrangement $(710,824)
Payments on oil price derivatives $(922,286)
Capital payments on lease $(46,195)
Interest paid on lease $(3,888)
Net cash used in financing activities $(1,683,193)
Net change in cash $1,471,028m-$(1,683,193) = (-$212,165)
Cash and cash equivalents at beginning of period / year $397,308
Effects of exchange rate changes $(266,297)
Cash balance without disposal of business (-$81,154)
My point being from the above is that Egypt is about break even in terms of funding the business up until H1 2022. FY2022 trading & operations update & 2023 guidance should be due before the months end, so best for one to wai
Last comments regarding production from BOD:
2022 production guidance
"Average production for the first quarter of 2022 was 1,567 boped net, well within the guided range of 1,500-1,650 boepd for H1. The H1 production guidance range of 1,500-1,650 boepd has now been extended to the full-year 2022. A prudent approach has been taken to provide this full-year guidance, which includes production from the current wells declined in line with historic trends, production from Al Jahraa-14 commencing in Q3 and production from ASH-5 commencing in Q4. No production additions have been included for the two exploration wells that are planned for 2022."
Anyone got any thoughts on the egypt fiscal terms . Full years revenue doesn't work out using the Below?
Contractor’s Effective Take 42.53%
§ Contractors (joint venture partners) take is 42.53% of
production/revenue
§ EGPC take is 57.47% of production/revenue
§ United’s equity interest is 22% in the licence
§ United does not pay any corporation tax in UK or Egypt on its profits
due to the PSC terms and double tax treaty.
Illustrated Example;
§ 10,000 bopd gross oil production for one month (300,000 bbls) would
mean working interest (22%) production of 2,200 bopd (66,000 bbls)
for United
§ Revenue at $70/bbl (post $2 discount to Brent) for United for this
month would be 66,000*42.53%*$70/bbl of $1.96m and there is no
taxation on this revenue
§ The same calculation applies to gas revenues
The financial update from April 2020 was " The Company's pre-payment facility with BP is based on a floor price of $60/bbl for c.6,600 bbls of crude oil production per month for the next thirty months." This has been extended from September 2022 until December 2023. Hope this helps.