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There's a note from the auditor that explains the situation:
"The group accounts for exploration and evaluation (E&E) costs in accordance with the requirements of IFRS 6 – Exploration for and evaluation of mineral resources. Costs such as exploration licences, leasehold land and property acquisition costs and costs directly associated with exploration activities are capitalised as exploration and evaluation intangible assets. There is a risk that the exploration and evaluation assets are incorrectly valued or need to be impaired.
If no future activity is planned, the licence has been relinquished or has expired, or where development is likely to proceed but there are indications that the E&E asset costs are unlikely to be recovered in full, the carrying value may be impaired and require being written off to the income statement."
"Exploration licence and leasehold land and property acquisition costs are capitalised in intangible assets."
"Costs directly associated with an exploration well are capitalised as exploration and evaluation intangible assets until the drilling of the well is complete and the results have been evaluated"
Intangible assets are just a tally of money spent, they don't reflect any market value of the asset.
Once an asset goes into production it is moved to Oil & Gas Properties which have a more rigorous valuation and results in a large impairment charge.
There are 10s of million of future accounting losses currently hiding in Intangible assets.
The GM allowed £1,627 nominal which is 1,627,000,000 shares
1,627,000,000 - 206,965,282 = 1,420,034,718
Currently UKOG has authority left to issue 1,420,034,718 shares.
RP/YA will want to ask for tranches of shares every month or so, probably around 6% of total outstanding like last time so that they each stay below the 3% reporting threshold.
That will of course put continued additional downward pressure on the SP.
But UKOG needs to raise cash of it's own as it only has about 4 months cash left.
New money from RP is definitely closed and I suspect YA has had enough as well. Last time UKOG used CMC at a 20% discount as did Alba recently.
But how much and at what discount? Alba had to offer a 30% discount to raise just 6% of marcap.
Currently at a 30% discount the most UKOG could raise is around £570k, which barely gives them a couple of months opex.
No-one is going to farm-in to Loxley without better test data which will cost a few million
BB restoration could cost a £1m
Hopes of HH farm-in seem to be dead given PPP's current markcap of £575k
Progressing Portland planning will cost a few million and UKOG need to appear financially solvent in order to attract needed partners.
So I think the next (or one after next) fund raising is going to be for several million, at a very heavy discount. Here's a raising through CMC at a 65% discount:
https://www.cmcmarkets.com/en-gb/capx/deal.html?id=3sV9AbBjnVGzvvJ7P72swH&symbol=LSE:MXC
The raising might happen as part of a rebranding of UKOG (maybe as UK Oil & Hydrogen Feedstock ;-)) or even splitting the company in two with UK Energy Storage being spun out.
For existing shareholders it will mean wipe-out. Getting it through the AGM will be brutal.
"Iceland is already a long way down that road, moving towards a Hydrogen fuelled vehicle society using their abundance of geothermal power."
50.1% of car sales in Iceland last year were EVs, hydrogen sales are too small to register, see
https://www.acea.auto/pc-registrations/new-car-registrations-13-9-in-2023-battery-electric-14-6-market-share/
Global sales of hydrogen cars fell by 30% last year, see:
https://www.hydrogeninsight.com/transport/global-sales-of-hydrogen-vehicles-fell-by-more-than-30-last-year-with-china-becoming-world-s-largest-market/2-1-1599764
The biggest problem with the Portland scheme is that there is no requirement to store hydrogen on the south coast. There's no producers of low-carbon hydrogen and no large scale consumers.
There is Fawley but they produce for their own consumption and have no need to for salt caverns.
The HHDL accounts have £360k for HH decommissioning, which is extremely optimistic.
But talk is cheap (apart from SS's salary) and that's all they seem to be doing these days.
I had estimated Sept 23 cash to be £2m, the actual was £1,868,000.
Using the same maths as before they have currently about £1m, so about 3 months cash left if no capital raise.
It's just saying that they don't need to show separate accounts for just the activities of the top level company, just the top-level and subsidiaries consolidated together. That's standard and not sus, unlike most of the rest of the report.
Looks like UKOG are looking for a new CFO, Guzyal Mukhametzhanova's name is no where to be found in the annual report.
The hydrogen clusters need to be built before any pipeline linking them together.
The Solent Cluster hasn't started to be realised yet, unlike some of the Northern clusters.
There won't be any requirement to store hydrogen down south anytime soon, the hydrogen has got to come from somewhere and at the moment there is no real plans for blue or green hydrogen anywhere near Portland.
Https://drillordrop.com/2020/06/26/dunsfold-environmental-permit-granted/
"The planning authority, Surrey County Council, has confirmed that all the costs of the highway work and speed restrictions must be paid for by UKOG’s subsidiary, UKOG234.
The work will be covered by a section 278 agreement, a legal agreement to carry out highway alternations to the road network.
Just over three weeks ago, DrillOrDrop understood that negotiations on the section 278 agreement were at an early stage and the finalisation date was not known.
We also understood that the traffic regulation order for the speed limit reduction required a consultation, which has not yet been advertised."
It's almost as if they are trying to hype the SP prior to a capital raise.
So far this morning they've convinced people to buy £220.10 worth of shares.
The risk of NSTA not extending the Loxley license was never very high on people's worries about UKOG.
The real issue is being able to raise the funds to do the drilling and believability of the CPR report given UKOG's history.
The only power UKEn has is a stack of PowerPoint slides
See https://www.lse.co.uk/rns/RGO/investment-portfolio-redemption-reverse-takeover-0d20hyiverqdkzh.html
Looks like UKOG has just lost one of its funding providers, RiverPort is exiting the investing business and is going to become a "health and wellness" company (no joke).
Turns out that providing death spiral financing isn't a sustainable business.
It is unclear what happens to RP's UKOG shares, it didn't seem to be a long-term holder anyway, selling them off as soon it was able after acquiring them. I think the UKOGs shares will be part of RiverFort's other investments which will be retained (or rather continue to be sold).
Matt Cartwright to planning committee:
"UKOG remain committed to its primary objective of unlocking its potential as a domestic source of oil & gas. We also have a backup objective. It's feasable for the well to become a geothermal heat spource that would that would enhance fruit and vegtable growth..."
RNS announcment:
"UK Oil & Gas PLC announces that its application to extend the planning consent at its Broadford Bridge site, primarily to assess the viability of converting the site to harness geothermal heat and power, was today refused..."
At least one of those statements is a clear lie.
Here's what they say in the planning application:
"The Site comprises a worked farm that accommodates a well site in retention mode. Temporary earth bunding delineates a stable, flat and drained well pad formed of crushed stone overlaying an impermeable membrane. A concrete well cellar and a conductor pipe have been sunk into the ground and cemented to surface through which the BB-1/1z wells have been installed.
Upon completion of Phase 3: Testing, BB-1/1z were suspended and permanent barriers to flow installed within the wells. All operational plant and machinery has been removed and the stone surface cleaned and retained along with the perimeter drainage ditches. A standard shipping container has been installed over the wellhead assembly and all valves closed."
UKOG (234) Ltd which has two assets, Broadford Bridge and Loxley, has as provision/liability of £1,013,619, I don't know what that would include other than the BB restoration cost.
When UKOG restored Markwells Wood during FY2019 & FY2000 it released £1,013,000 from their decommissioning provisioning figure during that timeframe and only MW was restored.
So it looks like UKOG has used what it cost them to restore MW as the provision allowance to restore BB, which is reasonable as they are similar sites.
So that's another £1m to find in addition to SS's salary and paying back RF/YA the remaining ~£500k before they can even think about investing in Loxley, HH or Portland.
Going concern statement in forthcoming annual report is going to be very interesting, it now has to take into account the BB restoration costs as well.
UKOG needs to make a big restructuring announcement in the next couple of months, business as usual isn't going to be possible.
UKOG has lost both applications 4-7