RE: mONEY16 Sep 2021 09:56
Ibug,
Difficult to pick through the accounts and be 100% accurate, but to me, it looks like UKOG are losing £220k per month.
So whatever float you think they had (i.e. £4.21m), that is reducing by £220k per month. March thru end of Sept is a burn of £1.54m, so they probably have ~ £2.7m or thereabouts, but given their restriction on how many more nominal shares they can issue between now and the next AGM (May 2022), and given their burn rate (8 months until AGM), and given their lack of positive cashflow (i.e. they are making a loss), then they will need £1.76m just to keep the lights on. That only leaves them with ~£1m for other activities. That's unless of course they do issue another placing (something that I've been saying will happen before year end).
HH-2 injector will eat up most of that cash in my opinion, in fact, has anyone seen any mention of them buying the kit for the reinjection of water into HH2z? Maybe they already have that kit, maybe not, but if they don't then it's not a cheap purchase.
So, in short, I think it's a bit dull for any investor, existing or potential, to think that UKOG are are in great cash position. The cash is being consumed at a rate of knots, the assets are not providing sufficient profitable income to offset costs/overheads, and the company needs to spend a lot more cash to explore the viability of their assets (including the dead duck that is Turkey).
On paper, UKOG have nothing more than a small income from Horndean and 100 bopd from HH. I'd expect H2z to provide some potential for increase of that 100 bopd, but my view is that it'll not push it above 150 bopd, and that the recovery rates will drop off to sub 100 bopd within 2 years (from studying existing figures, looking at the CPR, and drawing out comparisons with other similar plays (e.g. Brockham, where the Portland flowed historically). Indeed, if you look at Brockham (which is in close proximity), Angus are looking at water injection to aid the restoration of Portland production, that may / may not give them a commercial flow rate, but if it does, then I don't see it being a 2+ year operation.
Draw your own conclusions, but I will add one further thought for comment. Why is the CEO so quiet, why has he provided a limited update to the market on their operational priorities for 2021/2022, and why has he not made a clear statement in reference to their funding position?
I do see UKOG dropping to sub 0.1p before Xmas, with only a small trading window of opportunity based on the short term spike that the planning inspectorate decision will offer(i.e. SP may spike to 0.18p if lucky, but it'll then drop to sub 0.1p as the bad news continues to roll, and the CEO continues to hide away behind an even quieter Chairman).
All in my opinion of course.
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