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The price action is extraordinary now. They have said they have been entering discussions with US companies to agree marketing, although this is only expected to be agreed after FDA approval. One wonders if there is some buying from insiders related to those US companies. Barder did say though on the webcast that the discussions are at an early stage, so it doesn't seem likely to be buying based on knowledge of an imminent good deal being signed. But maybe one of those companies is looking at a takeover offer of Futura? I mean it has to be something serious happening behind the scenes, it's not just PIs suddenly deciding to buy more, the volumes are much too big. Although it could be an investment institution doing some stake-building, however I would have thought that in that case the intensity of the buying does seem somewhat unusually high. After all, surely they could spread it out more gradually as FDA approval is still going to take a bit of time. Which makes me think.... though of course it could be wishful thinking.
Surety, yes it looks like the market sees it like you, with the price going up; the farmout was being delayed because there was no clarity on what the final government policy will be, thus making it hard to make propert calculations and decide how much it is worth for partners to invest and on what terms, now they know (more or less) where they are and they know they aren't likely to get much clearer information on what could happen, so it's decision time for everyone.
It looks like a whole thread was deleted from last night with lots of comments about the presentation - why? I note that many had complained that the company name was supposedly never mentioned in the whole thing, and I pointed out that Monk was introduced at the beginning as the "chief scientific office of Synairgen". Is that why it all got deleted?
Well spotted Vince, that could be behind the share price movement, and it looks set up for more gains judging by L2.
I was thinking that maybe the share price weakness is because people are assuming that the new 75% total tax will in reality continue after 2028. This would reduce the value by about half. But against that the broker valuations (660p, 720p, 856p) make various assumptions about whether JOG would be left with a 20% or 30% interest after the farmout, and what the average long term oil price will be, which seems to be why they come up with different values - but in any case even if you half these figures you get more than the share price, and of course it is not certain that the WFT will carry on, or even if it does, it might not carry on as high as it is now. So the price definitely seems too low. Also, finncap (who give the lowest value of 660p) assume a 30% interest and an oil price of $70. I would think that at $70 the WFT is highly likely to be cancelled thus leaving the value at 660p. If it were halved then the value would be about 470p.
HF, yes, very possibly.
dickupham, yes I was also thinking along those lines of there being an overhang from someone. But still, the update was pretty positive in that presumably the reason for the fall is that many had doubts whether there will be a farmout at all in the light of the WFT, whereas this has dimissed that concern so that is really significant so you would expect more buying from people who had had that concern and had sold out, or even new people. If this is right I would expect the price to go up more over the course of the day and if it doesn't that really will need an explanation (and by extension be a source of worry as in what do people know that we don't).
To be honest I wasn't making a serious forecast, more of a dream, just based on the purchase price paid by Shell of E1.9bn for a biogas producer, so if we were to say that we are worth the same in that we are a bio-fuel oil producer then that works out as £1 a share, don't take it too seriously. By the way Edison's forecast was for $106m of REVENUE if MSC used MSAR in 54 of their ships, but EBITDA would be $16m, which is a more relevant figure. But in any case who knows on how many ships they would actually use it (maybe more?) and anyway it's bioMSAR they are more interested in, plus numerous unkowns of possible outcomes from other projects and the momentum any contracts would create, so it's really really hard to put a value on it. A good start and basic recognition of the market once some contracts start, I would just make a guess at around a £250m market cap which is 18p/share, but that is a total guess.
It's worth having a look at https://www.ft.com/content/ab11e006-3aab-4bf1-97a3-40124c3c0ad4 "Shell to buy Europe’s biggest biogas producer for €1.9bn". Not sure how comparable that is but 1.9bn euros for QFI (£1+ per share) is a nice thought....
Arden say JOG won't actually pay the WFT because the allowances will cover any income until the end of it in 3.2028. Presumably they know what they are talking about. If we assume (as they do) that there will be no WFT after 2028 then indeed the value is little changed, and we are in an even better position due to the incentive of investing now. The problem is if we assume it will carry on after 2028, even if oil prices are lower, as then the entire value is lower because the lifetime profits are lower. But I think it's fair to point out that Hunt said he is in favour of windfall taxes when there are "genuine windfall profits". So that would appear to exclude the tax going on with lower prices. I don't know where this idea came from, that the tax will stay even if prices are lower. The government keep stressing that they want to have more investment which is why they made the big allowances. So I think either they will clarify quickly that the tax will be removed when prices are lower, or the oil companies will threaten some kind of investment strike and at the point they will clarify it. But either way it should happen. And it should also be noted that there were previous windfall taxes on oil (I think in the 1980s) which were removed when prices fell. And if prices stay high after 2028 and the WFT stays it's not the end of the world as it's not so diferent to where were about a year ago, assuming oil prices of $70 with no WFT, so the fair value should be about the same either way.
"Some [oil company shares], like Jersey Oil and Gas and Kistos, have seen increased performance since the announcement on Thursday.
Analysts have suggested that, thanks to an investment incentive in the tax, the impact on companies could vary greatly.
Those with investment pipelines will likely benefit......"
From https://www.energyvoice.com/markets/461863/north-sea-windfall-tax-independents/
Why don't you all actually read what the statement says which is that "Under the 35% levy rate, the government is reducing the rate of the allowance to 29% which, due to the higher rate, will broadly maintain the existing cash value of the allowance. This means business will be able to claim £91.40 in tax relief for every £100 invested rather than the previous £91.25" So whether you understand it or not the result is that companies will have a choice to pay £100 and get a reduction of £91.25 off the tax they would otherwise have to pay. If they invest in decarbonisation they get even more off - as the statement goes on to say "This means from the 1st of January 2023, a company spending £100 on upstream decarbonisation will now be able to deduct £109.25p when calculating its levy profits."
So there is no less incentive to make new investments with the new policy than there was before yesterday's announcements.
Greener, thanks. How can he be sure though that the majors won't also invest in more projects and thus save the tax, and then he won't raise any revenue?
By the way just found this "Green MP Caroline Lucas welcomed the higher energy windfall tax but said it was “scandalous” that the chancellor was “keeping the investment allowance, giving a massive subsidy to obscenely wealthy oil and gas companies”. From https://www.independent.co.uk/news/uk/politics/autumn-budget-windfall-tax-energy-rise-b2227107.html - so it looks like there really is no change.