Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
I suspect the buyer of 121 million shares has not fully appreciated the impact the the fundraising to come . They are exposing themselves to two risks;
1 complete wipe out if the resolution fail and UKOG are advised to call in administrators
2 massive dilution by the creation of huge numbers of new shares thereafter to satisfy UKOG's working capital commitments.
UKOG have to get the accounts signed off and demonstrate they have funding for next 12 months.
UKOG need to raise a lot of cash.
With just Admin costs last reported at £2.7m p.a ; you can see an awful lot of dilution is to come.
Good grief talk about reckless gambling .
I am expecting those shares value to plumet
I have erred on the optimistic side a bit too much NibblePibbley
I need to correct an earlier post of mine where I listed the incredible number of fundraises since 2017. Its a little worse than I previously stated as I missed out that last 750k placing.
Here are just the last three raises which its worth highlighting the damage discount placings have on the shares value;
12.9.22 £3m Placing
RNS extract "... at a price of 0.0875 pence per share (the "Placing Price").
"The Placing Price represents a discount of approximately 20.3 per cent to the Closing Price of 0.1098 pence per Ordinary Share on 9 September 2022"
28.06.2023 £3m loan
12.01.2024 0.75m placing
" The Placing Price represents a discount of 20 per cent to the Closing Price of 0.0250 pence per Ordinary Share on 11 January 2024"
So I now make that £61,137,554 since 2017
Just look at how the share has slumped since the placings
Lets say its 7 years; so that's an average of £8.7 million having to be injected every year.
The company loses several million every year; its hopeless imo
Consolidation alone will not impact a shareholders £70 worth of shares. If no new shares were to be issued its possible he could still get £70 back (IF there were no dealing costs ,,lol)
But we know UKOG is in desperate need of more cash
Its the creation of new shares thereafter that will dilute and reduce the value of that £70 shareholding to, in my possible scenario; maybe circa £24.
"...the effect on the market cap should be zero."
The great pain will come when UKOG has to issue a massive number of new shares just to remain a going concern.
Not sure that some have fully understood what's coming. How many shares will be issued by a company with a market cap now of circa £2 MILLION to raise, maybe £4 MILLION?
I have previously tried to spell this out. It will be devastating .
I think there are some who believe that if UKOG is successful in a fund raise then the share price would rise, probably on relief that administration has been dodged for the time being.
I posted an example before; a £4m fundraise which might be sufficient to provide annual admin costs of circa £3m and provide for another "roll of the dice" (Sandersons words") , a single Turkish drill.
I demonstrated that the fund raise in my specific example might see the number of shares grow ; from 33billion to circa 113 billion.
It follows that an existing shareholder would need the share to dramatically increase for their existing equity to have their present sale potential return.
If you have Y shares at say 0.0062 p and UKOG increases the share number; say 3 fold to 3Y; your shares VALUE has been cut ; they will yield one third of what they could have before the new dilution.
£100 worth of shares TODAY might be worth £33 after a confetti based fund raise.
The rampers will say that after UKOG is funded the share price will rise.
My argument is ; just to stand still; UKOG's share price may have to multiply by 3 just for your investment value to just stand still at todays value.
Why would anyone want to buy this share?
I think there are some who believe that if UKOG is successful in a fund raise then the share price would rise, probably on relief that administration has been dodged for the time being.
I posted an example before; a £4m fundraise which might be sufficient to provide annual admin costs of circa £3m and provide for another "roll of the dice" (Sandersons words") , a single Turkish drill.
I demonstrated that the fund raise in my specific example might see the number of shares grow ; from 33billion to circa 113 billion.
It follows that an existing shareholder would need the share to dramtically increase for their existing equity to have their present sale potential return.
If you have Y shares at say 0.0062 p and UKOG increases the share number; say 3 fold to 3Y; your shares VALUE has been cut ; they will yield one third of what they could have before the new dilution.
£100 worth of shares TODAY might be worth £33 after a confetti based fund raise.
The rampers will say that after UKOG is refunded the share price will rise.
My argument is ; just to stand still; UKOG's share price may have to multiply by 3 just for your investment value to just stand still at todays value.
Why would anyone want to buy this share?
I can not understand the logic behind anyone buying UKOG's shares NOW.
Why risk that the resolutions are NOT passed and it follows that UKOG is no longer a going concern and they have to call in administrators?
Why risk losing everything?
Why not wait until the company can raise desperately needed funds by the creation of enormous numbers of new shares.?
I actually think UKOG fixed the votes in favour by the 3 billion issue to trustees so the risk may not be great; but until the votes are counted a grave risk remains.
I based my calculations from the 22nd feb 2024 RNS numbers;
"Admission is expected to take place at 8.00 a.m. on or around 27 February 2024."
"Following Admission, the total voting rights in the Company will be 32,539,926,104 ordinary shares and Shareholders may use this figure as the denominator by which they are required to notify their interest in, or change to their interest in, the Company under the FCA's Disclosure, Guidance and Transparency Rules."
I earlier posted that I thought £1m STERLING would be well enough for another Turkish drill. On reflection I think I was a little bit too optimistic;
"AME's cost estimates for a 1500 m depth well in the Licence are around $3 million gross."
"To earn its 50% interest in the Licence, the Company has agreed to fund 100% of the first of 5 commitment wells in the Licence's 5-year exploration term, together with a small 2D seismic survey with an expected cost of $1-$1.5 million. UKOG's net expenditure for the one well plus seismic programme is capped at USD$5 million maximum expenditure. Thereafter, the Company will fund its 50% interest share expected to be c. $1.5 million per well."
At todays exchange rate UKOG's share maybe ; £1,185,750.00
Penguins wrote ;
"Certainly after they commissioned a Kimmeridge report in June 2019 they failed to deepen HH-2 through the Kimmeridge for more data, they didn't dual complete or sidetrack HH-1 for the Kimmeridge."
Everyone has to forget about the Kimmeridge fantasy which UKOG blew a fortune on.
From the YE 2019 annual results we learnt that Sanderson's BB 'roll of the dice' cost dearly;
"There was also one exceptional charge. This was an exploration and evaluation write-off of GBP11.56 million. This was primarily comprised of a GBP9.25 million write-off of the BB-1 well and the BB-1z test. The BB-1 well was impaired, as it was determined that as a result of wellbore damage we would be unable to be used for production. The BB-1z test was impaired because, although oil flowed from the well it was determined that it was unlikely to be commercial. The larger majority of the remaining exploration write off (GBP1.21 million) related to Holmwood where the operator abandoned the site."
"..it was determined that it was unlikely to be commercial."
Remember that UKOG themselves , in 2019 , declared the HH Kimmeridge flow and pressure data , 'sub commercial'. As published on Page 22 of THEIR own Loxley planning submission dated 19th April 2019;
"Flow tests and pressure data from the Broadford Bridge and Horse Hill Wells Sites have been sub-commercial"
The kimmeridge dream is long over.
There are, since the 3 billion shares convienently issued to the trust, 32,539,926,104 shares in issue.
At 0.0062p per share the market cap would be £2.017m
In my previous post example I suggested UKOG might raise £4m (after consolidation); £3m to cover 12 months admin and £1m to well cover another Turkish drill.
For simplicity and a better understanding of the carnage to come lets just assume that UKOG were not consolidating and had the right to issue shares NOW to raise cash.
My more accurate calculations suggests that another 64,516,290,300 would have to be issued IF the price was ).0062p.
If the death spiral price was at the usual 20% discount then share s would be issued at 0.00496p
That means to raise £4m would require issue of 80,645,162,900 new shares
Total shares then in issue would be 113,186,089,000. 113 Billion shares
Consolidation will not remove the pain to come
"are you predicting no change in the mcap even tho the company just raised £4m??"
The market cap depends on the share price; it depends on the appetite to buy the shares. Will there be an appetite to buy UKOG shares just because they have managed to drag the show along for another year?
Of the circa £4 m I used as an example of the raise; £3m will be just for admin which does not add value BUT does ensure Sanderson gets his enormous pay for another year.
"downward pressure should be relieved."
I think UKOG have fixed the GM meeting with the 3 Billion share issue which they must have calculated as the number of votes they needed to win.
Most think Supreme court will not go against UKOG
The BIG problem is the amount of cash UKOG needs to raise. They need circa £3m for the next 12 months admin alone. To finance operations like another 5th rate Turkish drill; UKOG will need much more on top.
I reckon if UKOG had the authority to issue shares with a 20% discount; never mind consolidation, say they had authority already; they would have to issue 75 Billion more shares. Do the maths ; 33 billion shares are now priced around 0.0065 ; market cap now circa £1.95m. To raise circa £4m they will have to issue at least 75 Billion more shares.
It does depend also on just how much cash UKOG has now, BUT, we do know they need cash "in the near future" for working capital.
Its obvious that the value of each shareholders equity is going to be decimated.
Market cap is now sub £2million. The company will need to raise circa £3m to cover its basic admin before they think of funding any new drills.
Those numbers begin to give everyone a clue to the scale of fundraising to come and the number of new shares required.
It shows an awful direction of travel.
"Can they afford clean up and restoration of BB/HH?"
More pressing is can they get the accounts signed off in near future with a declaration that UKOG is going concern?
Can they demonstrate they have sufficient capital for next 12 months?
Basic admin , including paying wages , is a lot .
Accounts for year ending 30.09.2022
"Administration expenses during the year amounted to £2.7 million (2021: £2.1 million). An Operating loss for the year of £5.4 million was recorded (2021: £3.8 million). Finance costs amounted to £0.2 million (2021: £0.1 million), relating primarily to unwinding of discounts on decommissioning provisions."
If only Sanderson had been more focussed and not chasing so many expensive project dreams.
I posted this on ADVFN in 2022
"Can someone explain this to me please.
UKOG spent a fortune on Lawyers to get planning permission for a Loxley gas "appraisal" drill. Sanderson had bigged up Loxley's potential for ages.
Why is he NOW reluctant to drill it alone? Why is he not prepared to put money where his mouth WAS. The excuses put forward are "uncertainties" and better use of UKOG's cash resources elsewhere.
Elsewhere like.. hydrogen storage!
Sanderson proposes to spend "a modest" "FEW MILLION " over the next TWO years seeking planning permissions for a mind bogglingly expensive hydrogen gas project whose economic (profitability) case is opaque BUT will cost north of ONE BILLION pounds.
Its insane. Another crazy dream chase.
Time scale to potential START of construction is 4 years! Bet that time slips if it ever happens.
Listen to Sanderson here; https://www.youtube.com/watch?v=qLFkt9iBijY
UKOG should be using those "modest" "few million" drilling Loxley. Sanderson's reluctance to drill alone at loxley suggests to me that Sanderson is not that confident in the economic case of Loxley.
The waste of cash in chasing so many projects is lamentable.
The directors refuse to buy their company's shares and the reason is obvious; a business model that relies on massive dilution s that destroy shareholders value.
Will Sanderson get away yet another placing in 12 weeks, and at what price?"
"What happens at the agm rerun if shareholders revolt again and UKOG cannot issue any more confetti?"
Imo, UKOG will no longer be a going concern and they should be advised to call in administrators.
I think that the issue of 3 billion more shares to trustees has been calculated to ensure UKOG gets all resolution passed.
A whole new cycle of confetti share issues will follow.
Those getting out have maybe realised that UKOG will most likely succeed in passing all the resolutions after the recent 3 billion share issue to trustees.
Some seem to have done the maths ; seen how much capital UKOG needs to raise for its ambitions and just basic working capital.
As I have shown ; UKOG has previously raised an average £8.6 million each year to keep the business afloat chasing dreams.
They have recognised that , once authority to issue new shares is granted there will have to be dilution of the equity on a scale not seen before.
They need to raise 'working capital, "in the near future". They need millions just to cover their admin. With the market value where it is , you can see that there will have to be enormous further dilutions of the consolidated shares , when issued.
22 December 2020
UK Oil & Gas PLC
("UKOG" or the "Company")
Horse Hill judicial review challenge comprehensively dismissed by judge
UK Oil & Gas PLC (London AIM: UKOG) is delighted to announce that, following the judicial review ("JR") hearing of 17-18 November 2020, the Hon Justice Holgate has today published his judgement which comprehensively dismisses the challenge to the lawfulness of Surrey County Council's ("SCC") September 2019 planning consent for long-term oil production at the Company's 85.635% owned Horse Hill oil field. The written judgement rejects the challenge's three grounds and, therefore, the Company's production planning consent remains in full force.
The unsuccessful challenge by Sarah Finch for the Weald Action Group claimed that SCC failed to assess the indirect greenhouse gas emissions of the development arising from the eventual combustion of any produced oil, consequently their decision did not comply with the governing EU and Town and Country Planning Act environmental impact assessment ("EIA") regulations.
13 May 2022
UK Oil & Gas PLC
("UKOG" or the "Company")
One-year work programme extension on PEDL137 Horse Hill
UK Oil & Gas PLC (London AIM: UKOG) is pleased to announce that the North Sea Transition Authority (formerly the Oil and Gas Authority) has granted a one-year extension to the agreed Retention Area work programme of the Company's operated PEDL137 licence (UKOG 85.635%) containing the producing Horse Hill oil field and its underlying Kimmeridge oil pool.
The extension grants an additional year in which to drill a second Horse Hill Kimmeridge well, with the commencement of drilling to be prior to 30th September 2023.
"SS awarded himself the bonus for getting the planning permission past to drill more wells at Horsehill."
I can not recall the contrived justification . Assuming your recollection is correct; I have this to ask;
Its been five years and production has plummeted to 44 barrels a day.
The 15th March 2019 RNS update had these lines;
"The continuous Portland dry oil flow (i.e. oil with zero water content), at a stable daily average rate of over 220 barrels per day ("bopd"), forms a key part of the schedule of works required to finalise the Portland field development plan and to the targeted establishment of permanent long-term Portland production by end 2019."
"For prudent reservoir management purposes, the average test production rate from the Portland section has been maintained below the previously reported 362 bopd calculated optimised sustainable rate."
Note no water. Today ,tons of water and a pitiful 44 BOPD.
One suspects the reason he has not bothered to further drill more at HH is because they have determined its a failing asset.
Instead he took UKOG off on a disastrous Turkish adventure and stupidly drilled without doing seismic first.