Member Info for dickupham

Welcome aboard, Kheldar - hope you multibag.

The key issue imv is the enhanced reinvestment relief the Conservatives offered. With capex to first oil of c.£900m, the availablity of the relief (or something similar) makes the difference between a positive and negative NPV10 outcome. JOG is fully carried on its share of capex but the JV has to: 1) get FDP approval and 2) NEO and SQZ have to make a positive FID. FDP approval might not be straightforward, given the Supreme Court poking its nose into Surrey CC's EIA approval of Horse Hill onshore field 5 years ago. It's a legacy of Blair - do us all a favour and FO - you've damaged Britain enough to satisfy any normal power-mad freak with personal values that accommodate super-wealth aligned to truly socialist principles. The Supreme Court sits alongside the ECHR, in which "umen rites" count above all - it's everyone's "umen rite" to live in Britain - what has a British culture got to do with anything? It does away with the centuries-old sovereignty of Parliament. Comprised of 12 unelected law lords chosen for their pinky liberalism, recent examples being the propogation of Parliament in 2019 declared unlawful and the most recent their pronouncement that the eventual emission of "harmful greenhouse gases" meant Surrey CC shouldn't have approved the EIA . Opens up the possibility of judicial review of the Buchan FDP - when/if it gets approved?

Imv the NS oil industry should have got involved with the Supreme Court hearing. Who says CO2 is harmful? Without it there would be no life on earth. A Court ruling based on unsettled science involving what might happen in the future? What's going on?

The risk here is that Labour decides to shut down the NS by taxing the industry to oblivion, not realising that leaving companies with no possibility of operating profitably tends to encourage them to invest elsewhere. That 100k+ skilled jobs are lost and the plans and aspirations of so many decent and talented individuals and their families get flushed down the pan means nothing to freaks like Red Ed, who's only usually chosen for anything as a sop to the Labour Left and the Unions - he's the wrong choice here - maybe that's the adults' plan, assuming there are a few adults in the Party - they can ditch him and say he upset GMB and UNITE, two big Party donors.

I'll post 2 links - both interviews are well worth listening to/watching. One more than touches on DEI (the core of "wokism" - so dangerous to western society). Has it occurred to anyone that what is happening all around us presently is seriously challenging the values our parents (or grandparents) fought for and in many cases gave their lives to uphold? Can't be happening by accident.

jmo/dyor

I doubt Labour intends to make the situation any worse than it was under the cowardly PoS Sunak. Only £1.2bn pa is shown as coming in from what it calls WFT of the £4.7bn earmaked for the Green Crusade. The rest is borrowed.

Https://www.cityam.com/government-denies-ed-miliband-has-banned-new-north-sea-oil-licences/

.........very odd.

You're not Ed Miliband in real life are you by any chance, MunnieTorx?

Sounds as if Miliband got a sharp telephone call from one of the adults telling him to deny he said anything and STFU until he's told to say something. Labour will now know the reaction it's going to get if it does anything really stupid.

"Risk level just went up tenfold for JOG, I'd say"..........

.........as there is nothing remotely new in anything you have outlined, your assessment of increase in risk level makes you a buffoon, I'd say

Just my opinion, of course. No offence intended

"Writings on the wall for JOG".................

.........can you explain why, Einstein?

In case it's of interest, I posted what's below on the JOG board earlier:

"RE: Labour's NetZero policyToday 23:47

Good find, Varnish. I've linked the article below to PressReader.com to avoid the pay wall

https://www.pressreader.com/uk/daily-mail/20240629/281848648795652

I'm not sure that using logic will hold any sway with this Labour lot, whose mission seems to me to be crippling the UK economy by whatever means possible. What better way to do it than starve industry of affordable energy . The gazillions of voters (many of them not long out of school, where socialist indoctrination is the game played by all the lefties in the teaching profession) or at University (more of the same) who vote for oblivion next Thurs, might never come to realise the error of their ways, because it will be someone else's fault when they can't afford to buy (or secure at all) the goods and services they've come to regard as their entitlement. Taxes will be sky-high, freedoms they've take for granted long gone.

Suggestion: if you've got any moveable wealth at all, convert it to Krugerrands and hide it. If you have significant fixed assets, emigrate.

The Left will have its way. It will be a horror show - and it's heading our way.

Take some time to watch: https://www.youtube.com/watch?v=Ydl_47G8nzk

It (sort of) explains it all. You'll gain a much better understanding of what's happening. The intelligent and balanced experts on the panel (it followed a keynote speech by Richard Lindzen, whose knowledge is boundless and insights incredible) plus all the academics in the audience are the kind who (like me) are labelled "Climate Deniers" (they can't even get that right - I imagine they mean "climate change deniers"). I do not deny climate change - I just don't happen to think that when it comes to humans against nature and the universe, the best approach to take is the one Canute chose. Man can adapt. Nature won't. It's just a question of how many centuries of discoveries making our lives as they are today will have been given up by the time an ugly (but very rich) 43 year-old Swedish recluse living in Switzerland finally admits (when CO2 levels have risen by another 200ppm) there is no real evidence of any effect on the planet as a result of "man-made global warming" except that the human population has continued to grow and deserts will have reduced in size as a result of the expansion of areas of vegetation, many providing foodstuffs for the indigenous population, which will also benefit from the water storage in the new plant life, which will improve the quality of the underlying soil etc etc. People (some) will still choose to live in the polar regions and some in the Tropics (temp diffs about 50°C). No-one will have died from "global warming" - they'll have continued to adapt (eg near the Poles they'll have worn warm coats and polar bear hats - I'd have liked one of those and might have bought one if I'd still been alive........

dyor

Correction: ...........Humans can adapt. Nature won't

Good find, Varnish. I've linked the article below to PressReader.com to avoid the pay wall

https://www.pressreader.com/uk/daily-mail/20240629/281848648795652

I'm not sure that using logic will hold any sway with this Labour lot, whose mission seems to me to be crippling the UK economy by whatever means possible. What better way to do it than starve industry of affordable energy . The gazillions of voters (many of them not long out of school, where socialist indoctrination is the game played by all the lefties in the teaching profession) or at University (more of the same) who vote for oblivion next Thurs, might never come to realise the error of their ways, because it will be someone else's fault when they can't afford to buy (or secure at all) the goods and services they've come to regard as their entitlement. Taxes will be sky-high, freedoms they've take for granted long gone.

Suggestion: if you've got any moveable wealth at all, convert it to Krugerrands and hide it. If you have significant fixed assets, emigrate.

The Left will have its way. It will be a horror show - and it's heading our way.

Take some time to watch: https://www.youtube.com/watch?v=Ydl_47G8nzk

It (sort of) explains it all. You'll gain a much better understanding of what's happening. The intelligent and balanced experts on the panel (it followed a keynote speech by Richard Lindzen, whose knowledge is boundless and insights incredible) plus all the academics in the audience are the kind who (like me) are labelled "Climate Deniers" (they can't even get that right - I imagine they mean "climate change deniers"). I do not deny climate change - I just don't happen to think that when it comes to humans against nature and the universe, the best approach to take is the one Canute chose. Nature can adapt. Nature won't. It's just a question of how many centuries of discoveries making our lives as they are today will have been given up by the time an ugly (but very rich) 43 year-old Swedish recluse living in Switzerland finally admits (when CO2 levels have risen by another 200ppm) there is no real evidence of any effect on the planet as a result of "man-made global warming" except that the human population has continued to grow and deserts will have reduced in size as a result of the expansion of areas of vegetation, many providing foodstuffs for the indigenous population, which will also benefit from the water storage in the new plant life, which will improve the quality of the underlying soil etc etc. People (some) will still choose to live in the polar regions and some in the Tropics (temperature differentials about 50°C). No-one in either location will have died as a result of "global warming" - they'll have continued to adapt (eg near the North Pole they'll have worn seal-skin coats and polar bear hats - I'd quite like one of those and might have bought one if was still alive and Eskimos were into exports...........

Make a noise

dyor

A non-hysterical approach to the subject.

https://www.youtube.com/watch?v=tqcDyHdbYd4&t=1557s

Good spot on Repsol and NEO, Shredders. Thanks for posting. Fwiw, I read the (potential) news as positive, although there will be a lot in the detail. Hitecvision owns NEO and might be looking to divest itself of everything connected with the NS. If that were to be the case, Repsol might get to make all the decisions if the deal was a S&P rather than a merger. Repsol is a giant (25k employees) even if NEO has bigger interests (boepd of production) in the UKNS.

Guess we'll just have to wait until our Marxist leaders tell us what their detailed plans are to part decent, hard-working people from their money to buy the votes of the types they like best - those who make no contribution whatsoever to our once great country, because it's their entitlement, see?

dyor

There are a few sensible people around........

https://www.youtube.com/watch?v=tqcDyHdbYd4&t=1557s

.........that would be the UK Government - devious, dishonest, devoid of understanding - utter dopes.

Quote:

"Meanwhile, the UK remains an attractive destination for investors across all energy technologies, with government continuing to support investment in the North Sea oil and gas as part of the transition to net zero, alongside the drive towards renewables, such as wind power and hydrogen. The government is also committed to ensuring fairness for and support for UK investors operating abroad".

You couldn't make it up.

Sue the b'tards under the treaty before they changed all the rules. You can't take money off someone when the purpose of the transaction leading to the payment (perhaps in the form of spend committed to a project by the licensee) was clearly understood by the parties. EG: (thus hath spake the NSTA): "if you pay us what we ask for, we will grant you a licence to explore a defined part of the UKCS. Subsequently, if you decide to do so (subject to our not unreasonable requirements being met in regard to field development etc ) we will authorise you to develop the part of the UKCS covered by the licence, conditional on you (eg JOG) meeting the conditions attaching to the licence in regard to drilling an exploration well within a given timescale, followed by an appraisal well where appropriate, plus whatever else we reasonably require you to do, so that you don't just hold onto the licence until some time in the future which suits you, because tax revenues from production is what we're after - after all "MER" is our motto (Maximise Economic Recovery).

5 years later (after the licensee has committed countless millions on the development): "slight change of direction - yes, of course you can still carry on (you've got a contract after all) but our bosses in the Government have decided to make it impossible for you ever to realistically make a return on your considerable investment to date. Sorry about that".

The O&G industry needs to wake up

https://www.gov.uk/government/news/uk-departs-energy-charter-treaty

I've had to dig out “the Dunning Kruger Effect” article yet again (linked below). You won't be able to understand it, MT, but it's worth a go.

https://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect

In essence, two clever American chaps concluded (after much research on the subject) that inherent stupidity prevents stupid people from recognising the level of their stupidity (I DID say you wouldn’t understand). As a measure of your own stupidity, in your 24 June 15.45hrs post you invent a set of circumstances that apparently applies to the writer of 3000 posts (not all related to JOG) and his ownership of shares therein, when you have no means of knowing if any of the circumstances you confidently say exist actually do exist, or have ever existed in the past. Not very good I’m afraid, MT. You’re right up there with the test cases Messrs Dunning and Kruger based their studies on.

Be a good chap and infest some other board, would you? You belong in the day-traders' gutter, talking down shares in the mistaken belief that people will be daft enough to pay attention to the garbage you spout and that your worthless (because they are totally unsupported or blindingly obvious) opinions will cause JOG's share price to "receed" - your word for recede I expect. Everyone is entitled to their opinions, but yours are “exactly zero use” (to coin an expression).

You are certain JOG will fail, whereas I and a few other LTHs are not. What I am certain of is that the oil is there and , totally illogically, unjustifiably and unpredictably, first the Conservatives and then Labour have acted in ways it would be plain to anyone with a modicum of understanding of workings of the UK Oil & Gas industry would destroy it, thereby increasing the threat to national energy security, given Britain was already 2/3rds dependent on overseas countries (not all friendly) for the energy it needs to keep the lights on, before it got a whole lot worse.

The motives behind each Party's policies were different, the Conservatives going for quick cash and popularity by paying people's energy bills, raising a lot of the money by flogging the wrong (but safe to flog) horse. The civil servants in the Treasury will have dishonestly told their "wet-behind-the-ears" and hated "masters" this would be a good thing to do and then egged them on to increase the EPL by a further 10%. It should not at any stage be taken as read that people in Government - and perhaps more importantly that every one of the 510,665 (constantly growing in number and moving further left) civil servants in Whitehall and elsewhere - has Britain's best interests at heart. Stoma's biggest lie on Weds?? "Country, not Party, first".

Will Labour cut out the capex allowances - 91.40 per £1 spent? I can't say, but I never sell in fear. I'd be happier losing the lot than selling at £1, then being told by Einbert about the fab knees-up at Buckfastleigh..........

It isn't keeping me awake at ni

Au contraire, raxfactor - the rulings of the Supreme Court cannot be challenged - according to what I read, anyway. It is worth spending a bit of time studying what has actually happened here. Needless to say it all goes back to Blair and the EU. Sunak (via K Badenoch, who probably didn't/doesn't understand) refused to bin Britain's tame compliance with everything we were obliged to follow before the final exit agreement was signed (thereby removing our sovereignty as a nation) when he had the chance to about a year back (it was referred to as "a bonfire of 3500 petty EU regulations Sunak decided to keep on the statute book - for that alone he should have been hanged for treason; never mind leaving the 80th anniversary of D Day proceedings in Normandy early (probably after asking Cameron if this would be ok and Cameron immediately saying "yeah, fine Bro", before jumping into the the "look at me everyone - I'm back at the top table - that's me standing next to the important bloke who's in nappies, alongside the French midget and the bloke from Germany who had the bare-faced cheek to join in with proceedings when his father's generation who caused all the death) photo-shoot.

Read what the Supreme Court has to say about itself below. Who elects Lords, by the way?

You can read all about the Horse Hill case on the website - and anything else that might have been confusing you.

https://www.supremecourt.uk/about/index.html

https://www.supremecourt.uk/about/biographies-of-the-justices.html

https://www.bailii.org/ew/cases/EWCA/Civ/2022/187.html

I get where you're coming from raxfactor. But are you sure "the deal is water under the bridge now"..............do you not see a risk of Mercuria finding SQZ just too attractive not to take private now the 18 month lock-in period is coming to an end. I'm not saying it will happen, but the risk must surely be overhanging the shares - to an extent at least.

If there's anything that would alleviate this fear (if it's real and not just me being neurotic - it's happened to me before) it is that Mercuria hasn't put all its own people on the new reconstituted BoD.

Let's hope (i) Labour backs off with its plans to destroy the UKCS upstream O&G industry and (ii) David Latin proves to be an exceptional CEO who goes on to realise SQZ's considerable future potential

dyor

....should have checked it before pressing the button - apologies.

"Unfortunately the one major holder who might have been able to prevent the Tailwind deal from going through".........turned out to have no balls, or no brains - or both"

"The only benefit I can see is that they are in treasury instead of being cancelled"..........

.........I'm surprised you see this as a benefit, raxfactor. Shares held in Treasury can be dished out out to deserving sorts, like directors who have presided over increased EPS.

The old ones are the best.

What a cracking job Serica's former directors have done for all us LTH these past 2 years. I'm pretty certain it was Andrew Austin's threat to put some life into an underperforming company that was coasting on the back of the gift of BKR made to it by BP that got them galvanised into action and they then got busy fixing the best possible deal for themselves. Sod "ordinary" shareholders. Unfortunately the one major holder who might have been able to prevent the Tailwind deal from going through. The bizarre way it was structured left all SQZ's other shareholders at the mercy of what is, in essence, a Swiss hedge fund. Hedge funds aren't noted for their philanthropy.

Add Sunakhunt and Stoma to the mix and you have a level of toxicity that would have been impossible to imagine two and a half years ago. Theft and deceit pay off in the modern world - that much is plain. Ref the politicians, how on earth can a windfall tax (which is not a windfall tax at all - it is a straightforward hike in the tax rate charged on UK upstream producers from 40% to what is about to become 78%, with a bigger percentage of profits being brought into the calculations as a result of the disallowance of expenses like interest and decommissioning costs and a restriction of the use of brought forward losses to 40%) be applied for 5 years into the future. Easy - you cheat when calculating the price floor which, were it to be breached on the downside, would end the EPL by failing to take into account 5 years in total of Covid (2019-2021) and the spat between OPEC and the US (2014-2017) when Brent Crude fell off a cliff.

No doubt Mitch and TCF are lazily enjoying the proceeds of all their hard work as those left behind suffer. Thanks again fellas.

What a truly sh.i.te country Britain has become

jmofwiw

PPS

You can add 50p (29p + 21p) to my 577p per share NPV (for cash at bank and the proceeds of option conversion). This gets us to 627p per share.

Zeus, via other routes, gets to 617p for what it calls: "total core and upside NAV".

Is it worth the risk??

"At $249m (NAV of JOG's share of Buchan - plus the resources and prospects in the other licences) JOG's 25mstbbl of (at 'reserves' value - it's only timing) have a value of $10 pb"..........

.......I meant to write: "At $249m (NPV of JOG's share etc.............)

ie: NPV not NAV

Bloody bookkeepers..........who'd have them?

I have now prepared a DCF/NPV model for JOG alone. This shows that, making the assumptions I've already outlined for the Buchan Field in total, JOG's share of Buchan has a net present value (NPV10) of $249m. It's a lot more than 20% of the overall NPV10 value of $735m referred to earlier because JOG doesn't have to bear any of the Capex cost, which is reduced by the availability of the 84p relief for every £1 spent by NEO and SQZ under the EPL reinvestment allowance. Additionally, JOG is the recipient of the upfront and milestone payments made (or to be made) by its two JV partners.

The $249m converts to £199m which, divided by JOG's fully diluted shares (36.6m), gives a value per share of 544p.

So, why the difference between my number and Zeus's?

There are many possibilities. I might be ok on the financials, but Varnish flatters me with his much appreciated but incorrect assessment of my knowledge of the industry as a whole, even though I've been invested in it for more than 15 years. I haven't included rig maintenance in projected spend, for instance - is it necessary in the first few years of a project? Maybe Zeus has? I have used a constant BC price of $75, whereas Zeus has used $65. Zeus has used a $/£ rate of 1.3, whereas I have used 1.25. I have used an estimated 25mstbbl of "reserves" that are still officially regarded as contingent resources. Zeus has worked out the NAV of the GBA fields and licences differently - note, NAV not NPV. I'm only interested in broad estimates based on assumptions I think are reasonable. They're far more detailed.

I always take what I call a 'macro view' of any numbers I come up with. As I see things, JOG owns a 20% interest in the P2498 and P2170 licences, which contain the Buchan oil field, the J2 and Verbier oil discoveries and a number of exploration prospects. Estimated resources are in excess of 100mmboe of API 33.5° sweet light crude (about the best you can get). JOG's early estimates were of 170mmboe of contingent resources, but I guess these estimates were pared back on due diligence, or whenever seismic testing was done that set a platform for finalising the deals (FOs) that followed. I have assumed there will be at least 125mmboe and that JOG will own 25mstbbl of this. It's just my take of the situation.

When the Buchan FDP is approved, the contingent resources therein will be recategorized as (2P) reserves. The oil in J2 has been tested (it flowed at 2850bpd) and we know about Verbier.

At $249m (NAV of JOG's share of Buchan - plus the resources and prospects in the other licences) JOG's 25mstbbl of (at 'reserves' value - it's only timing) have a value of $10 pb.

HBR's recent acquisition of WD's huge portfolio of (mostly producing) interests was at $10pb. Bet they're not all 33.5°API. Buchan should become a jewel.

Patience still needed. The risk is political. No point to me in selling at these levels - hope Zeus and others are right about Labour

dyor

.......slight correction, Dennis: "The lunatics have already taken over the asylum"

Slight amendment re wording on inv allowance: I wrote:

"1. The availability of the 84p cash (per £1 spent) in additional investment relief on qualifying Capex"............this should have read: "total investment relief on qualifying Capex...etc"

OK. I have only taken the DCF projections forward for the first 7 years of production (from 1 Jan 2028 to end of 2034 - see below twds the end). The effect on NPV of projected net cash contributions each year diminishes each year when the discount (or discounts) is applied. As an example, the NPV (ie the value today) of £1 of project cash inflow in 7 years' time amounts to 34p - and it is less again in year 8 and so on. I decided to stop after 7 years (i) because I get bored crunching numbers and my back hurts even more than it usually does when I'm hunched over my laptop typing with two index fingers and my right thumb (used to hit the space bar immediately below the keyboard). (ii) I am by no means confident that 10% is the right discount to apply (to recognise risk - it's just the rate the industry uses - probably fair enough because the risk is cumulative; income expected 7 years in the future has an effective risk applied of 66% of it not arriving); (iii) I have not included the usual discount to reflect the cost of money (some call it inflation, others call it interest, but monetary cost is what it is supposed to represent; typically, the rate would be between 2% and 5%). Generally it's too notional to get excited about.

There's no perfect way to value any asset held for commercial purposes (projects, shares etc), but NPV using DCF projections is as good as any afaic - as long as the underlying assumptions have merit. To ASSUME is to make an A.SS out of U and ME - a wise man once said.

Taking the approach I've outlined, the Buchan Project (in total - ie JOG's, NEO's and SQZ's combined interests) has a NPV10 of in excess of US$735m under the tax regime Zeus (and others supposedly in the know) believes will apply when Labour take office. Their views are in part corroborated by the fact that only £1.2bn pa for the 5 years of the next Parliament is forecast by Labour in its manifesto to be collected from companies paying the EPL.

jfi (I have no idea if what I have assumed about timing of Capex spend will be anywhere near accurate) I have converted £900m of infrastructure cost to US$ @ $1.25/£1 ($1.125 bn) and estimated it will be spent in: 2025 - $100m; 2026: $300m; 2027: $725m. The timing and yearly spend numbers might not be accurate but in total they shouldn't be far off. Bear in mind that NEO and SQZ (according to Zeus) would be able to claim 84/100 x qualifying Capex to immediately offset against profits from other UKCS fields they have interests in (which would be suffering tax at 78%).

JOG's 20% of NPV10 will be greater than 20% (in value) because it won't have any Capex (less the relief) and it will have the milestone payments included in total costs.

nuff said - dyor