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.........guess spring must have arrived in Aberdeen/Whitehall?

This is the first "consultations' result". The others closed at the end of May. The most important outcome now, will be current and future tax rates charged on UKCS O&G profits and what replaces the EPL. It's no good having clarity on scope 3 emissions if there's no-one causing any because they've quit the UKCS. In Reeves and Miliband's book, tax rates approaching 100% are fair. Many well-established UKCS players think otherwise and have already voted with their feet as a result. My guess is that the dim-witted pair I refer to were forced to ask an adult what to do about falling UKCS tax revenues and energy security and might have had things explained to them. If so, what's important to them now will be how to present yet another embarrassing U turn to the equally dim-witted electorate who voted them in, having bought into Minibrain's "climate change is gonna kill us" c.rap. https://www.alamy.com/environment-secretary-michael-gove-left-former-labour-leader-ed-miliband-2nd-right-and-swedish-climate-activist-greta-thunberg-right-at-the-house-of-commons-in-westminster-london-to-discuss-the-need-for-cross-party-action-to-address-the-climate-crisis-image244287943.html?imageid=85DFABAF-95D7-40AF-A038-1C0BAE5D0ED3&p=309366&pn=1&searchId=d52498a73468657e636c838281e39b1e&searchtype=0

Other consultations (who knows when we'll find out the results) were on:

"New Oil and Gas Price Mechanism:

The UK government is consulting on a new price mechanism for oil and gas, aiming to ensure the fiscal regime can respond to price fluctuations.

This mechanism is designed to target profits deemed attributable to unusually high prices.

The government is considering different options, including a profit-based model, and is seeking feedback on their strengths, weaknesses, and implementation details.

Transition to a Clean Energy Future:

The government is consulting on "Building the North Sea's Energy Future," which includes managing existing oil and gas fields responsibly alongside the development of renewable energy sources.

This consultation is a critical step in developing a framework to support the transition to a clean energy industry, including creating new jobs and boosting the economy.

The consultation will inform the government's approach to not issuing new licenses for exploration while managing existing licenses and decommissioning.

Transparency and Decommissioning"

Today's price increase is encouraging. If sense prevails and tax rates return to something like normal, we should see a lot more interest in companies like JOG & SQZ. Let's hope NEO/Repsol are committed to getting to first oil in the minimum timescale possible - and that they have the funds available to do so

dyor

The judge in the Supreme Court appeal by Greenpeace and Uplift (re the EIAs submitted for the Rosebank & Jackdaw fields - operators: Equinor & Shell - stated that the Supreme Court can only make decisions on points of law. In the relevant cases, consent to proceed with field development had been given that had failed to take into account scope 3 emissions. He found that permission to extract oil & gas had been illegally awarded. That's just my take on the situation, all the detail can be found in the judgement itself:

https://www.judiciary.uk/wp-content/uploads/2023/10/CO4583-Greenpeace_CO4830_Uplift_-v-SSESNZ-Final-for-hand-down-19-10-2023-003.pdf

As I interpret the siuation (as a layman) the judge effectively said the Supreme Court wasn't going to get involved in future complaints made by Mrs Miggins and her cat, any time it took her fancy. He effectively told the Secretary of State to get its act together and come up with some rules for everyone to follow in future. By inference (because he found that field approvals had been illegally granted) future EIAs should take into account the effects of scope 3 emissions. In the meantime, he authorised the Rosebank and Jackdaw licence holders to continue development work until such time as the Secretary of State for DESNEZ (via the NSTA) provided the necessary clarity. From what I read, Shell had spent about £800m developing Jackdaw and Equinor more than £2bn on Rosebank (or vice versa - I've forgotten now). The Govt is on the ticket if the NSTA says "no more drilling because you can't quantify the eventual emissions", so the NSTA is under pressure on this particular chestnut.

The NSTA then told everyone it would provide full guidance on EIAs and what needed to be included in future EIAs about scope 3 emissions. This guidance (said the NSTA) would be provided "in the spring".

It is now mid June. Whilst it might be thought by a minority that spring starts on 1 April and ends on 30 June, it certainly doesn't end any later than 30 June. The NSTA appears to be following what is stated by our AI Google friend who states: "In the Northern Hemisphere the summer solstice (June solstice) and the beginning of astronomical summer will occur on Saturday, June 21, 2025, at 03:42 BST (02:42 GMT), according to the Royal Observatory".

So I guess it's spring until 21 June, when it becomes summer.

I am certainly expecting news (which I suspect will be positive for UKCS O&G operators) before end of June. Hopefully by 21 June.

Looks as if, one after the other, all Minibrain's false proclamations are turning to dust, so very late spring and summer might .

Reading of support for the removal of the dishonestly hatched and constructed EPL is positive - esp if the outcome of the other 2 consultations which closed at the end of May is as most seem to be expecting.

I'll get the bus checked over and make some tentative enquiries about facilities in the Buckfastleigh area

dyor

The fact Rachel from complaints didn't mention NS oil & gas at all - it was as if it doesn't exist - suggests to me Labour's foot on the windpipe of the industry is likely to be lifted when the outcome of the various consultations becomes known. She didn't want to admit that she finally understands that if action isn't taken pdq to tax UKCS O&G cos more fairly, even more established producers are going to upsticks and look to more fertile pastures to ply their future trade, leaving the UK in a precarious position both from an energy security and financial standpoint. There's aleardy a 10 year backlog for connection meaningful wind and solar energy to an antiquated grid that can't cope with existing volumes let alone accommodate what's required when we take a 100 year backwards step and elect to switch to wundmills. Look again in 20 years for Sizewll C output - you won't find it. What on earth is the point of UKCS operators committing billions to the UKCS when UK Govt is the enemy? Or taking on all that risk if the greedy and utterly incompetent nincompoops in Labour, who'd struggle to understand the financial dynamics of a sweet shop, are going to bag all the profits?

As I have said since the outset, I regard the performance of OEUK, which is supposed to represent the interests of the entire UKCS industry, as little short of pathetic. They should have played hardball with the dishonest incompetents in Govt from the start. The mere threat of witholding production was all that would have been needed to get the morons to understand. The suggestion to Reeves et al that just the mention of such action from, say, 1st-15th December in a specific year might cause an element of disruption. The queues in towns and cities up and down the country would be unimaginable. But instead, the OEUK decided to try to reason with people incapable of either understanding, or asking someone who does understand how they should proceed.

Has there ever been a worse Govt in power than Labour's present one? Miliband looked to be insane when the camera panned onto him.

Looks like it's back to waiting for lazy and incompetent civil servants to do some work for once in their worthless lives and give the go-aheads the industry is waiting for. Late summer maybe??

dyor

Contd........

The consultations (results due on the twelfth of never – don’t hold your breath, it isn’t even spring yet in Aberdeen and Whitehall) concern:

(i) Scope 3 emissions and how to perform the impossible task of working them out on oil & gas bought by unidentifiable buyers in unknown parts of the world;

(ii) ending the EPL in 2030 (or earlier if the Energy Security Investment Mechanism is triggered – impossible) and replacing it with a new tax on O&G cos. The word is that from 2030 onwards, the "fair" windfall tax replacement being proposed by Labour will be levied only on the profits made by UKCS operators as a result of oil & gas prices that exceed a “shock level”. Murray claims that only genuine windfall profits will be taxed, not the lot, although there will be lower allowable expenses to offset against the stolen profits. The “shock level” (for oil) I have heard being talked of is $100-$110pb. I have no idea about gas; 125p a therm??). The idea would be for companies to split their profits between oil & gas and for HMRC only to tax the profits arising from sustained prices above the “shock level”. How long “sustained” means (3 or 6 months?) remains to be seen. Murray (DESNEZ minister) claims he's after fairness for O&G cos and consumers, then makes it a one way only “shock level” and says no changes will be made to the present EPL before 2030 when he knows a max of 18 months windfall profits are being taxed for 8 years. There is no limit to these politicians’ dishonesty.

(iii) The government is also consulting on a broader framework for the future of energy in the North Sea, aiming to make it a world-leading hub for clean energy technologies like hydrogen, carbon capture, and wind power. This consultation also addresses the transition of the existing oil and gas industry, including commitments to maintain existing fields for their lifetime and not issue new exploration licenses.

Murray (a Miliband bottom licker) says Labour is anxious to create a fair environment for taxing UKCS O&G companies' profits, which he believes the extension of the (originally) "temporary until end of 2025" new tax from mid-2030 onwards will achieve. He then goes on to say the existing EPL (which by definition he admits is unfair) will continue until 2030. This is outright dishonesty. Everyone knows windfall conditions ended in 2023. The existing wft (EPL) is impossible to escape because what Sunak & Hunt dishonestly introduced (the so-called “Energy Price Mechanism”) saying it fairly reflected average prices for oil & gas based on prices over the previous 20 years failed to take into account things like inflation and long periods when oil and gas prices were on the floor for reasons outside the control of UK O&G cos.

TBC

Apologies for another long post. I'll stop after this (in 3 parts) except to post a link

Greener - I don't really understand your first question. Every acquisition is different. Were SQZ (or any other potential buyer) to bid for JOG, the structure of any deal would depend on circumstances I don't have the information to speculate on. The structure of most deals tends to be tax driven. One option might be for SQZ to acquire 100% of the shares in JOG and continue to run it as it is, as it seems quite likely JOG’s tax losses on will quickly be offset against profits arising in JOG in the first 2 or 3 years post-acquisition. Using “grouped” tax losses outside companies that incurred them is complicated because of the ring-fence rules. It’s easy enough to transfer cash from retained profits arising in subsidiaries (typically to the parent).

Your questions 2 & 3 are about tactics. Clearly the price paid for JOG would be lower if a deal was struck before Labour's plans on EPL, scope 3 emissions and all the other political inventions stupidly or dishonestly (probably a combination of both) inflicted on what is arguably Britain's most important industry. Price paid is always about risk/reward. An important consideration to me is that Labour doesn't seem to understand how damaging its failure to provide certainty about its future attitude to oil & gas production in the UK to individual companies and the industry in general.

Re your Q4, there’s no reason why someone other than SQZ wouldn’t make a bid for JOG. I chose SQZ because it has recently stated it intends to add to its UK assets. Given it was clearly attracted to the Buchan project, it will have a comprehensive understanding of the key issues and the fact it could easily afford to buy JOG, it seems quite likely (unless it has been told by JOG’s directors it’s a non-starter) that the thought of adding 7kboepd to its forecast 10.5boepd of production from Buchan, to the 50k boepd it will be producing when the Triton hub resumes full production, might be quite appealing.

The 3 separate "consultations" going on at present are crucial to the UKCS O&G industry. When we learn the outcome is in the lap of the gods. Labour just doesn’t get it. Time means nothing to the lazy b’tards who infest the corridors of DESNEZ and quangos like the NSTA. The latter pretty quickly switched its allegiance to their new masters (Miliband et al) and chucked “MER” out of the window as soon as Labour got in. And a stand-off has developed between Reeves and Miliband with Starmer acting as referee. It’s all about power. Starmer owes his political career to Miliband and the latter is the hero of the left, so it’s far from certain “dirty energy” is going to be given the concessions many are predicting. It is daft trusting politicians – particularly Labour ones. Remember, in the dim-witted view of the masses, nasty CO2 is ALL caused by fossil fuels. Until this myth is dispelled progress migh

....cont'd

Whether or not SQZ were to make a bid for JOG, SQZ is obliged to pay 30% of the Buchan development costs (£300m) plus a £75m carry towards JOG’s 20% WI (costing SQZ £75m). NEO is obliged to pay £500m, plus a £125m carry.

In the event of SQZ acquiring JOG’s 20% working interest in the GBA licences, the question to ask is: would a payment to JOG’s shareholders of £161m (if they were minded to accept 438p a share, which they wouldn’t be) be fair to acquire the benefits flowing from a £200m carry, which both NEO and SQZ clearly thought was worth paying to secure their respective 50% and 30% interests in the GBA licences. SQZ would also gain the other benefits set out above, all of which are measurable in cash, totalling £61m.

The 35% Energy Profits Levy was already in place when the farmout deals were struck, albeit there were special tax incentives to encourage future investment in the UKCS. These were subsequently withdrawn by Reeves. “Sunset” for the EPL was set at 31 March 2028, whereas now it’s June 2030 – maybe never if enough dopes in the UK vote the Labour clowns back in office, although the penny seems to have dropped with the accounts woman about not raising much tax when the rate is prohibitive.

I’d take £6 a share to close the book. A bargain for SQZ maybe but there’s still too much uncertainty. I’m fed up with the never-ending roller- coaster ride – 10 years of JOG and the last 2 years of TRAP’s shameful existence. SQZ and NEO can withstand whatever further body blows the cretins in Govt might still have to deliver in their greed and stupidity. Govts can drag things out for years; they have no understanding, no morals and no shame. These can’t be factored into risk assessment. Nor can directors always be trusted to do what’s best for shareholders generally – or perhaps would want if they knew it was on offer.

Does anyone seriously think none of what I have set out above has occurred to SQZ (or NEO/Repsol)? I and other shareholders in SQZ lost out badly when SQZ’s then directors rejected a fair bid from Kistos and instead ran for cover into the arms of a Swiss hedge fund. The directors, all gone withing 12 month fully cashed-up, did very well out of it all (options, salaries, bonuses etc). Shareholders didn’t. 27% of s/hs voted against the deal, but proxies were fielded that won the day. SQZ’s price then was around 450p – today its 1/3rd of that and the acquiree is in control. Once bitten and all that.

Someone might want to ask a few questions at the AGM……..

jmofwiw

dyor

You’re on the mark, FJ.

At present, under the terms of the farm-out agreement announced on 6 April 2023, which granted NEO a 50% share in the GBA licences (and operatorship of the development) NEO has to pay

• 50% of the estimated £1bn Buchan Field development costs included in the FDP approved by the North Sea Transition Authority ("NSTA"),

• a 12.5% carry (relating to JOG’s 20% of the development costs) amounting to £125m

• 62.5% (50% plus a 12.5% carry) of the estimated $25 million cost to take the Buchan field through to FDP approval

• A milestone payment to JOG of 62.5% of $20m, on FDP approval by the NSTA sometime next year

• There were a number of other milestone payments (most already made to JOG) reflecting other terms agreed by the parties.

The terms of the farm-out to SQZ are identical to those agreed with NEO, pro rata to their 30% and 50% holdings.

I can’t now work out why I chose 438p a share (SQZ to pay JOG’s shareholders to buy JOG) but I’ll stick with that figure. What would SQZ get for its £161m spend (36.745m shares @ 438p a share)?

It would benefit to the full extent of the value of the £200m carry of overall development spend, by virtue of owning 100% of JOG.

Plus, it would benefit from the value of:

• NEO’s £3.125m carry of costs through to FDP approval

• SQZ’s avoidance of the milestone payment due to JOG on FDA approval - $7.5m (£5.5m)

• NEO’s $12.5m (c.£9m) milestone payment due on FDP approval

• The cash value of JOG’s tax losses of £62m – i.e. £25m.

• Cash in JOG’s bank account at the date of the transaction (say £10m)

• Cash raised from JOG employees on exercising options: c.£8m

The above comes to £61m - cash value to SQZ on acquisition of JOG.

The above is just one way of looking at the situation. I just submit it for discussion. It would be illogical to think SQZ has not worked out for itself the considerable benefits that would flow, were it to acquire JOG for what – at, say, £6 a share - no-one could claim was not “a steal”. SQZ would increase its stake in the GBA licences from 30% to 50% at a stroke. Pre-tax cash generated by JOG’s 20% WI in the GBA fields, according to my NPV10/DCF projections, in year 1 of operations alone (based on production of 35kboepd, a BC price of $70pb, OPEX of $25pb and production of 330 days pa) would amount to well over $200m (pre-tax – it seems likely that, by 2030, sense will have prevailed but people can form their own views on the rate payable)....

TBC

You've got it in one, Cyril. Even by politicians' and civil service standards it's idiocy on a grand scale. How is is possible to establish what parties totally unknown to the vendors are going to do with the oil (and gas) they buy on international markets? It is impossible to determine.

I wish we lived in an era where the term: "don't be so stupid" was still considered on its merits. Instead, for unaccountable reasons that won't go away, we have to pretend that what fringe minorities, backed by Government, tell us is right, is in actual fact right - and anyone who says otherwise is quite likely to be sent to prison. The whole climate change debate is designed to fool the masses. Lies have been spread for the last 30 years or more about anthropological global warming and, more particularly, the reasons for it. The "97% of scientists agree" line - a complete fabrication of the truth designed to fool the masses - is arguably the most dishonest part of it all. It involves a combination of enlightened self-interest, brainwashing of the masses and an almost religious zealor to sacrifice ourselves on the alter of virtue to pay for our sins as a species (wouldn't the earth be so much better a place were it not for humans?). To compare what I have seen countless independent climate physicists - and others whose intelligence and understanding of what is a very complex subject is clearly comprehensive - explain to audiences assembled to draw from their wisdom and experience, with the one-liners emanating from UK politicians' various orifices (eg: "97% of scientists say that human use of fossil energy is harming the planet beyond repair") is surreal. In any other era such ramblings would be put down to ignorance beyond compare. You can bet your bottom dollar a minority of already rich people and countries get to benefit financially from this "madness of crowds" (Al Gore, Obama & Clinton come to mind).

https://www.youtube.com/watch?v=P_nH1BAfDhs

We'll get there. But people who are guilty of stupidity tend not to admit it until they're forced to. Britain going bust appears to be what we're waiting for.

dyor

Final results were posted on 13 May last year. Ergo: we should get some sort of update soon.

Ref: Scope 3 emissions & EIA approvals:

https://legacy.gasstrategies.com/information-services/gas-matters-today/court-rules-rosebank-jackdaw-projects-need-new-approvals

"OEUK chief executive David Whitehouse said: “The revised environmental impact assessment process which manages these consents must be robust and must be delivered at pace. Our domestic oil and gas remain a strategic asset for the UK. Industry takes its environmental responsibilities and the goal of net zero seriously which is why we need a robust process which provides clarity to investors, enables timely and predictable decisions, and provides certainty."...............

............"The government has already consulted on revised environmental guidance to take into account emissions from burning extracted oil and gas to provide stability for industry, support investment, protect jobs and deliver economic growth,” a spokesperson for DESNZ said in a statement.

Guidance following the consultation is expected to be published in the spring.

However, the process to allow new consents to be given can only take place after this consultation.

The spokesperson noted further that the government would respond to the consultation “as soon as possible and developers will be able to apply for consents under this revised regime”...........

Anyone care to define "in the spring"?

They just don't care. They have no concept of the ongojng damage all the (totally unnecessay) uncertainty is causing. A bunch of lazy incompetents is a generous way to describe the NSTA under Miliband. Plus about 10m other public sector (non) workers, all on fat packages and defined benefits, index linked gold plated pensions no-one in the private sector can afford. A very significant number "working from home" or working from abroad". Yeah. In the local authority that covers the area I live in, I learned recently that 25% of council tax payments made by local residents are applied to the payment of pensions due to local authority (non) workers. Absolutely scandalous.

Insurrection looks increasingly likely (by this I of course mean peaceful protest........)

dyor

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