The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Sageman, I've been here for a couple of years and am fully aware of the potential here and what's been achieved ( SP aside ) since June. However, I do feel in the absence of any institutional investment our CEO is far less accountable as far as stakeholder value is concerned and can plough on regardless in the knowledge that they do not have to account for share price performance. Being absolutely cynical I feel that this setup suits certain CEO's. The larger cap/main market CEO's would be dragged over the coals if their company's SP halved in the space of 4 months as it has here.
Maybe SS remuneration should be linked in some way to the average performance of the SP over a 6-12 month period. I'm sure then that the indifference that he appears to show towards it would be somewhat different.
The SP should by now be trading at circa the 4-5p level considering what has happened since June. Instead of reflecting 2 soon to be 3 commercial zones for an onshore well producing in excess of 1000 BOPD ( revenue 70k per day and profit of circa 50k per day ) the SP has dropped from 2.6 in July to 1.3. The cynic in me points to pure market manipulation as UKOG is now worth less than it was on the day Broadford Bridge was declared non commercial. There is no logic whatsoever that reflects the current SP.
What UKOG needs is positive sentiment to return which will change the SP trajectory from its current downward trend to an upward one. News ( website updates,podcasts etc ) can do this. After all there's a lot a positive news to broadcast. Where is the PR Company that UKOG have employed.
Sageman, Some valid comments. However, does a proper business plan with nil revenue and continued multi million losses year on year justify a 1 Billion market Cap in the case of both HUR and SXX in comparison to our market Cap of circa 70 million. We are way way undervalued. I do agree that SS needs a proper business plan, reputable sources of finance and good PR. Silence is not golden in this case as demonstrated by our dismal share price. Regular updates on the website would suffice and bring back some positive sentiment which UKOG desperately need. He may be a good geologist and technically very knowledgable but is sorely lacking in other areas. He has raised circa 30 million in under 2 years so funds/ resources for the business should not be an issue.
UKOG need to prove up HH. 3 commercial zones and CPR and get off AIM and on to the main market. This will attract institutional investors and appropriate sources of funding. We don't need a repition of last years farce with YA global. The Share Price will then reflect our true worth instead of being valued by Mm's to suit their own agenda ( Naked Shorting etc ).
Shortly after commencing the EWT in late June We were trading as high as 2.6. 5 months on and 20000 barrels of oil later and 2 declarations of commerciality soon to be 3, We are trading at 1.35. As a business are we now worth less than we were on the day Broadford Bridge was declared a non starter back in Feb this year. I know that we are not and common sense dictates that the Share Price will start to reflect our true market value. We should be trading at 4-5p min. Look at HUR and SXX who produce nothing and never have and are valued at Circa 1 Billion.
With over 20 no 1 million buys yesterday and over 10 no 1 million plus buys so far today short positions are being closed. We are now awaiting the confirmation of the 3rd commercial zone at HH. This is transformational news for UKOG and with this we will start to see a serious rerate of the SP. We are horrendously undervalued here. Compare our assets and revenue to that of HUR and SXX who have never produced any revenue and yet have market caps of 850 million and 1 Billion respectively. They both posted huge losses for year end 2017 and 2018 will be the same. With our world class fundamentals in place and the imminent inflow of good news the lead up to Christmas should see the SP start to head north.
The SP is being over suppressed. We should be trading in the 4-5p range. ( look at the Market caps of HUR and SXX who are both producing nothing and never have produced ). A little bit of PR can go a long way. I'm not looking for RNS's every other day. Just updates on the website to keep current holders and potential investors informed. UKOG have employed a PR body. What are they doing ? If it wasn't for the eyes on site a lot PI 's would be none the wiser.
There is very strong likelihood that the 11 x 1 million buys are short positions being closed. Tanker numbers will start to increase as the flows are optimised for K4. The Share Price over the next few days will start heading back towards the 1.70 - 1.80 range. Even at this level it is way undervalued. What is needed is perhaps far more PR in terms of updates on UKOG's website after all it's all been positive news since the ewt started back in June.
The fundamentals speak for themselves. 80 + tankers and counting do not lie. 2 commercial zones confirmed and a third zone soon to be confirmed. The Share ( RSI ) has been way oversold and current support level is 1.40. Resistance level is circa 1.80. As soon as good news lands 2p will be broken and the negativity will disappear for a while as those seeking a lower entry price or closing shorts will look elsewhere.
The oil is flowing. Approx 80 - 90 tankers of crude oil leaving site do not lie. 2 commercial zones declared and a 3rd declaration to follow very shortly. The Share Price should be trading two to three times higher than 1.45, however it's not but it will. The fundamentals are too good for the SP to remain at this level for much longer. A little patience is key. LTH's are fully aware of this. However, there are many on here that know very little of UKOG's potential that crave an RNS every second day and invariably berate the Share before selling at a loss. They will move on to another share/board shortly and repeat the same mistakes there. Those that are shorting will deramp until the time to close their shorts then perhaps take a long position. Money talks but also brings out the worst in people.
The Share Price will not remain at these levels for too much longer. Are we to believe that despite 2 proven commercial zones soon to be 3, UKOG's Share Price is worth the same as it was back in Feb/March of this year when Broadford Bridge was declared non commercial. You can apply any spin ( positive or negative ) dependant on whether you hold a long or short position or you're just looking for lower entry point. However,there are some a...holes on this board who would sell their own mothers if they only knew who she was. The Share price is dire at this point in time but within weeks it will reflect its true valuation. 6-8p as starting point.
Not an unreasonable assessment considering UKOG will be a multi well producer generating several thousand BOPD with huge proven reserves,neglible debt,strong balance sheet and a revenue stream from 2019 onwards that will run into the tens of millions and a high margin of profitability against this revenue. This will steadily increase year on year. Compare this to two companies who currently have market caps of 1 Billion ( SXX) and HUR with a mc of 800 million. Never of these companies have ever produced any revenue and in SXX's case will not produce any until 2022 at the earliest.