Member Info for dickupham

............if you've read Part 1, in fact additional revenue generated by the increased BC price would fall straight to the bottom line (as shown in my example). Don't quite know why I confused the issue with my "pro-rata" nonsense. Out it down to age and general infirmity.

Any ideas on whose gonna win the Masters, anyone? I've backed a few outsiders at long odds (a bit like betting on AIM listed oil juniors except that the Conservative and Labour parties can't shoot the golfers at Augusta).

Tips for Saturday's Grand National also appreciated. I'm thinking of liquidating about 10% of my JOG holding and backing one of Willie Mullins horses but might decide to put the money on a golfer as he's less likely to fall over.

........."so you shouldn't suggest some kind of allowance is due".............not should

mea culpa

Goodnight and goodbye (for now at least)

Part 2 (ie Part 1 contd)

Work it out – it isn’t rocket science but for some reason everyone, including the useless OEUK, has been conned into calling it a windfall tax, when it quite clear it goes way beyond that. Just wait until Labour get in and finish off the job of killing the North Sea.

For the less mentally adept, had the so-called “windfall” tax (called EPL to discourage challenge) not been imposed our company would have had a profit after tax of £86m. It now has a profit after tax of £36m.

In a nutshell additional pre-tax income of £43m has led to a tax charge of £50m – an effective tax rate of 116%. And this is before Labour gets to work by increasing the (so called) wft rate from 75% to 78% and removing the “anomaly” of re-investment relief and disallowing decommissioning and interest costs, plus removing the ability of companies to use b/fwd losses to the full (perhaps ‘at all’, if the chancellor whose legs touch all the way up from her ankles, gets on a run).

“Dear Government – would you please let us lift and sell enough oil to enable us to give you 100% of the additional profit we make as a result of what we accept was a windfall event. We won’t charge you a penny to do this, so not only will we not make anything as a result of the windfall event, it will actually cost us money as we’ll be working for you for nothing”.

“Dear Nonentity we don’t care about, because we’re only interested in virtue signalling and getting cash in so that we can pay people’s energy bills, which will make us popular and keep us in power…………no you can’t do what you suggest because it doesn’t get us enough money. And before you say anything else, we don’t accept that the 3 year dispute between the Saudi the US governments that caused the price of oil to fall off a cliff and stay there for about 2 years+ from 2014 to 2016 was a windfall event (ie outside the industry’s control). Nor Covid, which caused BC to crash to $25pb. These were everyday events so you should suggest some kind of allowance is due to offset against the latest wft - it doesn't work like that. And 7 years of wft (at least) is fair enough even if prices are now back to normal (near enough)”

dyor

DYOR

Part 1

Before a “windfall” event, imagine a Brent Crude price of $70pb.

Further imagine an upstream operator, focused only on the UKCS, making an annual profit before tax of £100m.

Tax charged on the £100m or profit would amount to £40m (40% of £100m), leaving £60m after tax.

A “windfall” event occurs that causes the price of Brent Crude to increase to $100pb.

In the (say) 12-month period following the “windfall” event, the upstream operator would make more profit (which for simplicity I have calculated “pro-rata”, although in practice it would be higher because fixed costs would be recovered over more barrels, thereby reducing $ cost pb).

But for the introduction of a wft, the upstream operator’s P&L would look something like:

Profit before tax: £143m (increased by BC$100/BC$70)

Tax @ 40% = £57m

Profit after tax = £86m

So, our upstream UKCS operator would be better off to the tune of £26m as a result of the BC price increase (£86m - £60m).

Along comes Sunakhunt and (after deciding 65% tax was too low and increasing it to 75%) imposes a tax (stating it is a wft) of 75% across the board on all UKCS operators’ profits. Never mind the enhanced re-investment relief (important to companies like NEO and SQZ but irrelevant to, say HBR and Enquest who had just completed multi-year investment cycles costing billions, to which the enhanced relief is as much use as tits on a bull). See my last post about getting dragged into a 78% forever tax regime with no capital allowances under labour, which won’t lift the tax when 2030 arrives because the ill-informed net zero agenda groupies will be making an even bigger issue of fossil fuels than we’ve had since a conman somewhere planted a seed that led to the ugly Swedish truant and now hypocrite, as she’s said to be worth £20m and travels everywhere as comfortably as possible)

What does our upstream producer’s P&L look like now, with a tax of 75% slapped on its entire profits, at the same time denying it the ability to claim decommissioning expenses and interest – and just for good measure restricting the use of b/fwd losses to 40%, not the full 75%.

I reckon it’s as follows assuming BC holds at $100pb):

Profit before tax £143m

Tax @ 75% £107m

Profit after tax £36m

What tax rate does this mean our company has paid on the windfall profit of £43m?

tbc

I'm about to make a post that will spill over into two setting out some basic arithmetic that shows just how dishonest both political parties are in labelling their destructive taxes as being tax on "windfall" profits. They are no such thing. It's probably another complete waste of time spent trying to stimulate meaningful discussion that might lead to something positive happening. By all means challenge my logic. But please also bear in mind that what I have included in my posts to follow does not take into account the carnage that Labour's latest dishonest or perhaps plain economically illiterate proposals will cause.

We are at a watershed moment and we are getting from OEUK and most companies with UKCS interests is: "we're making progress in discussions with Labour officials in our efforts to persuade them it is better to have the industry as an ally during the transition to net zero by 2050, than a foe. The naivety of these people is unbelievable. For a start, they HAVE TO stop calling this shortsighted and fundamentally flawed tax grab as a "windfall tax". Yet again: IT ISN'T - it's a heist.

If you can't find fault with my logic - copy what's written and send it to your local MP, the Media - whoever. Everyone is being conned. Wake up to the fact.

imo/dyor

I assume the comment about not wanting talk of JOG's share price is directed at me. Apologies if I came across as a GOM - I've been under the weather for a while and it's affected my general demeanour. It's not my place to comment on whatever anyone wants to discuss. Talk about price to your heart's content - to me, it's understanding JOG's underlying situation that's important as a LTH.

JOG's present low share price is imv the result of the Government wanting more money to pi55 away on pleasing the masses - and choosing the UKCS oil & gas industry to destroy for the purpose by dishonestly imposing what it calls a windfall tax (wft), when it is no such thing. A wft would be charged only on windfall profits, whereas what Sunakhunt have imposed is a punitive tax on ALL UKCS upstream producers' profits, at the same time removing the ability to offset (against the "above normal" element of these profits) categories of spend like decommissioning and interest cost. In addition, b/fwd losses can only be used for offset at up to 40%. Under Labour, most expect it to get worse.

A tax rate of 75% on all profits is here to stay accounting to Hunt. In the circs, who cares about whether companies can offset investment in new projects at up to 91p in the £, when the profits these will lead to, which will take years to achieve and involve lots of opex, are then taxed at 78%, with a lot more being disallowed, inc capital allowances on future capex, by the Labour cretins cheered into office by people who don't understand that what they're voting for, which is an unaffordable and freezing cold form of Armageddon.

The plans and aspirations of tens of thousands of highly skilled workers and their families, plus those of hundreds of thousands of people in connected industries are being flushed down the toilet by politicians, who don't appear either to understand the industry, the Laffer Curve or anything else, inc simple economics. Labour doesn't appear to give a monkey's toss about energy security, or anything else that would concern a patriotic individual of average intelligence. Labour might be able to collect extra tax revenue from a few companies locked into the UKCS as a result of recent multi-billion investment in new projects, where it is less costly to pay the 100%+ tax rates implied by Labour, than to throw the towel in; but otherwise it's a "no-no". And tax revenues will fall dramatically pdq. A gloriously destructive complete waste of time and lives.

Why invest in the UKCS unless you're overseas owned and see cost and tax rates as secondary to the energy security of your nation? eg ENI, VAR and ITH (Delek).

Makes sense (not) for the UK to shut down the NS, then import whatever oil and gas it needs in order to function effectively, at much higher prices from abroad than it would cost on our doorstep - and at about 10x the carbon footprint. 10/10 for stupidity.

The UK is responsible for less than 1% of global emissions.

dyor

BoA use of swaps designed to make them a dirty buck is like having a poisonous tick constantly feeding off you - and however hard you try, you just can't get rid of it. In the end it sucks all the blood out of you before moving on to its next target.

It doesn't seem to have been very successful with the last lot of swaps it did whatever it does with, because HBR's SP has continued to advance, despite "Parasitic Arachnid Inc's" (a more appropriate name for BoA) attempts to depress the SP.

Good..........let's hope it continues.

jmo

You haven't upset me, MPO

Garbage seems to proliferate on the JOG forum these days. Constant price, price price. Give it a rest, will you?

Read what the Sage (of Omaha) says about it. "Price is what you pay; value is what you get".

Price is a measure of supply and demand. More people buy than sell and the price goes up. If it continues? The price goes up more. Still with me?? And vice versa.

Predicting what the scrambled and befuddled minds of a whole lot people, who wouldn't know what affects share prices if it stood up and slapped them in the face, will tell them about any number of real factors that are relevant to an understanding of what value should be put on (in this case) JOG's shares at a point in the future , is a very silly game. Let's all talk about what we want it to be, shall we? And tick up people who say it will be high. That's really clever.

If politicians don't prevent it (which they might) LTHs should get a good result. How good? Consider what various brokers and professional share commentators have to say - they're the ones who have put in the hours.

So have I and have come up with NPVs (based on DCF projections) for JOG, NEO and SQZ (the value is different for JOG because it won't have any Capex - fat lot of good this will do if NEO and SQZ decide it just isn't worth it).

Risk is what is holding back JOG's SP. The risk of virtue signalling, commercially inept, dishonest politicians deciding to ignore advice offered to them on the error of their ways - and proceeding with plans that will not only significantly damage our nation's energy security, but generate less revenue from NS taxes, trigger rampant energy inflation and destroy the jobs of countless thousands of highly skilled employees directly and indirectly in the industry, along with the plans and aspirations of all these people's families.

And all for what? I doubt there will be any measurable difference in anything in 26 years (ie in 2050). It is a flick of a finger in astronomical/geological time. The sun (the earth's only energy source) has been around for around 13.5bn years and the earth close to 5bn years. And Man can change what it falsely thinks is wrong in 2 minutes? Labour's plan is to turn GB into a shivering nation that either can't afford or can't buy countless items that rely on oil they are used to picking up off the shelf in a supermarket, or anywhere else. Wait 'til the fat and greedy masses can't get their cheap flights to Costa del Vomit. There'll be riots. So let's all vote Labour shall we? That Kweer Stoma seems ever such a nice man. And that lovely Rachel - it's not her fault her legs touch all the way up from the ankles. She used to be ever so good at chess, so she's bound to be a good chancellor. Oh, and there's that lovely Angie too..................

dyor/imo

PS: the 332p opening quote doesn't mean anything - it's a number put up by those who fix the markets - sorry: enable people to trade

Alibro - I can't tell you how relieved I am (no doubt others are too) to constantly to learn you've made enough out of your day-trading to take the missus down the chippie for an XL portion of haddock and chips (with mushy peas). She's one lucky lady.

Have you considered writing a book on your investment techniques? I think you could be onto a winner. Might I suggest a title that catches the eye of aspiring Warren Buffetts? It's important to make an immediate impact, so here goes: "Buy 'em low and sell 'em high - the secrets of investing in the fast lane".

Don't be too critical - it's a first effort and could probably be improved.

I'd be interested in your views on Ithaca's (Delek's) plans to buy ENI's UKCS assets (largely comprising Neptune Energy's NS interests). I understand Delek started life in 1951 as the Israel Fuel Corporation Ltd in 1951. Further reading indicates Delek (via a subsidiary) is Israel's biggest forecourt operator.

Yours too, Einbert, as it's your area of expertise. Do you reckon Delek offers costly perks - eg topless free windscreen wash and shine, which would make it less profitable? I asked someone else earlier about Delek and they said it's involved with downstream activities. Sounds a bit fishy to me. Downstream of what? The "river"? Not THE river surely? Did you know Delek only put up 10.3% of its holding in ITH in the recent IPO. It banked all the proceeds. After buying Ithaca in 2017, Delek bought all Chevron's UKCS interests: https://oeuk.org.uk/oguk-welcomes-news-of-chevron-acquisition/

What's next I wonder?

I'm intrigued by your 150p theory, Alibro. What's always puzzled me is why, with BP being so much bigger than JOG, its share price is only about 3x JOG's. It's a real head-scratcher.

What day is it? I'm still a bit woozy after todays antics. I didn't realise share could go up as well as down and it shocked me. No doubt normality will soon return. The BP share price anomaly has spooked me a bit too............

The first post I made was "lost" while LSE was trying to establish I wasn't a robot. Attempt 2 was removed for reasons that are unclear to me.

In a nutshell, as I am not going to go into as much explanatory detail, the situation seems to me to be as follows:

JOG had b'fwd tax losses of £62m at 31/12/22. These will have increased by the tax loss incurred in 2023. The CASH value of these losses, using a tax rate of 40%, exceeds £25m.

Within the next few months, assuming the GBA FDP gains the necessary approval (which imv is the most likely outcome) further milestone payments will be received from NEO and SQZ that will swell JOG's cash reserves to around £35m. Ongoing cash burn thereafter is forecast to be small in the period leading up to either production or company disposal (sale).

At its present SP level, JOG is valued by the market at £49m, thereby indicating that regardless of what happens in the future in regard to the GBA, JOG would be a valuable asset for any industry player to acquire. The market seems to be saying Buchan, J2 and Verbier (set to be re-categorised as P2 reserves when the FDP is approved in a few months' time - JOG's share c.20mmboe - 33°API) plus the prospective resources in Cortina, Wengen and Verbier Deep - all close to being exploration drill-ready..........are in total worth MINUS £11m.

And people are selling???

dyor

Even after today's 13% increase in SP, Andrew Austin has presided over a 75%+ loss in the value of KIST's shares over the last 18 months. Does that make him a star? "Hardly", I'd say.

That said, in order to assess his (and KIST's) performance fairly, one would have to compare performance with peers. I haven't made the comparisons, because I can't see past the elephant on the premises. It's a composite elephant made up of a few different, but connected, pieces that go by the names: Sunak, Hunt (aka "the rhyming Hunt"), Starmer (aka "Stoma"), Reeves, Miliband and the ginger Amazonian who left school with more children than GCSEs.

Mercuria has full control now - not sure what of though anymore; nothing that seems to be generating much cash, however. "Bye bye 12% yield; hello penury". It was always going to be thus. It's been a bit quicker than I expected, which gives us about another 5 months to wait for the derisory offer that's coming our way when the price has been smashed down a bit more. Then SQZ will gently fade from the memory (along with your pension plans) as time trickles remorselessly by ('races' in my case).

How sad (and dishonest). TG I sold enough at 440p to extend the guest quarters at Chez Fawlty, which now have an improved "ocean perspective".

News of increased concentration on the UKCS (planned 30% farm in to JOG's GBA fields) is supposed to be imminent (by end of Feb). Not sure it makes much sense now, given what Labour has told us it's planning, which would make profitable operations in the UKCS impossible to achieve. Run a couple of illustrative DCF models if you doubt this.

The thinking seems to be that Labour will back down on policies that would be counter productive in a few different ways. Wish I thought they had that much sense. And moral integrity.

jmofwtw

dyor

Ouch

I consider myself "told".

Thanks for the lecture on the sheer simplicity of setting up a NS E&P player on a budget of nothing and a few years later - despite strong headwinds along the way - getting it to the brink of a pay-out (for those who have been with JOG throughout its journey) of something in the order of 200x its initial market cap.

Easy peasy.

Has everything gone according to plan for JOG since it reversed into the remains of Trapoil in 2015? Of course it hasn't - it never does. People would know this if they had a modicum of understanding of the complexities of establishing and running a business of any merit - never mind one of the most complex it's possible to encounter.

Have mistakes been made along the way? They probably have - it would be a surprise if they hadn't. But has the company achieved what it might realistically have been expected to, given the circumstances. "Not yet" might be the accurate answer, but the company is as well placed as it is realistic to expect it to be, given Greta et al and the low behaviour of the Conservative government - for which I shall never vote again - in mounting the raid it did on the UK O&G industry (all for quick money to spend on the wrong people to win their votes). These low-lifes opened the door for Labour to complete the job of finally killing off the North Sea - and hundreds of thousands of skilled jobs it's spawned not just in the industry itself, but in many industries impacted by its products.

JAB doesn't run the company on his own. There's a team of experienced and enormously capable individuals (led by Les Thomas, an acknowledged industry heavyweight) overseeing all. They will have considered at all times what steps to take that are in shareholders' best interests. Who are we, as keyboard warriors on a blogsite like this, to challenge their decisions when we don't know the facts, or what routes it was open for the Company to choose?

No-one is precluded from taking up their concerns directly with either the chairman, the CEO or any other director. I have made contact directly on many occasions and, whilst my concerns could not always be eased by information it was proper (and legal) to give me, nonetheless my concerns were taken seriously and I always came away feeling my views were valued. Sometimes circumstances I had not taken into account were pointed out to me, enabling me to reassess the situation. Occasionally I have posted info here I felt others might benefit from having.

IMO If Labour introduces "a proper windfall tax", any company making a decision to invest in the NS would have to be insane. With tax @78% and no enhanced reinvestment relief, there'd be nothing in it to make investment worthwhile. Run the DCF numbers if you doubt me. The hope that is that Labour will back down - let's hope it does.

Re: " I think the whole leadership needs sacking to conserve cash, and replacing with someone capable and who knows the industry well"............

Names and salaries please.

Hear hear, CHF.

"Cuckoos in the nest of Conservatism"

Someone's bought 50 shares this morning, so we should be ok............

"The disingenuous comparison between the 78% Labour intends to charge with the rate charged in Norway where, to start with, operating expenses are 12% higher as a % of gross revenue than the UK,"..................

.....I meant to write "12% LOWER than the UK"

Put another way, the 78% rate Labour intends to charge UK producers in effect equates to 90% when compared with Norway.

It's important to remember though, that Labour is the "party of business and stability for their investments" and that "Our windfall tax will only apply while there are windfall profits being made. This is fair and proportionate."

There will never be a time, whilst Labour is in government, when "windfall profits" are not being made. If things were "fair and proportionate" the EPL would already have been scrapped. The "windfall" element of UK producers' profits disappeared within months of the spike that was evident for a few months following the start of hostilities in Ukraine, but this does not appear to have occurred to either of the main political parties, which have chosen the oil & gas industry to milk for all it's worth, regardless of the longer term consequences for the industry and for Britain. In reality they are relying on the ignorance of the vast majority of Britain's citizens, who mindlessly chant the "oil is bad, green is good" script, 365 days a year, year after year. Turkeys and Christmas come to mind.

It will be too late when the majority of oilcos have decided en masse to shun the UK in favour of countries who put the interests of their people ahead of cheap votes won with lies and deceit.

https://www.politico.eu/article/oil-gas-company-lash-labour-party-windfall-tax-plan/

...........as I have pointed out multiple times, all this "the world will end if we carry on using fossil fuels" is a con.

At present consumption rates, commercially recoverable oil (much of it formed as a result of the same event that wiped out dinosaurs and most other living creatures, inc all the earth's vegetation because the world was plunged into darkness for years) will run out. It took 64mn years to turn into recoverable oil and the gas emitting from it - and 3 or 4 generations of humans to use up the lot. Alternative forms of energy HAVE to be found - and governments don't want to have to pay for finding them.

Anyway, some more illuminating info:

https://www.bing.com/videos/riverview/relatedvideo?q=what+daily+products+contain+oil&mid=A526FCFCC43254AD77D4A526FCFCC43254AD77D4&FORM=VIRE

https://listverse.com/2012/12/23/10-everyday-things-that-started-life-as-oil/

https://www.politico.eu/article/oil-gas-company-lash-labour-party-windfall-tax-plan/

..."but oil and gas companies are particularly concerned by plans to close what shadow chancellor rachel reeves called “loopholes” in the existing windfall tax. industry figures are concerned that this means labour would scrap an “investment allowance” which currently allows oil and gas producers to get 91p in tax relief for every £1 they invest in u.k. operations.

oeuk said scrapping the tax relief measures would likely result in no new investments being made into the u.k.’s oil and gas industry and estimated that the plans could imperil thousands of jobs and cost the u.k. £26 billion in “economic value.”

“with no new investment, 42,000 jobs will go, and we could start to see the effects as early as this year,” said whitehouse. “these are not faceless numbers but decent, hard-working people working across the u.k. to provide the energy we will need today and in the future.”

the industry group — formerly known as oil and gas uk — is demanding an “urgent” meeting with labour to clarify the party's plans.

a labour spokesperson said friday evening that the party's plans would "create good jobs in all parts of the country" and that the opposition represented the "party of business and stability for their investments"

“we have been consistent that a proper windfall tax means raising the rate of the windfall tax to match the rate in norway, abolishing the investment allowances inside the windfall tax, and that these changes account for the vast majority we would raise from a windfall tax," the spokesperson added. "our windfall tax will only apply while there are windfall profits being made. this is fair and proportionate."

'stunned'

other industry groups also voiced concerns. robin allan, chair of the association of british independent exploration companies (brindex) said labour’s plans were “an attack on the oil and gas sector and its 200,000 workers.”

god help us if this is just the start............

i'm already 7 figures down thanks to suna****. labour would see me in a debtors' jail. people's living conditions may well return to dickensian times, so why not the punishment system as regards people with no money?

the only answer is to quit the uk. it really is finished as a civilised first world country

dyor then joac (the last word is cliff)

......."delusional" is the word I'd use to describe Labour's "impossible to achieve" claims. Either they're liars, or they don't understand even the basics about oil & gas. Even if Britain's masses were willing to accept a significantly lower standard of living for the foreseeable future, brought about by a huge increase in the price of around 6,000 everyday products and services that rely on oil (more so than gas) for their production, they'd be unlikely to welcome (or put up with) the lack of availability of all kinds of goods and services that are part of their lives - and they like having. The good news is I can't find any link between oil and the inks used in tattoos - phew.

I could list a lot of such products, but why not dyor? It's reasonably straightforward. Oil isn't just used to make vehicle and jet fuel and to heat people's homes in an economic way - it's in thousands of products , affecting every part of UK folks' lives. When it comes to oil-based products, you'd have more difficulty finding something that doesn't contain oil, than something that does. Does the NHS use any plastic products, does anyone happen to know? Try pharmaceuticals - life-saving drugs? Cheap flights to wherever the masses can find that have had the good sense NOT to destroy life for its citizens for virtue-signalling purposes and a few billion of short term cash. Labour is intent on killing one of Britain's few remaining industries it can be proud of. One that employs hundreds of thousands of high-skilled workers, both directly and indirectly. The pretence that all these people can all just be redeployed on non-existent green projects that will all be up and working within 5 years is stupidity - or dishonesty - or both, personified.

The disingenuous comparison between the 78% Labour intends to charge with the rate charged in Norway where, to start with, operating expenses are 12% higher as a % of gross revenue than the UK, as a result of the significant difference in volumes produced in Norway's much bigger fields, really sticks in the craw. No mention is made about Norway's Govt bearing the risks of volatility in oil & gas prices by repaying any losses oil & gas producers suffer in any year, in cash and immediately. Cos know where they stand and are content with the net returns available because they allow decent profits to be made for owners benefit.

It may not be over yet as unions representing the workers whose jobs will be lost are far from happy with Labour's proposals.

I just hope a buyer will emerge to take on the risks JOG and all other producers face, but the price offered would be likely to reflect the circumstances. £25 a share looks a bit ambitious to me - I'd definitely take a £ or two less for my shares.

Further info in following post

dyor

GLAL

Cornishoil - check out the Turtley Corn Mill . Avonwick exit off the A38 and on the left after 250m along the road to Avonwick - ample parking plus good food & ale

I really wish people would stop referring to the EPL as a WFT. It isn't. It's a tax heist on ALL the profits of UKCS upstream oilcos. If it was a windfall tax, it would only be charged on windfall profits - ie, the profits the oilcos made as a result of Brent Crude and UK Natural Gas prices exceeding the norm. It should have ended as soon as oil & gas prices returned to more normal levels.

Sunak opened the door for Labour to walk in and steal everything it could lay its hands on.

Welcome to GB2024.

It would surprise me if any new projects are undertaken in the UK following today's announcement. The returns now available simply make the NS uninvestible

God I hate these b'tards

:-(