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Einbert - ref taxing the entire profits of the UK upstream players at 75%, my point was why? Windfall gains - fine, no problem. But 75% of the entire profits? Ultimately, companies are valued on investment yield - all the valuation metrics lead back to this - even when no income is yet being generated. Halve the income (net) and you halve the value. Or more than halve the value, because a lot of companies that are focused only on the UKCS will be go bust.

My second point major point is that Sunak and Hunt are taxing the wrong people. Market prices for BC returned to more normal levels (having been unusually low for some time before because of Covid (demand fell off a cliff and remained motionless on the rocks for 2 years) after a few months and for UK natural gas inside a year. The prices the downstream players (forecourt operators - your employer among them no doubt - and energy supply companies) bought their supplies at therefore "normalised" in the same timescale. Yet they continued to increase the electicity and gas bills they sent to their customers and the forecourt operators didn't pass on the reduced cost of oil to motorists beastly and selfish enough to drive non-battery powered cars. Of course it's not quite that simple because there are active and complex forward markets to factor into the equation, but 3,6,9, 12 months and beyond forward prices won't have been nearly as high as gas (for instance) spiked at briefly before crashing back to earth (640ppt down to 50ppt in no time at all).

Have these energy companies been asked to pay their share of the cost of paying the energy bills of the nation (can't say I noticed any decline in the number of people attending football matches and I'm not aware bar owners in Magaluf and Benidorm went into overdraft as a result of the UK's high energy bills. I did hear, however, about one bloke (a friend of a friend) whose investments in 3 UK AIM-listed companies dropped in value by 7 figure as a result of Sunak's & Hunt's decision to apply a theft tax of 35% on his investments, not for one, year, not for two years but for FIVE years, regardless of the price of oil & gas. Hunt didn't fool anyone with the so-called "price floor".

I hope their wives give them a STD. Stoma too. I hate dishonesty and it's rife in politics. It needs reform (forgive the double entendre)

jmo

dyor

DonkeyO - ref your post of 20.06hrs yesterday, it's well worth mugging up on the different classifications of oil at various stages in the life of a licence granted by the NSTA on behalf of the Dept of Energy Security & Net Zero (ridiculous - you can't have both - they're mutually exclusive).

The linked article should provide you with all the information you reasonably need to understand the terminology used in describing an E&P company's oil & gas assets.

https://www.spe.org/industry/docs/PRMS-Guide-for-Non-Technical-Users-2007.pdf

As for how a company values oil & gas assets, the principles are the same as any other class of assets. If you check out JOG's accounting policies (exciting stuff) set out on pages 52 & 53 of the 2022 accounts, you'll find all the information you need on the carrying value of oil & gas assets: https://wp-jerseyoilandgas-2020.s3.eu-west-2.amazonaws.com/media/2023/05/AR-20221.pdf

The way I chose to gain some kind of idea of how NEO values its investment in the Buchan licences, I was simply trying to outline the spend it will have to make before it starts to generate income when the GBA fields are commissioned, which is presently anticipated to happen in 2026. It seems to me a reasonable assumption to make that NEO expects to make a great deal more than the money it's investing to get to the stage when it can start generating income and profit.

I outlined another way it might be possible to work out what JOG could be worth when it starts generating income from the GBA fields, which was on a multiple of (net) earnings. To come up with anything more refined than I have done in outlining two different ways of having a stab at working out what a fair SP might be if JOG achieves its objectives would be pointless. But whilst we're on the subject, a rough and ready way of valuing an E&P company that has defined oil & gas assets is to check the latest price per barrel that's been achieved in recent S&P transactions, for oil & gas with similar characterisics to the company you're trying to value. To skip multiple different scenarios and use a simple example: take a company that's just started producing, find out if there's any recent evidence of what price producing reserves have been sold for (ie ppb) and apply that number to the producing reserves in the company you're valuing.

JOG can reasonably expect to own 25mmboe of producing reserves on day 1 of production in 2026. SQZ recently acquired Tailwind Energy, a NS producer owned by PE. It (over)paid $21pboe for TE's reserves. That situation was complicated by the supposed tax losses in TE available for offset against tax. We JOG to sell for a number that's half what SQZ has recently paid, it would be worth 25m x $10.5 = $262.5, or £6 per share.

Any assets held for commercial gain is only worth one thing: the present value of all the cash that investment will generate during its period of ownership.

The end - do I still I have my uses?

foadyorif

I try to keep things as simple as possible, Greener. Then more people are likely to understand. Yes - I did look at the situation from an earnings angle a while back, but it's difficult (as it is in this case too) to factor in the heinous tax rates low-life politicians have unjustly imposed on the upstream industry (which only benefited from inflated prices for a few months (oil) and about a year (gas)) before returning to 'normal' (post Covid) levels. "Super profits" caused by the Ukraine invasion hardly even covered the upstream industry's losses due to Covid, when demand fell off a cliff, along with BC and gas pt. Was Covid the fault of the upstream players - on the same premise as "the industry gained from events that were wholly outside its control"? No it wasn't. Yet all upsteam profits are being whacked at 75% for 5 years regardless? Dishonest, cheating toerags.

We're now starting to find out who's (still) making money out of everyone's misery. As I have maintained all along, it is the downstream players - the energy supply companies and forecourt operators. The former kept on increasing consumers' bills, even though the prices they've been and are still paying for what the upstream players sold to them on the iCE market returned to longer term average prices or below ages ago. Forecourt operators decided they preferred 10-20p of margin instead of the long term average of 5 or 6p per litre.

But the upstream players got clattered. It will not end well for UK plc - or the NS. We're fortunate, in that JOG meets all the criteria and more to fit in with the need for UKCS producers to reduce tax to the fullest extent possible. We've found a great partner in NEO. Let's hope the secondfarminee is just as impressive.

I don't know enough about NEO's operations to factor tax into what they're paying for their 50% of the Buchan action. If you prefer, in future I'll prepare a 20 or 30 page report on JOG's value when posting, making it clear what I've factored in, what I haven't and why (of the kind I prepared for submission to the Court in advance of giving expert evidence in cases hanging on business valuations in days of yore).

People would be bored silly, however, and the methodology used would be lost on most. As an aside, many a case over the years was won and lost on boredom and ignorance, particularly on the part of the judge. Lawyers never understood anything.

I'm not offended btw - and no sarcasm is intended. I recognise I've been around these boards for too long and am past my sell-by date. It's high time anyway that others with relevant background and experience took up the riens, leaving people like me to gently fade into the past. I see its even expected now for people to get disposed of in a carbon-neutral way. Not quite sure how that's achieved, but afaic they can shove it into a place where the sun doesn't shine.

Has the SP reached £4 yet? How about £43? Pick a number.

Maybe ask Malcy?

dyor

Quite quickly I find I might be able to add some more after all.

Let's look at things the other way around - ie from NEO's perspective. Can we all agree they're likely to know what they're doing? And that HitecVision (NEO's parent) is targeting a stellar IRR for the HNW types who've invested $8bn in it? OK - I'll carry on - hope my logic is sound.

NEO has agreed to pay JOG the following to acquire a 50% operator's interest in the GBA licences:

§ Carry for JOG's 50% share of the estimated $25 million cost to take the Buchan field through to FDP approval

§ $2 million cash payment on completion of the transaction

§ $9.4 million cash payment upon finalisation of the GBA development solution

§ $12.5 million cash payment on approval of the Buchan FDP by the NSTA

§ $5 million cash payment on each FDP approval by the NSTA in respect of the J2 and Verbier oil discoveries

§ 12.5% carry of the Buchan field development costs included in the FDP approved by the North Sea Transition Authority ("NSTA"); equivalent to a 1.25 carry ratio - we now know the estimated cost of this to NEO is $112.5m (12.5% of $900m infrastructure costs inc the FPSO)

The above adds up to $158.9m.

In addition, NEO will pay (voluntarily - no-one is forcing it to do so) 50% of the infrastructure costs ($900m) as above, to get to first oil (anticipated date 2026). That's $450m to add to the 158.9m set out above. Grand total $608.9m. For 50% of the GBA licences.

After a second FO (inc the receipt of some more cash) JOG is likely to retain a fully carried 20% (min) working interest in the same licences that NEO seems to think are worth 2x $608.9m = $1.218bn.

20% of $1.218bn = $243.6m. Or £195m. The clever market says £57m. There are 35m shares in JOG (fully diluted). I make that 557p per share. And that's before JOG starts making any profit (assuming it gets to become a producer). I'll take the money immediately post FDP submission (and approval) thanks, when all the 'unknowns' become 'knowns'.

Any thoughts on the above anyone? Are my numbers or assumptions up the creek?

dyor

CHF - not sure why you chose to post that garbage from SWS. Even by analsts' standards they're the pits. Note they fail to say anything about what JOG is about. They've taken the latest accounts and in child-like fashion have applied a lot of metrics that aren't relevant and don't matter. The same applies to whichever company they share their wisdom on with people who are misguided enough to read it. Some even pay whatever SWS asks for to get even more detailed analysis that's also irrelevant.

Ref the calls for AB's head, I'm staying out, other than to say the issues aren't as simple as some posters would have us believe. A great deal of knowledge is accumulated over the course of nearly 10 years. When all said and done, subject to industry conditions not deteriorating further, we're nearly there (wherever "there" eventually turns out to be - the SP should certainly be a lot higher than it presently is when it happens, however).

I'm as impatient and frustrated as any other LTH, but I haven't seen any definitive evidence (for instance) that JOG isn't engaged in discussions with, say, 3 or 4 NS oilers about farming in to GBA to the tune of 25% or so. What sense would it make to do a 2nd FO before the cost implications of whatever NEO might have brought to the table in the way of a cost effective solution to GBA storage and offtake options? The numbers are big and the engineering complex; and it takes time. It's not like running a sweet shop. Everything in this industry takes longer than expected. And just as things were likely to have been slotting into place, in stomped Sunakhunt and Stoma looking for money, in the process throwing the Upstream industry into turmoil.

Luckily JOG is practically a "green energy" company. And it provides the means for tax-paying producers to avoid the heinous tax rates the political clowns have unfairly foisted on us. Who had the foresight to concentrate on making sure GBA oil extraction has a carbon footprint if 1kg/boe I wonder?

I think it's relevant that AB has recruited a number experienced industry pros, some with a lot of grey hair who, between them, would certtainly compensate for any technical skills AB might be thought to lack. A CEO's role is wide-ranging. Ultimately it is about making sure a company has all the human and other resources it needs to succeed with a defined plan within a defined timescale - then driving the efforts to get there. Life is such, however, that circumstances sometimes get in the way. I am not making excuses for anyone - just saying. No-one seems to have considered the downside of someone as important as the CEO being given his marching orders at a critical time like this. How would this help JOG?

AB's future financial security and comfort is firmly tied up in JOG. So we're aligned. Where he's made a mistake imv is in upping his pay and share options substantially, whilst we've had to watch our money ebb away. 0/10 on that one afaic

jmo

dyor

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