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Maverick - do you think the shares will hold above 30p, or could they go lower with all this negativity around? You forgot to say that we might get hit by a comet. I'll warn the Hardys and the American former NED who's holding about 17% (and who's held from his acquisition price down to 3p and back up to where we are - or were; bet he's panicking now).

There was I thinking SQZ was a cracking long term hold after decades of valuing companies and it turns out I've failed to take into account all those things you list that made SQZ overvalued when you moved your money into a Brexit-friendly stock in the same sector.

What makes SQZ Brexit-unfriendly btw?

.........."Plans to use hydrogen to help heat UK homes - and MASSIVELY cut the country's carbon emissions - took a big step forward today with a £14.9 million funding boost".............

.........."The aim is to build support for a much wider roll-out. If adopted across the UK, using hydrogen like this could save the same amount of carbon as taking 2.5 million cars off the road"...........

There are approximately 40m vehicles (cars, lorries etc) registered for use in the UK. And we're supposed to buy the notion that a reduction in carbon emissions from the equivalent of 6.25% of the 'cars' on British roads, ignoring all the other sources of carbon emissions (domestic & industrial power and heating, for instance) when and IF the technology is adopted across the UK, will MASSIVELY reduce carbon emissions?

It's a fact that pioneers in new industries rarely succeed in the longer term - they get sunk by the weight of debt and if it's to be avoided shareholders get diluted to oblivion. Given the MASSIVE potential you clearly believe TM Power has, maybe it will be the exception to the rule. who knows? I do note, however, that whilst it received government grants of £4m in 2018 and raised £29m via equity issue (£6m in 2017) TM Power achieved revenue of under £3m. It's been struggling along for a few years now - each year the accounts get longer and glossier, with the same very worthy types lending their names to it all. Have you any idea why Peter Hargreaves resigned as a non-exec this year? It won't have been about the money and he's said to own 8%; normally the very rich like to be associated with worthy projects? Losses seem to grow each year. How odd.

In 2018 the 3 exec directors shyly took remuneration (excluding options, with which they're full up) of £409k, £269k and £132k respectively, which included bonuses of £187k, £95k & £29k - possibly for being clever enough to get shareholders to stump up the money to keep paying everyone working in the company very nicely indeed thank you. One of the non-execs (Prof Putnam) was paid 160k and the other 3 took more than £100k between them. It is stated that in 2018 the Company employed an average of 92 people who were paid £5.122m between them. I make that an average of more than £50k each. There were 13 admin staff and the sales and marketing people can't have been paid much because there were hardly any sales. All three exec directors are doctors of science and the non execs are made up of titled people and more doctors. Strikes me they might consider engaging a numbers person who might know something about how to run a business. And it might not be a bad idea if the incumbent directors made a bit more effort to align their interests (instead of their pockets) more closely with those of the people who provide the money for them to take out.

You lecture us about the dangers of investing longer term in SQZ? If I were you I'd concentrate on TMP where it seems to me there's a lot more risk

D

............"At Spirit Energy, we are energised by this pressing need to rethink the way the sector operates and our place within it.

Today, our team of more than 800 people is committed to the development of oil and gas reserves in Europe, overseeing production of 50million barrels of oil equivalent per year while working out how to tap into reserves and resources in the pipeline amounting to more than 600million barrels.

We are working hard to maximise the potential of our existing assets, work with our partners to bring exciting new developments on stream and maintain an absolute commitment to safety in everything we do.

OUR HISTORY
Spirit Energy was created in 2017 following the combination of Centrica’s Exploration & Production business and Bayerngas Norge AS. The business is 69%-owned by Centrica plc, with the remaining 31% owned by Bayerngas Norge’s former shareholders, led by Stadtwerke München and Bayerngas GmbH.

The independent company was formed to combine a complementary mix of producing and development assets, and creates a robust, self-financing business to allow both organic and inorganic growth"...............

.............might not be relevant, but Centrica owns British Gas.

https://www.spirit-energy.com/about#main

PMG could hardly be called an 'international major' and has limited cash resources. SQZ is nearly 6 times its size, is full of cash and acquisitive but still couldn't be regarded as either 'international' or a 'major'. With a market cap of £340m, following completion of the BKR deal it describes itself as a "leading 'mid-tier' independent exploration and production companies operating in the UK North Sea".

Re: Ineos................."INEOS Oil & Gas UK is a fully integrated exploration and production company. Our focus is primarily on gas production. We make a significant contribution towards securing the UK energy supplies by means of sustainably high domestic production levels. Our focus is the Southern North Sea and West of Shetlands"........

Is it a major international oil & gas co? Where is the oil? Does its exclusive North Sea focus to date qualify it to be called 'international'?

https://www.ineos.com/businesses/ineos-oil--gas-uk/our-business/

Spirit is definitely a possibility, based on the description given of the preferred bidder. There are many other companies that fit the description of the preferred bidder that could also be involved.

Re timing, whilst a binding deal has to be in place by the end of January and completion to take place by the end of February, is there any reason why everything should be left until the last minute to announce, if agreement could be reached sooner? Algy might want to pleasantly surprise people - he's an amiable sort and it is coming up to Christmas ........... :-)

jmofwiw - DYOR

What's more relevant is that your post is plain daft, loadsadough (Warren Buffet has loads too).

Last time I checked, Britain was responsible for less than 1% of global carbon emissions (so-called 'greenhouse gases'). And in large areas of the western world (USA and Europe in particular) changes in land use associated with human activity have the net effect of absorbing CO2, partially offsetting the emissions mainly caused by cutting down and burning forests in other parts of the world (eg S America and large parts of the Far East).

So lets go all out to cut GB's emissions by 20%, whilst China, the US and dozens of countries ahead of GB keep banging out coal, burning oil and gases and cutting down and burning forests carry on doing so with reckless and gay abandon. I'll pay a charity £100 every time I hear a politician say what's really needed and this is a sensible approach to population control. People consume energy. The planet only sustains so many people and this was exceeded many years ago; the excess is now numbered in billions. But that wouldn't be a vote winner and whoever suggested it be called a Nazi. As a 'for instance' here in the UK, young people (married, single, gay, straight - it matters not a jot whether they have the necessary parental skills or know the first thing about the responsibilities of parenthood) are incentivised to have children they can't afford to raise without tax-payers' support. Why?

Never mind saddling future generations with the responsibility of trying to sort out carbon emissions caused by countries it's impossible to control when it's too late. What about the 6 or 7 trillion pounds of debt. This is made up of national debt, combined with 'off balance sheet' unfunded liabilities to pay public sector and old age pensions out of future current taxes. And whole chunks of liabilities flowing from Labour's copious use of PFI funding resulting in unaffordable and otherwise onerous leases on all the schools and hospitals GKB (Gordon Knows Best) liked to claim his party were responsible for providing for the nation.

Who caused the crisis by opening our borders to all? Who said the planet was only for humans anyway? It might not be a bad thing if more creatures (which might develop real intelligence countless millennia in the future) if there weren't so many humans around and other species could share a few more of the earth's resources.

Nature usually sorts things out in the end. I will continue to try to act responsibly and won't take my lead from cringing politicians who continue to show what devious, dishonest, generally incompetent and largely thick slimeballs they are on a daily basis. They have the power to act quickly, but they don't because they won't accept the cost and they know China won't listen whatever they say.

Two things aren't going to happen, loadsadough:
1 Gas production slowing down any time soon
2 You emulating Warren Buffett.

Otherwise a very good post

DYOR

Thanks VCKP.

It's impossible to work out the likely trading behaviour of people who criteria are different to mine so predicting SPs that are the result of short term trading is a no-no. They do price. I do value (as I see it). I see plenty in CLNR but it all depends on signing up partners and then those partners doing their stuff by picking the right spots on the licences to drill. Luck always plays a big part, however well all the prep work is carried out.

Positive price action (based only on what I've seen in the past in small E&D oil & gas cos) tends to occur:

* on the announcement of a signed farm-out deal
* in the period leading up to an exploratory drill
* on announcement of a drill result (assuming it's positive)

I was expecting a much bigger price hike when the news was released last week. I can only think that people's hopes had built that, because 30 Nov was the key date, one of two outcomes was likely:
1 news of a signed farm-out deal with a bigger player
2 surrender of the licences (in a worst case scenario) or further 'kicking it into the long grass' (".........we're talking to gazillions of interested parties of galactic size and they're all REALLY interested"......(yawn)

The RNS was a relief but still left uncertainty. I added a few at what I saw as good value (2.29p). I see it as more likely than not that CLNR will sign a farm-out deal on at least one of P2252 and P2248.

What people probably don't take into account is that it's never easy doing any kind of deal when you're backed into a corner (because whoever you're talking to knows you're short of cash and it's critical you do a deal of some kind - ANY kind). If the Company is to be believed, CLNR seems to have played a blinder in getting multiple parties interested in the licences. Widespread interest changes the dynamics entirely. You know the rest.

Doesn't seem to me out of the question that within 2 or 3 years CLNR should have a value of more than £100m? That's if all kinds of variables (farm-out interest, gas prices, regulations, politics, tax - you name it) don't jump out and spoil things and it has any kind of luck with the drill bit. The number and quality of licences it's sitting on is mind-boggling given its size. Currently the market values it at about £13m.

I think there are 538m shares in issue and directors are holding options over another 13%+ (some of which are 'in the money'). Hopefully whatever CLNR is paid in cash on however many farm-outs it manages to do will avoid the need for further equity fund raising activity.

wdik? It's all in the future. I've been wrong in the past but my record of late has been better. Concentrating more on the people behind the claims made (ie the reputation of the individuals running the companies) has brought better results. Luck always plays a big part - oil & gas is inherently risky.

Apologies for the long past

DYOR

The 6 companies you name are also referred to as the "supermajors", draft. I'll have a friendly wager with you that none of them is involved here and be happy to lose. There are any number of possible suitors and some names that might be in the frame have already been helpfully suggested by other posters on here since the RNS on Weds. I can think of one or two others on top.

The general idea of a farm-out is for a licence holder in CLNR's sort of position to get a free carry on a drill that wouldn't otherwise be possible due to lack of funds. Seems unlikely to me CLNR would be expected to contribute to the drilling cost, not least because it doesn't have any cash to speak of. The variable (or perhaps 'quid pro quo') in all the cases I've come across to date is the percentage of equity in the licence surrendered to the party chosen to farm out to. Usually there's also a cash 'sweetener' paid to the licence holder in recognition of the importance of cash to the smaller entity.

In the case of JOG (which reversed into the remnants of Trap Oil in 2015) one of Trap's 28th round licences (P2170), in which Trap had a 60% operator's interest was farmed out to what was then called Statoil (which would certainly count as a 'major' even though it isn't on your list). Statoil paid JOG & the other partner (CIECO) $2m in cash and agreed to meet 100% of the costs (up to a max of $25m) of an exploratory drill on the licence (Verbier was chosen) , in return for a 70% operator's interest in P2170 . Thereafter, each of the parties was required to meet all E&D costs pro rata to their interest (70:18:12).

Sorry if the above is a bit long for you, draft (you might even have applied the filter - I'll be hurt if you have). Others might have a longer attention span, however and be interested to learn about a real example to contrast with your opinion.

JOG's shares were trading at about 35p when it was announced in August 2016 a farm-out to Statoil had been agreed, subject only to the usual clearances. Nothing happened to the share price, which I found surprising. When it was announced 2 months later that the agreement had been signed, the share price immediately more than doubled and then carried on up.

Let's hope agreement is soon reached in principle with the oil & gas major in question and that it goes on to complete. With a bit of luck the same thing might then happen to CLNR's share price. All LTHs could then breathe a sigh of relief and wait (with little or no downside) for many other agreements to follow.

DYOR

draft - as a matter of fact I am a former partner in one of the so-called 'Big 4' accounting firms, where I counted share valuations (mostly in connection with dispute resolution) among my specialisms. I hung up my accounting boots early (one spends a long time dead) and have kept myself occupied since in a host of different - largely productive - ways, including studying more fully the concept of risk vs reward with a view to managing my own investments more effectively. I have a limited number of current investments - and you will therefore only have seen me posting on JOG, (where I acquired the majority of my shares at between 8p and 20p from late 2015 to mid 2016) and Serica (where my entry prices were at 14p, 18p, 22p and 26p). Neither share now owes me a penny as a result of de-risking by selling a limited number of shares at much higher prices than I paid. I hope to do the same with CLNR, in which I have a significant investment (in my terms) acquired at an average of about 2.3p.

I posted on Interactive Investor as 'Eagle51' from 2007 until someone clever there decided to destroy the discussion boards earlier this year. I am not a particular fan of LSE because of the number of ill-informed people who loudly tell others what the situation is when the reality is they haven't got a clue. Against this - and as ever - there are others whose contributions are highly valued. I'll leave it to you to work out where you fit in. Judging by the accuracy of your assessment of me and what I do, it shouldn't be too difficult a task.

Reference farm-out v farm-in, I prefer official company releases to 'podcasts':

RNS 27 Sept 2018: "Cluff Natural Resources Plc, the AIM quoted natural resources investing company with a high impact exploration and appraisal portfolio focused on the Southern North Sea gas basin, is pleased to announce that it has recently updated the UK Oil and Gas Authority ("OGA") on its farm out processes for the P2248 and P2252 licences".........

https://www.investegate.co.uk/cluff-natural-res--clnr-/rns/licence-update-on-p2252---2248/201809271534122200C/

GL

RNS 29 Nov 2017: "Cluff Natural Resources Plc, the AIM quoted natural resources investing company, is pleased to announce that the UK's Oil & Gas Authority ("OGA") has confirmed that the Company's two 100% owned Southern North Sea Gas licences, P2248 and P2252, which are estimated to contain combined net P50 prospective resources of 2.4 Trillion Cubic Feet of gas, will be extended, subject to the achievement of certain milestones, for a further year".........

.........RNS of 30 Aug 2018 re 30th Licensing Round: "The Southern North Sea blocks awarded to CLNR contain a number of drilled discoveries, undrilled prospects and leads with an estimated combined unrisked P50 prospective resources of approximately 1.9 TCF net to CLNR".

Consider the following: https://www.indexmundi.com/energy/?country=gb&product=gas&graph=consumption

Clearly all the chickens won't come home to roost, but there's more than a sporting chance at least one or two will in the coming years. Any one of them doing so would make a complete mockery of the £13.5m at which the market values CLNR at close of play today.

If the exclusive (and other) discussions CLNR is having with a major oil & gas company (and others) conclude positively, it is highly likely CLNR will be carried on its remaining share of the licence/s on one or more drills that are bound to be done in 2019 if the OGA's requirements are to be met. The anticipation of the drills alone as they approach should drive the share price to levels well beyond those achieved so far in CLNR's relatively short history.

I'm not even going to talk about the licences most recently awarded. It goes without saying (although I will say it) that signing the farm-out agreements is key to the whole thing but there's no reason to think they won't be signed having got this far - particularly P2252.

We might be experiencing an "emperor's clothes in reverse" situation here. A stubborn refusal by the market to recognise that this is an investment (for those willing to embrace measurable risk) that is dressed in the finest silks but which is seen by many as being in its underpants (budgie-smugglers not boxers at that).

Every so often a real opportunity comes within reach (recently JOG at 8p-20p and SQZ at 4p-26p?). The skill comes in reaching out and grabbing it when it does.

There are no guarantees in oil & gas. If you don't like risk, look elsewhere.

DYOR

GLAL

Part 1 - too long for one post (apologies in advance)

It shouldn’t be forgotten that Bruce and Keith are late life fields (Keith is described as ‘very late life’, with production due to cease in 2019), so applying a p/e to present numbers isn’t necessarily the best way to get to a fair value for the shares in this case (imo – I have a relevant background although I didn’t work in the oil & gas industry). And despite Rhum having considerable upside potential, this is very difficult to predict accurately because there are so many uncertainties, particularly around reserves upgrades and timing. Political uncertainties overhang everything, even at a UK level (ie ignoring Trump’s shenanigans, not to mention an oil price - and to a lesser extent gas price -that’s significantly influenced by OPEC, a few other big players – and of course Goldman Sachs and JP Morgan, who have way too much influence on oil prices using their crooked ways on NYMEC and ICE, the world’s biggest energy exchanges. Ref politics, attitudes to what some blinkered politicians regard as “the nation’s assets” can quickly change, along with tax rates, regardless of the fact a limited number of private investors (PIs) have taken all the risks – institutional investors also use PIs money when making their investments.

I could spend a long time explaining why NPV, which is the product of discounted cash flow modelling using estimated future cash flows to arrive at a fair valuation today, is easily the best way to value a company like SQZ. But even this requires predictions about future volumes, prices and costs – with the rate of discount applied (supposedly) reflecting the perceived risks that apply in the industry and in each individual case. 10% (NPV10) is the standard discount applied in the oil & gas industry, with a further discount applied to reflect the diminishing buying power of money (inflation, in simple terms).

I ran some ‘back of an envelope’ models shortly after the first BKR deal was announced which supported a share price well ahead of what it was at that time, but the estimates I made about future capex, maintenance and maintenance costs were no better than guesses, albeit probably on the conservative side. I can’t remember the precise number I came up with but 150p+ comes to mind and a lot has happened since that’s decidedly positive.

For the present I’m happy to apply a price to confirmed reserves that has some sort of support based on recently completed NS deals, in order to arrive at a broad estimate of SQZ’s value today. Rightly or wrongly I’m using $12 a barrel and applying it to confirmed reserves as stated by SQZ in the Supplementary Admission Document of 26 Nov: “Based on the Updated BKR CPR and Updated Serica CPR, Serica's pro forma net 2P reserves are expected to increase over 20-fold to 63.7 mmboe, as of 1 August 2018”.

to be contd............

SQZ interim report 28 Sept:

"We look forward to becoming operator of the Bruce, Keith and Rhum (BKR) fields, so that we can take advantage of continued strong gas and oil prices and start to implement our plans to maximise recovery from these assets by prolonging field life. We will also continue to use our financial position in order to identify and pursue opportunities to grow our portfolio in the UK North Sea."

SQZ's BKR deal (not sure about the two subsidiary "mirror" deals) will complete on 30 November, when the Company will receive 40% of net production revenues from the 3 fields since 1 January 2018. SQZ already has a significant cash pile. The aggregate would be enough to buy CLNR a few times over, based on its market cap today of just over £9m.

Seems odd to me the OGA would choose to award 6 new licences (10 blocks and part blocks) in the 30th Round to a minnow like CLNR if it thought it was unlikely to be able to progress them. Are the P2248 & P2252 licence extensions to 30 Nov just a coincidence?

I'm still relying on Graham Swindells' words in the last RNS of 27 September: "..... we remain confident of being able to achieve our ultimate aim of securing the necessary partners and investment to allow wells to be drilled on these two licences."...........and Algy's in his statement of 3 Sept:
".......I am confident that with the revival of interest in the North Sea will come a revival of exploration, the life blood of the industry, and that in my next statement I shall be able to refer to a drilling programme on our licences".

I can’t say what will or won’t happen because I don't know any more than the next investor - I'm just speculating. I’ve got a lot (in my terms) in CLNR and accept the risks, which come with the territory. Happily, I have a lot more in SQZ, having bought at prices much lower than today's.

Both investments were founded on the reputations gained by the respective leaders, Algy in CLNR and Tony Craven Walker in SQZ. Algy might not be able to do anything about it but one thing’s certain - he won't want to bow out with a flop. CLNR is his swansong. Plus he wouldn't do his standing much good in the eyes of two individuals (Dorfman & Spencer) who wouldn't normally be expected to have put a chunk of their respective fortunes into a North Sea explorer like CLNR. Seems likely to me Algy knows them on the charity circuit - the three together now have a blocking vote in the event of a hostile bid. Perhaps Ashanti Gold's opportunism still irks Algy?

All just idle thought whilst waiting. Just out of interest, SQZ was awarded 3 licences in the 30th round which, coincidentally, included Skerryvore:
https://www.heraldscotland.com/news/14790321.algy-cluff-in-north-sea-oil-option-setback-skerryvore/

GLAL

imo/dyo

PS how's the rehabilitation programme going, Riz?

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