Member Info for dgdg1

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.

So does anyone understand why the price is still this low and there isn't more buying today?

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/

Should have said "companies will have a choice to pay £100 and get a reduction of £91.40" (not £91.25)

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, understood.

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.

Greener, fair point about the "brownie points". I didn't understand your second paragraph though.

Can we be sure that there is no change to the investment allowance,i.e. would he have had to announce it, or could he sneakily publish changes in a technical document (in Budgets all sorts of documents get published alongside the actual speech)?

You can think of it as if the income from the oil just starts a bit later (say 2026 instead of 2025) at the original tax rates. So not a massive change. But on the positive side, the incentive to invest from the investment allowance is now even bigger, given that the tax itself is higher.

Not sure how Euroclear would have that information.

Is it available publicly?- I can't see it on their website. Or is it "secret" insider information supposedly? In which case I'm not sure that we should believe it. Anyway, the fact is it's not showing on the FCA site so I am somewhat skeptical in the meantime, unless someone can give some clarifications.

Jimmy, where did you get that information from? On the FCA website I can't see any short positions notified as of yesterday. Also, if that's true then surely shorters are not stupid so what rationale could they have?

Based on the last report of 28.6.22 there are 584,552,350 warrants, and another 100,000,000 have been issued recently per the convertible loan facility. If you add that to the 1,980,219,255 share in issue you get 2664771605 shares, so 592,830,258 is 22.2%, which would mean he is overstating the percentage owned. If you ignore the 100,000,000 recent warrants then you get 23.1%. I suppose you could say he was taking an approximate average figure as there is a doubt as to whether the warrants will be exercised, so it's anything between 22.2% and 29.9% so he just took a figure in the middle.

I don't follow how the 25% is calculated as on 26.8.21 Tomco said that Valkor would get 592,830,258 shares. As of now there are 1,980,219,255 shares, so that makes it 29.9% based on the current share count. Actually based on the share account when the deal was announced it would have been more than 30% so perhaps someone can elighten me please.

Interesting remark from FInncap near the end of their note: "The end-point of the ACTIV-2 4000+ patient phase II/III study in outpatient COVID-19 patients, which includes SNG001 as one of the treatments, has yet to be reached. It is not clear exactly when the data will be published, but it is likely to be a news item for Synairgen in Q4 2022. According to ClinicalTrials.gov, the last patient intervention was in l ate March 2022, so a time frame before the end of the year is reasonable."

How does he know that it will be decided in the "next few days"?

"cast an opinion"