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Thanks, buc101 - I agree re risked NAV.

The most significant risks as I see them are now political. The dimwits (ie politicians) should come to their senses, however, when the great unwashed of the UK cotton onto to fact that life in the UK is going to get a lot worse (and more expensive) when alternatives have to be found for the 6,000 or so products that in some way rely on oil for their existence (including cheap flights to Costa del Vomit) and almost everything in the HNS.

It will be fun for a nation in which TV advertising campaigns are launched ahead of important football matches urging those watching them not all to start their kettles at the same time for fear of overloading the grid, when about 10m people want to recharge their electric cars between about 9pm and 6am daily across the country.

You have to laugh..............

jmofwiw, dyor - I see the present cold snap is caused by man-made global warming..............

North Sea-focused upstream oil and gas company Jersey Oil & Gas (JOG:233p) has announced a second farm-out of its Greater Buchan Area (GBA) project. It’s a cracking deal for shareholders.

Having handed over operatorship in the project to its new partner, NEO Energy, in April this year, Jersey has agreed terms with Serica Energy (SQZ) to divest a further 30 per cent working interest. Serica is a cash rich UK-listed exploration and production company that generated free cash flow of £107mn in the first half of 2023, and one that holds 130mn barrels of oil equivalent (boe) of 2P reserves. The transaction is on identical pro-rata terms to the 50 per cent farm-out to NEO and means that Jersey retains a 20 per cent fully carried interest in the redevelopment project to first oil.

Based on forthcoming farm-out cash payments from both NEO and Serica, analyst Daniel Slater at brokerage Zeus Capital estimates Jersey’s forecast closing net cash of £9.3mn this year will increase to £23.8mn (73p) at the end of 2024. The estimate factors in a $20mn (49p) cash milestone payment on approval of the field development plan, which is scheduled for next year. In addition, Jersey is fully carried on its 20 per cent share of Buchan’s pre-development costs ($25mn) and its projected capital expenditure ($850-900mn), which is expected to bring more than 70mn boe into production (95 per cent oil). First production is scheduled for late 2026 and the Buchan field is forecast to deliver 35,000 barrels of oil per day at peak production.

Re-rating beckons

It’s a game-changing deal for the small-cap company. That’s because it not only hugely de-risks the investment case, but it unlocks the route to monetising GBA’s total resources of 100mn boe.

To put the estimated value of the farm-out transactions into perspective, Slater’s risked NAV of $235mn (533p) includes a $207mn (469p) valuation for the 20 per cent fully carried interest in the Buchan field, rising to $272mn (616p) once the company’s 20 per cent interest in both the nearby J2 Sgieth and Verbier prospects are factored in. The estimates are based on a long-term Brent Crude oil price of $65 a barrel (a discount to the one-month forward price of $81) and a long-term sterling dollar exchange rate of £1:$1.30 (above the current spot rate of £1:$1.25). At current exchange rates, Slater’s total risked NAV per share is 640p. Analyst Jonathan Wright at broking house Cavendish is even more bullish, placing a risked NAV-based target price of 755p on the shares.

Jersey’s share price shot up 18 per cent to 233p on news of the Serica farm-out, but this only places a valuation of $95mn (£76mn) etc.........

Contd

BC continued to fall. JOG dropped from the 27p it had briefly hit. I bought more. I got to discuss things not only with AB but also met him, Ron L, a topside engineer called Dave L and AB's PA - a smashing girl (geologist) when I occasionally visited my old home to see relatives (and increasingly JOG's team). I liked everything about the company and the way it was run. What Ron L didn't know about oil wasn't worth knowing. Dave L was/is a great bloke to have on board. JOG had about 8 or 10 people in total back then - 4 based in Jersey. I met others in London on a couple of CMDs I drove up to attend. Everyone impressed me with their friendliness, professionalism - you name it.

Back to the share price, by Feb 2016, with BC at an exceptional low (good for JOG because they were at the time looking to acquire late life interests in NS fields with good tie-back arrangements, to produce cash. Did the market take any notice? Nah - not interested in fundamentals - or the calibre of people - or the fact the future of JOG's people was tied up with the success of JOG. None of that counts, see?

The price fell to 8p. JOG was worth about the same as my house - probably a bit less. 8.36m shares @8p. Ten or more talented and highly motivated people were working flat out to take JOG towards success. I bought more (my lowest price was 8.79p). BC pressure eased, the price rose a bit. I bought more. I stopped at just under 3% because I didn't want to expose myself to guffaws of laughter from my pals when yet another AIM junior bit the dust. I never thought it would - good people rarely fail in life and I couldn't have been happier with my investment in JOG's.

Anyway, somewhere along the way I came across SQZ. Again, it was about the people. I couldn't have forecast the sensational BKR deal, but I bought 450k shares at between 14p and 26p (avge). The highest price I managed to sell at was 440p. I was more than disappointed with the Tailwind/Mercuria deal - I immediately smelled a rat - a big stinky one too. Maybe I'm wrong and things will turn out well. I've retained a fair few, but nowhere near as many as you're holding, mommur.

I sold some of my SQZ to buy more JOG. My JOG holding in % terms has been diluted by various placings and offers but I'm presently holding twice as many shares as when I had 3%. I've never held more. I've subscribed to every placing and offer (to the extent cash has allowed and it made sense to me to do so). Now is not the time to lose confidence afaic

When JOG came along and organised a placing to raise £1m, the shares were divvied up: 27% to former TRAP holders.; 27% to JOG + friends (the Jersey co TRAP acquired to keep the listing and losses): and 46% to subscribers to the first placing. TRAP holders who'd been there since the 2011 IPO needed £43 to get their money back.

Too much info. Apply the filter.

We're not going to be at this price for long. People sold out at 8p remember ......

GL

dyor

Mommur - odd how different people's stories play out differently in the same co's shares! I held 2m TRAP, which had cost me c.£95k, when I found out what had been going on behind the scenes without shareholders' knowledge. The shares had fallen to 0.22p and I'd first bought in at about 10p, because the accounts showed £18m of cash, Athena underpinned by $96 hedges and new licences were to be farmed out to keep the risks low. What was there to lose? No 1? The accounts were wrong because there were big undisclosed decommissioning liabilities. No 2? The only people who knew anything about oil (except Martin David, who was great but not on the main Board) were sacked. No.3? The hedges disappeared. It was all to do with a so-called "value investor" who'd bought 27% and was running the show as a shadow director. The hedges went to make the BS look better cos PMG was interested in buying. BC then fell off a cliff. Can't go public with what then went on, but my bluff was called when I wasn't bluffing. They made a mistake thinking TRAP could just be swept under the carpet - they wanted it buried. I've still got the emails. I drove to London for the AGM (May 2015), talking to Ithaca and Parkmead (co-licensees of Athena) on the way. I'd also spent an hour on the phone to MGG (he was in Thailand with his family - cheaper to live out there) who confirmed recent RNSs hadn't been truthful. I stood up at the AGM for half an hour and gave them seven bells of **** (my questions and their answers were recorded at my insistence) telling them they'd better find a buyer or they'd never find another job when I made everything I knew public. Virtually no-one else turned up for the mtg, but this didn't change anything. TRAP had a clean listing and £30m of losses and my "advice" was to sell the co to someone looking for a vehicle to back into. Athena liabilities would have to be capped first. 2 months later I had a phone call at home from a bloke who introduced himself as being from a company called Jersey Oil & Gas. As I hail from that island, I thought it was one of my pals taking the p*ss, as I was best part of £100k down on TRAP - and this was on top of a disaster with Xcite Energy (don't go there - what a t.w.a.t I was). I said: "don't tell me - you've just discovered oil off L'Etacq - now p*** off will you, it's not funny". He patiently explained he was who he'd said he was - going on to say he'd been warned by the TRAP people he might get a spirited response. I almost fell over when he told me JOG (TRAP's new name) was looking to raise a million in working capital, so they could open the place for business in a few days time and was I interested?

I liked the cut of AB's jib, he sent me the slides they'd wheeled round the City and said he was hopeful of raising the money needed to get going. I went for another £10k in the placing. My 2m TRAP got me 20k JOG (at 22p) and the £10k bought me another 45,455 shs.

tbc

I can only imagine those people selling at a SP that's lower than it was a few weeks ago, before the FPSO deal was signed and the FO to SQZ was announced, think neither NEO or SQZ knew what they were on about when they committed about $10pb (c.$1bn in total) for the chance to own stakes in what is described as a minimum of 100m barrels of 2C resources (API 33°) in the GBA fields, until recently 100% owned by JOG.

t

JOG still owns 20% of the GBA licences (25% of what is owned in total by NEO and SQZ). It has a 100% carry on the infrastructure spend to get to first oil - estimated to occur in about 3 years' time. This suggests to me (I'm not too bad at arithmetic and things like that) that JOG would likely be valued by NEO and SQZ at about $10 per barrel for the 20m barrels+ it retains ownership of in the GBA (this stands for Greater Buchan Area btw, for those focused exclusively on short term share price).

This is "enterprise value" only, to which many would add the cash value of tax losses available for offset against future taxable profits and the cash JOG will build up as progress is made ticking off the various milestones on the road to EIA, FDP and FID. I've conservatively estimated a fair value of £200m+ or around £6 a share.

There are other ways to establish fair value, the principal ones being NPV using discounted DCF projections (you can explain this if you like, marineclark); a P/E multiple taking into account estimated years of production/volumes (ditto); investment yield basis, when JOG gets around to establishing a dividend stream (ditto).

Silly me, shares are only worth what someone is willing to pay for them. When the markets are full of people who don't understand what anything is inherently worth because they have never been educated in the art, what (I call) the don't knows and the don't understands merrily swap shares between themselves at prices they justify as reasonable by drawing lines on pieces of paper. They call these "technicals".

Fundamentals always win in the end. In JOG's case it seems likely to me someone in the industry is already casting an eye over JOG, given the massive gap between value and share price. 5 or 10 years is nothing to a NS Oil producer. E&P companies are always looking to add to reserves that are constantly declining, as reservoirs empty and production volumes decline. Keir Stoma thinks existing licences produce forever, as does Rachel "I used to be very good at chess and Keir is my hero - I agree with everything he says and he's promised me the Chancellor's job if I stop being such a groupie. I'll have to concentrate on Amazon Angie instead - quite a feat leaving school with more children than GCSEs" Reeves. God help the UK when that lot get voted in by the liberals. Muslims and benefits claimants

JOG is worth at least £6 of anyone's money. You just have to wait for the price/value gap to close, which it's quite likely will come on a bid at 3 x today's nonsensical numb

re: "do you think ab and other jog directors, let alone serica, would accept a low-offer ?

if so, why ?"...........

..........you do seem to be confused, chf. the points donkey o raises are valid. sqz has nothing to do mercuria (essentially a big hedge fund), which owned tailwind when it was acquired by sqz last march. under the terms of the spa, sqz paid mercuria a big lump of cash, handed over a 28% stake in sqz to m and sqz took on board £200m+ of debt in tailwind's bs for good measure. it was a shocking deal that worked out at sqz paying $22pb for tw's p2 rsves. many experienced investors couldn't get their heads around it and 27% of sqz's s/hs voted against it. wasted, because chairmen of like meetings always seem to be holding enough proxy votes to ensure the board gets what it wants. i lost all respect for both tony craven walker (who tried to sell me all kinds of b/s when i wrote questioning the deal) and mitch flegg, who no doubt gained substantially from the deal. the extent to which he's benefited has yet to emerge but i and other have his card marked. the whole thing left me feeling relieved i'd decided to reduce significantly when the sp was 440p in early may 2022. i used the money to improve my home further and i could not have been happier with the result.

all kinds of justifications were put forward to support what many thought was inexplicable behaviour by sqz's directors and significant shareholders. the spineless and incompetent sushi****'s epl u-turn hit sqz's sp badly in late may and the rhyming hunt's increase and time extension, followed by the tailwind fiddle, took it down to below 190p at one stage. inexplicable destruction of shareholder value - i still remain puzzled. there's a saying: "honesty is the best policy.......". i would add: "but some ns e&p directors don't do too bad".

of the many justifications offered, tailwind was said to be oil focused (rather than gas, which represented the lion's share of sqz's production) so the deal brought balance. yeah.........

mercuria can't take any action in relation to its 28% holding in sqz for 18 months post deal. as donkey o points out, m's 28% gives it effective control over sqz's future. what's to stop m, after the 18 months, from putting a low offer to shareholders, knowing most holders (many being s/t traders) will take whatever makes them a profit. the skill is in making sure the sp is kept low in the meantime. no problem there. institutions rarely rock the boat (fund managers are far more interested in bonuses that are paid automatically , than sticking their necks out and attracting attention). sod fund investors.

back in the day, shareholders in a co called p****q were done up like kippers by an ex-kpmg consultant (ceo ) who'd built up 36%. he made a low-ball offer to s/hs who had been loyal through some v tough times. when the future was assured, he took it private for a pittance and made a fortune. nice.

live and learn

all imo/dyor

Thanks, CHF. It's been a long haul but I haven't given up yet by any means. I'd much prefer it if I could walk a bit more than about 30m without ending up double, however.

Only the good die young, so I should be ok.................

I'm definitely aiming to be around for the Buckfastleigh celebrations ........wouldn't miss them for the world...........

MPO818 - you ask about SQZ and EPL. SQZ is a big cash producer so, prima facie, it will be able to offset the infrastructure spend against EPL. Effectively, this should mean it can meet its GBA infrastructure obligations at a cash cost of 9p in the £. The link JerseyCrew (and Troajan) helpfully provided yesterday revealed that Steifel (a smart operator who's covered SQZ for some time) attributed an increase in SQZ's NPV of about £100m to the farm in (c.13% of present market cap).

Changing the subject - and I hope it promotes some discussion - I (and one or two others whose opinions I value who have more skin in the game than I do) see JOG as a "sitting duck" at its present price, particularly given the cash it's now (effectively) sitting on and the tax losses that are available for offset immediately production kicks off. Net of tax profits in year one alone (2027) would provide full cash payback (for a bid at the present SP) inside 9 months.

I've long thought the most likely outcome is JOG sells on FDP approval, when contingent resources convert to reserves and FID is made. Various milestones are due to be flagged as they are ticked off, so there should be a steady flow of info to support SP growth in the interim, as JOG's story becomes more widely known. Private equity might be way this one plays out - there are multiple options.

When the small time traders have moved onto their next targets, it would be good to think AB & Co will have a few serious buyers lined up to join the rest of us LTHs. I'm not particularly having a go at day traders - these have to co-exist with the more serious investors, otherwise you'd have an illiquid situation where it was increasingly difficult to buy and sell in sensible volumes. I just don't like having to read garbage that's intended as advice from people who have difficulty working out how to tie their shoelaces.

Takes all sorts. There are NEVER any guarantees. Who could EVER have foreseen the theft of our assets by politicians desperate for money, jumping on the popular misconceptions of ugly Swedish know-nothings and the rest when the irony is that history far in the future will have a footnote saying: "there was an unusual c.150 years in earth's history when "oil and gas" were used to provide energy. The oil & gas was generally found deep underground, where it had formed as a result of all the earth's vegitation dying when a meteorite crashed into the Gulf of Mexico and plunged the planet into darkness for a few decades". It ran out commercially in about 2070 and alternative forms of energy then had to be found"

Just coming, nurse..

Mc: re "I am just trying to figure out why I didn't get my 2/3 bagger here as I had expected on FO news. I will be back here when the time comes, as I have been many times in the past"...........

..........could it be because people like you, who haven't got a clue about the inherent value of any of the shares you gamble on, focus only on the price and set targets to sell at that yield miniscule profits knowledgeable investors wouldn't get out of bed for?

As I have oft said, retail share prices are only ever the result of supply and demand. More seller than buyers? The price goes down. The reverse? It goes up. It isn't rocket science. If news is neutral or disappointing, there might be a good reason to sell. But the usual result that follows an announcement such as the one JOG put out last Thursday, is that demand created by people wanting to buy into good news is neutralised by small-beer selling (the "sell on the news" brigade - how clever is that?). Most of the selling is done by people I would refer to as the "don't knows and don't understands".

Well-researched and (some might say) "intelligent" investors don't habitually sell down their holdings when events progress according to plan; if anything they add. This is because they're after the bigger prize . In my case I believe this will come when an industry player emerges and buys JOG outright at a price that's determined on a "willing buyer/ willing seller" basis, with both parties knowing the industry backwards and knowing what it takes to complete a deal.

There are good race cards at Haydock and Ascot today, mc. Can I recommend you try a "lucky 15" (15 bets - one accumulator, four trebles, six doubles and four singles)? No.5 on the card is very often a good horse to back................should get your juices flowing and you might even make a few bob you can then invest in something like UKOG, which is a sure-fire winner. There are only about 24bn shares in issue and oil output is pushing 50bpd from its Turkish wells. Charting should work well for you on that one. Always sell on the news, mind................

Thank you for all the advice you have offered us of late. I don't know where I'd be without it. I'll let you know when my holding profit gets to £4m. The bad news is that I might not be around to celebrate it so, if you're reading this AB, get a move on would you?

GLAL

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