Member Info for dgdg1

I meant if a deal is made soon, how much could sales reasonably get to within 3 years from then?

DoN, thanks, so bottom line do you know or have they indicated what is actually a reasonable range of the likely amount of tons that they could sell per year assuming a deal is made with MSC, say within 3 years?

DoN, when you talk about 100 vessels and 1m tons, is that a serious estimate, in which case how have you arrived at that - did QED mention those numbers? Or if not then do you know what the reasonable total actually is? Remember we are only talking for now about vessels with Wartsila engines and also they have to be going on the right routes where they will actually be able to get hold of MSAR. In an Edison note at end 2024 they said that the total usage of MSC vessels with Wärtsilä Flex engines was 345,000 tons per year (23 vessels).

They also said "The total addressable market for Quadrise’s innovative fuel technology comprises vessels over

10,000 gross tons with specific engine requirements that would require minimal vessel

modifications. This equates to approximately 12,000 vessels, representing roughly 11% of the

global fleet by vessel count and approximately 40% of global installed diesel engine power capacity

(in MW). In order to target vessels with engines other than the Wärtsilä Flex engines covered by the

forthcoming LONO, additional LONO trials may be required."

Oil price falling on latest Trump TACO. JOG share price being marked down illogically as a result (along with other oil companies). For JOG it makes no sense because relevant oil prices are the prices they receive after Buchan is developed in a few years, not the price now. On the contrary, the high oil prices of now have made it harder for the government to move from EPL to OGPM, so a fall to more normal levels can enable them to do it which would be a major boost for JOG.

DId you see the articles I posted links to last week about sources saying they were going to abolish it but then cancelled the plans as it wasn't a good look with the oil price being high (this is all not related to the official mechanism of the EPL being removed, it is government deciding that EPL is no good and they want to get it rid of it in favour of OGPM - the new tax system)

Not sure why people are selling today - is it because of the fall in the oil price? That is hardly relevant to the long term average oil price which is what is relevant to JOG. If anything the fall makes it more likely that it will be politically possible to remove the EPL quickly, which is what the government want to do (that's what they have said).

Https://www.energyvoice.com/markets/energy-finance/593461/reeves-wants-windfall-tax-to-end-but-not-yet/

After meeting with the chancellor, OEUK chief executive Dave Whitehouse argued “the UK should be making decisions for the long term in the interests of energy security” at times of “huge global uncertainty”.

He said the country should be “prioritising domestic production of oil and gas and supporting jobs”.

“Today’s meeting with the chancellor followed weeks of in-depth discussions with industry, which took place at the instigation of the Treasury,” Whitehouse added.

“The government has committed to work with us in the coming days to find a solution to replace the energy profits levy so industry can make investments in homegrown energy.

“This will enable greater energy security, tax revenues and growth for the UK economy.”

OEUK has long since stood in opposition to the windfall tax, and reported that within the first year of the policy’s implementation, 90% of North Sea firms slashed domestic investment.

In the build-up to November’s Autumn budget, Whitehouse’s organisation teamed up with fellow trade body Scottish Renewables to call for windfall tax reform, alongside support for offshore wind projects north of the border.

Taxed on UK oil firms are set to bring the Treasury £4.1 billion for the 2025/26 financial year, a 5.6% drop from the prior 12 months.

“On the basis of this proposed change, our members identified additional investment in the UK Continental Shelf that could begin next year,” Whitehouse said.

“And this is just the first step. The industry is ready to invest up to £50 billion in new activity by 2050 with a functioning regulatory regime.

“We welcome that the Chancellor recognised the need for the EPL to end and appreciated her time to discuss these issues in person, during which North Sea operators reaffirmed their unwavering commitment to reducing our reliance on imports and bolstering UK energy, economic and national security at a time of geopolitical crisis.”

Aberdeen and Grampian Chamber of Commerce (AGCC) CEO Russell Borthwick was also at the meeting.

“We welcome the Chancellor’s recognition that the EPL must come to an end now. Events in the Middle East strengthen, not weaken, the case for change.

“The offer on the table was billions of pounds worth of investment, which can be unlocked overnight if the right fiscal and regulatory conditions are in place.”

Https://www.agcc.co.uk/news-article/chancellor-looking-to-end-energy-profits-levy-three-years-early

The Chancellor held crunch talks with industry bosses in London yesterday, where she revealed that she had planned to announce an end to the levy this week, prior to America’s actions in Iran.

She has now instructed Financial Secretary Lord Livermore to work with the sector to provide “long-term financial certainty”, as well as certainty on a 2027 shift to a new North Sea tax regime which could unlock investment.

Reeves met representatives from the oil and gas industry - including BP, Adura, Neo Next, Harbour Energy, Ithaca Energy, Serica and EnQuest - at No11 Downing Street on Wednesday afternoon.

After the meeting, a Treasury source said: “The Chancellor was clear with industry that she wants the Energy Profits Levy to come to an end. She has made that promise and she stands by it. Indeed, it was a commitment she wanted to make this week. But the crisis in the Middle East has had real-time consequences on oil and gas prices and it is right that we respond to this.”

...

The meeting followed several weeks of discussions between the Treasury and operators, instigated by government, during which industry tabled an offer to invest billion of pounds if the levy was replaced by the government’s proposed successor regime, the Oil and Gas Price Mechanism.

After the meeting, a Treasury source said: “The Chancellor was clear with industry that she wants the Energy Profits Levy to come to an end. She has made that promise and she stands by it. Indeed, it was a commitment she wanted to make this week. But the crisis in the Middle East has had real-time consequences on oil and gas prices and it is right that we respond to this.”

...

“The offer on the table was billions of pounds worth of investment, which can be unlocked overnight if the right fiscal and regulatory conditions are in place...."

Producers have the opportunity to execute projects for nearly 40% off, if they sanction them now. That message hasn't got through to all the players just yet, but it soon will.

We are very upbeat about the prospects for a renewed wave of North Sea investment. Orcadian's strategy has always been to build a portfolio of carried interests in projects that can deliver a legacy for our investors and shareholders and while we are disappointed that new licences are limited to the Transitional Energy Certificates, which we believe will enable access to the Feugh discovery in support of Pilot, we would not be surprised if a future government reversed this policy as quickly as the New Zealand government has done.

Orcadian has five licences with three appraised development projects (Pilot, Earlham and Lowlander), two appraisal targets (Elke and Fynn Beauly), three gas exploration prospects (Clover, Glenlough and Breckagh) and the potential redevelopment of Orwell. From the industry's perspective the hiatus in licence awards chokes off the supply of new project opportunities. From Orcadian's perspective, we have multiple opportunities for investment at a time when the producing companies paying EPL need good investment opportunities and have limited means to access new opportunities from the NSTA......

We believe the UK North Sea is on the verge of a resurgence and that Orcadian is well positioned to make the best of it.

Https://www.investegate.co.uk/announcement/rns/orcadian-energy--orca/results-for-the-year-ended-30-june-2025-/9327409

Orcadian announcement on Wednesday:

The new windfall tax is an elegant solution for the fiscal mess that our political masters have confected for us. Between Hunt and Reeves, the EPL was transformed from a short-term windfall tax into a confusing, unfair, and burdensome levy that has threatened the entire existence of the North Sea oil and gas industry. Having assisted in that process, Treasury has designed an elegant exit that will incentivise near term investment in projects, and provide fiscal clarity on the future tax regime while preserving a genuine and fair windfall tax.

You would not think that if you read the newspapers, rather than the Treasury's consultation response, but 'tis the case.

Starting with the future fiscal environment. From 2Q 2030 the EPL is no more, it is replaced by the OGPM and any allowances that might offset EPL have no value past that date, but the 38% levy on top of the "permanent tax regime" is gone. The "permanent tax regime" is the combination of a 30% corporation tax and a 10% supplementary charge; this regime has never been stable but we are all accustomed to it and everyone in the industry understands how it works, Unlike the renewable power industry, the oil and gas industry expects to pay higher taxes and is unaccustomed to guaranteed prices and other government subsidies.

The replacement tax only applies to revenue in excess of a threshold price for the product. The thresholds are close to the actual real historic average prices for our products: $90/bbl for oil and 90p/therm for gas. The OGPM is a 35% revenue tax that only applies to the price over the threshold so if the price for oil is $120/bbl producers pay 35% of $30/bbl, as opposed to 38% of $120/bbl in today's system.

This makes sense, bankers and boards take decisions to develop new fields with conservative assumptions about oil and gas prices. The existing and poorly named Energy Security Investment Mechanism guarantees that investment decision makers combine low product prices with a greedy fiscal take. So, the industry has been paralyzed, temper tantrums ensue and despair grips the industry.

We can all wake up, the nightmare is over, it is time to get to work on planning projects, and with the rules established, work out how to make the best of the situation we find ourselves in.

For companies that are currently producing, and paying EPL, the message is clear - start projects and spend money between now and the end of EPL. Every pound spent on development and exploration projects reduces those companies' tax bill by 38% without an offsetting uplift to their tax bills when those projects start production.

Producers have the opportunity to execute projects for nearly 40% off, if they sanction them now. That message hasn't got through to all the players just yet, but it so

OTM, so you are saying that you now don't believe him about anything because he contradicted himself about things like the number of parties they were talking to so that means you think he was lying, but you said previously that you thought Tim was not lying. (For the record, I didn't see a clear contradiction in what he said about the number of parties involved.)

Tim didn't actually say, as far as I remember, that whether a deal is signed quickly is dependant on whether they have "the magic" (I suppose that means good data). In any case, presumably you agree that in reality the fact is that deals can take a long time to agree however good the data are, so if he did imply this then it is down to incompetence rather than lying as you originally said, therefore I don't see how you can logicaly conclude that really there is no "magic".

OTM, you say it was incompetence that Tim said there would be a deal this year, as he should have known that it would take longer. That seems possible (even though you could argue that it made sense at the time he said it, but after he said it there was further interest from more pharma companies which caused a delay as they then had to deal with more parties and compare their offers etc. - which is basically what he said in the last interview, I think)

Let's assume however that you are right that it was incompetence, as he should have known that it would take longer, because deals do usually take longer. But you then go on to argue something extra - that "the pharmas are not seeing the success potential clearly. Hence they are in a period of extended assessment and due diligence, most probably requiring extended testing and evidence (my opinion)." Where is your evidence for that second allegation? If Tim is just incompetent and didn't realise how long a deal would reasonably take to reach, then that is enough of an explanation for the delay i.e. that it's normal for deals to take a long time - so what basis is there to assume that there is an additional problem of pharmas not being impressed with what they see?

Roger at 19:02 "No phase III trial evidence to speak of so all the recent hyperbole has come from Tim and the team who just may have misinterpreted the data - verified I know by Jackson but they didn’t verify any of Tim’s wild interpretations of it."

Roger at 10:13 "Could we see £1 per share? Yes, I actually think that’s possible but unlikely..... More like 30p? I’d say that’s quite likely in fact and as such from a share price of 5p (if it ever drops that far) that’s a 6 bagger. It would be a really good punt from there or even at current levels ....."

On the basis of a NPV of $141bn they would probably be happy to pay say $110bn, which is £82.5bn, so based on a fully diluted 650mn shares that means the current fair share price should be about £127, which is about 2000 times what it is now, but clearly no-one has noticed. One does have to wonder that there might just be a mistake somewhere in one of those assumptions.

If people are selling for tax offsets then the time is not December but before the tax year ends on 5th April.

Agreed. I think the price is cheap but I can't really guess what happens in the short term. To me the drop seems irrational. If people thought that on the basis that EPL would end a year earlier in 2029 then it would probably get the go-ahead, then ending one year later would presumably at worst means it proceeds a year later, I can't see why that justifies an almost halving of the share price.

I literally laughed when JS called me vile. I actually have a substantial long position in JOG, having bought back in when the price fell low on Budget day and the announcement about the new tax regime was announced, which I saw as positive. I also asked AI how the price drop could be justified and thought the answer was interesting, so I posted it. It basically answered as I thought it would, i.e. it agrees that logically the price is too low, but explained that in terms of positioning etc the immediate market reaction is understandable. I thought it provided an interesting summary and clarity of the present position, but for some this is clearly too difficult to understand.

....If the Budget isn’t a clear “win”, those holders hit the bid and move on.

A few decent-sized sells can drive the price down 10–20% with no fundamental news at all.

So from the tape’s point of view, you’re seeing:

Crowded, hope-driven trade pre-Budget

→ “Not as good as we hoped” headline

→ De-risking / stop-losses / MMs marking down

Rather than a considered reassessment of 2040s cash flows.

5. Is it actually illogical?

If you were valuing JOG strictly on:

Buchan P50 resource,

A $60–65 long-term deck,

Full carry to first oil, and

40% tax in most post-2030 years,

then yes: you’d probably conclude NPV is higher now than under the pre-announcement “78% forever?” fog, and a share price below pre-Budget levels looks “too low”.

But the market is also baking in:

Fear that NEO/Serica might still not sanction (FPSO gone, capex inflation, politics).

The fact EPL still makes early-year returns worse.

General UKCS de-rating as big names exit and policy risk stays ugly.

Pure flow/positioning – people had a trade on, it didn’t work, they’re out.

So I’d say:

It’s not “illogical” in the sense that the market is crazy; it’s that the market is focusing on near-term risk and sentiment, while your intuition is focusing on long-term project NPV.

Those two lenses can (and often do) give very different answers, especially in a small AIM name right after a political event.

From Chatgpt:

given the two announcements i.e. epl to stay to 2030 and EPL to be replaced with OGPM, surely the second one is more positive than the first is negative, so is it illogical that JOG's share price is far below what it was before the Budget?

ChatGPT said:

Thought for 6s

You’re thinking about it very logically in NPV terms – and I agree with your direction-of-travel: for a long-life field like Buchan, “EPL stays to 2030” is a negative, but “we now know it’s basically 40% + occasional OGPM after 2030” is a big positive.

So why is the market behaving “illogically” (JOG below pre-Budget)?

A few things are going on at once:

1. The market wasn’t thinking in pure long-term NPV

Before the Budget, a lot of short-term money in JOG was clearly hoping for something better than we got, for example:

EPL cut early or softened, or

A stronger sector “signal” that would re-rate UK oil equities generally.

What we actually got was:

Bad headline: “EPL stays until 2030.”

Good nuance: “After 2030, OGPM ⇒ 40% base tax most of the time, extra only when prices very high.”

Most traders never get to the second line. They just see:

“Windfall tax still there → North Sea still toxic.”

So there’s a classic sentiment vs DCF mismatch:

In spreadsheet land: “Buchan’s long-run economics improved; NPV up.”

In trading land: “Windfall tax still there; sell UK oil.”

2. EPS / cash-flow timing vs distant out-years

Even at the project level:

The EPL to 2030 hits the early, cash-rich years of production.

The OGPM clarity helps the 2030s–2040s.

Equity markets heavily discount distant cash flows and care a lot about:

Near-term free cash flow,

When/if a project is sanctioned,

How much equity needs to be raised, etc.

So even if, over 20–25 years, OGPM’s positive effect is bigger than the extra drag of keeping EPL to 2030, the market’s weight on “now to 2030” is much higher than your spreadsheet’s.

In other words: yes, the second announcement is more positive in a 20-year NPV sense, but the first one hurts the near-term story – and that’s what most holders trade on.

3. Risk, not just NPV, has gone up in some investors’ minds

Some investors will also read the package as:

“UK government has reaffirmed it’s happy to slam the sector with ad-hoc taxes (EPL), even while designing OGPM.”

That can easily increase perceived:

Political risk (what if they tinker with OGPM later?),

IHT/ESG risk,

And the chance that big partners still walk away or stall.

Higher risk → higher discount rate → lower equity value, even if you hold the same central NPV.

4. Micro stuff: AIM sentiment, positioning, and “sell the news”

JOG is:

Tiny,

On AIM,

Illiquid,

Heavily held by PIs who were explicitly punting “Budget → re-rating.”

In that setup:

If the Budget isn’t a clear “win”, those holders

Well done Umaz, did anyone else also guess the right answer?