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....if Typhoo put the T in Britain, who put the **** in S****thorpe?

Make that Downing Street (10 & 11)...........

We are overdue news about what's going to keep the NSTA happy re scope 3 emissions. Followed by clarity on future tax rates. Hopefully EPL will cease to apply, as Murray has admitted the release mechanism is flawed (dishonestly so - blame slippery Sushi and the rhyming Hunt).

JOG's present £30m market cap is soon going to look totally daft.

jmofwiw

always dyor

Dgdg1 - there has been news of a sort.

https://www.telegraph.co.uk/business/2025/04/02/labours-north-sea-shutdown-raises-blackout-risks/

The article focuses on Jim Ratcliffe and Ineos but it applies to the UKCS O&G industry generally. A few extracts in case you encounter a pay-wall:

" To revive the North Sea, he called on ministers to scrap the windfall tax, which currently requires oil and gas producers to pay a headline rate of 78pc on profits.

He said: “Government tax policy on energy is squeezing the life out of our abundant energy reserves in the North Sea.

The UK came perilously close to energy blackouts during this January’s cold snap, when the wind stopped blowing.

With one week of gas storage and strained electricity supply, the National Grid was forced to issue emergency market notices"........

"................we import most of our energy from abroad. It is expensive. It leaves the UK strategically vulnerable, as Europe discovered from its dependence on Russian supplies.”

"High energy costs mean fewer jobs in the North Sea, he added, while they also hinder growth in domestic manufacturing".

"As one of the biggest chemicals companies in the world, Sir Jim’s Ineos has been hit hard by high energy costs in the past year. It has also suffered from the Government’s retreat from the North Sea, where it owns and operates a number of platforms".

"Ineos also owns the Forties Pipeline System, a sprawling network of pipes that is crucial for transporting oil and gas from more than 80 offshore fields, which was expected to keep running until the mid-2040s.

However, its closure is likely to be brought forward to the early 2030s given the sharp drop in production expected under Labour".

UKCS-focused companies are quitting the basin in their droves as a result of the EPL; plus all the uncertainty caused by the UK's insane dash to net zero. Reeves's options for growth are fast disappearing. Any time now Labour is bound to see the error of its ways and offer UKCS E&Ps support instead of punishment. It won't be long before we learn the outcome of the various consultation processes. Most expect Labour's foot to be lifted off the windpipe of the companies the UK Gov't needs if economic disaster is to be avoided. This should mean the green light for (at least) existing licences to be developed. These include Rosebank, Jackdaw and Buchan Horst.

My forward projections for JOG show a bottom line profit before tax in excess of $100m per annum when/if Buchan H gets to production. This is based on a 20% share of 35kboe/d for the field as a whole. If tax rates return to 40% and with the benefit of b/fwd losses, a single year's retained profit should considerably exceed JOG's entire value today according to the market. There's no real cost to get there, thanks to JOG's 100% carry. The key thing is getting field approval.

Risk can never be eliminated, but to me the potential for significant reward makes the risk worthwhil

It isn't a windfall tax because the EPL is applied to every UKCS O&G company's entire profits, no matter how low. The rhyming Hunt made certain the EPL could never be be withdrawn by ruling that both oil & gas prices would have to be below levels for the same continuous 6 months' period, when everyone knows there is no direct link between the price of each (as we are seeing now, with oil below the trigger release price, but gas way above it). Plus no account was taken in calculating the 20 year average prices for inflation, or for a period between 2014 & 2016 when prices fell off a cliff for reasons outside operators' control (as a result of the standoff between the US & Saudi when the US burst in on OPEC's territory with its fracked offerings), then again in 2020/21 as a result of Covid.

By the time the EPL is withdrawn (if it is) heinous rates will have been charged for 8 years on only about one year's exceptional profits. Reeves is looking for something to replace EPL that taxes UK O&G companies' profits at higher rates as soon as oil/gas prices touch levels that are "above normal"). If you ever doubted we now live in a communist country, that doubt is now removed. Why is there no proposal for companies to pay a lower rate of tax when oil & gas prices are abnormally low? Funny, that.

It is all a part of what the private sector now exists for in this Governments' eyes - to pay the taxes needed to pay the (mostly) lazy and totally ineffectual public sector never to deliver a fair day's work for hideously excessive pay; the 9m or so of Britain's population who've decided work isn't for them; everyone younger than working age; everyone over pensionable age. 15m pay for 70m. The Conservatives are no better - they pretend to be one thing (champions of conservative values) and display another entirely (deliverers of weak, social democrat policy). The vast majority of Britain's politicians are people with no principles and no backbone. Scum of the earth.

Apologies if you view the above as O/T but it is relevant if you invest in oil & gas in the UK.

The odds are the rapid decline in production of UKCS oil and gas will force this destructive Gov't to take its foot off the industry's windpipe before it kills it (and itself). There are signs sense will prevail, but you'll have to keep your eyes out to spot them, because no-one in Labour is going to shout loudly about what will amount to a U turn. For some reason Miliband remains in place - I can only think it is as a sop to the far left. Were he to go, everything would be much easier.

With every day that passes JOG's prospects of finally monetising UKCS assets that have been so patiently, skillfully and potentially very profitably assembled, increase. Markets only reflect supply and demand. Short term sentiment drives price. Many don't understand fundamentals and measure these against risk. Risk can never be eliminated, but a market cap of less than £40m??

Silly.

dyor

.........I take it all back - she's a very clever woman.

https://www.agcc.co.uk/news-article/chancellor-says-jackdaw-and-rosebank-will-go-ahead

Not sure why there's not been much (anything?) said about this - I certainly hadn't seen. Seems to me it's an important threshold to have crossed. Beats me how a politician can preempt a decision that, strictly speaking, is in the domain of an "independent regulator" (NSTA) but I guess "where there's a will there's a way".

Bodes very well for us re Buchan Horst gaining EIA/FDP approval sooner rather than later, thus unlocking JOG's receipt of £16m in cash from NEO (now Repsol/NEO) and SQZ under the terms of the FO agreements.

I'm marking down 27 March 2025 as an important day in JOG's history. On the face of it, JOG is in a very different position from the one it was in on the 26th. I therefore officially declare yesterday's closing price of 104p to be idiotic. At this price the whole company is assessed by the market to be worth around £34m.

When/if (much more likely now) the BH FDP is approved, JOG will be sitting on around £27m in cash; it will have tax losses to the (cash) value of c.£30m. Its other assets are thus valued at a big minus number. These include a fully carried 25mmboe of what will be 2P reserves (33° API slc) on FDP approval, plus at least the same again in drill-ready prospects with straightforward tie back potential.

Just for balance, under the "there's always something" rule that prevents us from ever getting anywhere near the starting line never mind the finishing one, there are one or two tasks we are reliant on our directors to carry out before we can start really celebrating, most notably ending the uncertainty about the FPSO. They might also consider arranging for a certain energy minister to be kidnapped and stuck on (or to) a desert island, just to be on the safe side (it's ok - I don't mean it).

I agree with Jim re Repsol. My understanding has always been that when the Buchan rig failed on H&S grounds in 2017 (Repsol Sinopec were the owners of the licence) Repsol wanted to take whatever steps were needed to get the remaining oil (c.50mmboe per the CPR) to the surface, whilst Sinopec - chinese - didn't. There was a dispute, the terms of the licence (inc an obligation to produce oil - it couldn't) were breached and the licence had to be surrendered. A lot of clever work by JOG's team resulted in a licence being awarded (inc the OIP) to JOG in 2019. Buchan had come to be known as "the field that just carried on producing".

Looks as if Repsol gets another bite of the cherry - can't have failed to influence the NEO deal.

I'll get the bus checked out then have a word with the relevant Abbot about facilities in the general vicinity of Buckfastleigh, given I now understand the Happy Eater went bust in the late 1980s. How time flies.

https://www.buckfast.org.uk/northgate-hotel/

Stay long and strong..............

dyor

Have it your way Tarmak - think what you like and post what you like. I really don't care.

If SQZ holders are offered less for their shares than they can sell them for in the market OF COURSE they'll rush to accept the lower offer.

As you haven't answered my question: "how much is a share worth?"................the answer is: "today's value of all the cash that share will generate over its lifetime (or period of ownership)". Commonly: (i) acquisition cost (a minus);

(ii) cumulative dividends - all forms (a plus); disposal cost (also a plus).

The method can be used to arrive at the fair value of companies as entities - and often is. Returns from individual projects are often determined by net present value calculations NPV. NPV only takes account of cash an asset (of prject) generates. Ultimately, cash is all investors (in shares or any other assets held for commercial return) should be concerned with. No share valuation method is perfect. NPV requires realistic assumptions about the future, because the valuation involved the preparation of DCF projections stretching well into the future. The discount rate applied in the projections also demands judgment. As does the future cost of money.

Whilst in many investment professionals'/share valuation specialists' view NPV may be the purset indication of a company's true worth, it does not necessarily (or even usually) determine a company's share price. SPs factor in a whole lot of things unrelated to pure numbers.

I was involved in any number of M&As over a long period when I was working. The "price" of each deal was almost invariably thrashed out in (sometimes many) meetings over weeks or months. Deals were often not signed in the early hours of the morning (who's negotiation skills/stamina were better?) leaving the tax people behind to finalise the tax warranties.

It is often said that a fairly priced deal leaves both parties feeling unhappy - one thinking it has paid to much and the other thinking it has received too little. There is imv a lot of truth in this.

SQZ holders haven't been given anything like enough info in what are unsettled times to make any kind of decision about throwing their lot in with ENQ.

As I have previously said, I instinctively don't like what's being proposed. EG: we aren't told who's going to be running the show, nor why directors/shareholders relatively new to SQZ would want to cede control (which I'm pretty sure is what is going to be the case) to ENQ's team. Where does Mercuria fit in with it all?

A question that comes to mind is: "what's in it for the directors?".

What I can say is that if it means dividends are cut, I'm outa here pdq.

Keep drinking the kool aid

dyor

In case anyone is interested, I made a post relevant to JOG on the SQZ blog yesterday (26 Mar) at 19:51hrs.

https://www.lse.co.uk/ShareChat.html?ShareTicker=SQZ&share=serica&thread=917C1D63-6CDD-488E-968F-B65319B9D467

Glad to be wrong about HitecVision's/NEO's commitment to the UKCS.

Today's news considerably derisks JOG's overall situation.

We now await the NSTA's guidance on EIA submissions re scope 3 emissions which was promised "in the spring". The promise was made 6 months ago and it's now spring according to the daffodils. But time means nothing in the public sector. We'll probably have to wait a while yet, because there's work to do in civil servants' gardens. Plus the weather's great for walking the dog to the pub for lunch. "Nuisance" office matters can be dealt with later - maybe if there's a rainy spell in the autumn?

I'm not expecting any clarification on tax rates until at least the Autumn (not sure what year). The closing date for industry representations on the subject isn't until the end of May and there were about a million questions for industry spokesmen, UK O&G cos and other interested parties to answer, many of them facile but hugely time-consuming.

James Murray is the Gov't spokesman supposedly heading it all up. He has as good as admitted it was/is wrong to charge a windfall tax on ordinary profits (as well as even more punitively on windfall profits themselves because of all the disallowed categories of spend). He forgets to mention the dishonestly calculated (by the rhyming Hunt) so-called "20 year aveage oil and gas prices", although he does say that from 2030 onwards companies will be able to choose either oil or gas for the purposes of establishing when industry prices exceed the norm (and hence will be subject to a higher tax rate).

It is logical to assume that the method/rate eventually chosen to apply from 2030 onwards, which Murray is at pains to emphasise must be seen to be fair by the industry, should apply with immediate effect. OK - so when did logic or honesty ever come into it when dealing with politicians?

It was imv very encouraging for the UK O&G industry that ravishing Rachel made no reference at all to the elephant in the room when it comes to the avoidance of crippling costs for the Gov't she so shamefully represents - ie Net Zero. She daren't say she's identified additional tax revenue and savings running into tens of millions by not listening to the lunatic (sorry - energy minister) and has decided to take Gov't's foot off the industry's throat. She'd have been howled down by the brainwashed masses in the House (inc most Tories). Man-made existential climate change will feature in a 2041 edition of :"Extraordianry Public Delusions and the Madness of Crowds", originally written by Charles Mackay's in 1841. It includes such popular delusions as the The South Seas Company (1720); the Mississippi Scheme; Tulip Mania and others.

Patience is a virtue. We are virtous people.

In a willing buyer, willing seller situation shares change hands at at market value usually plus a premium to reflect perceived higher value of the target. In the case of an agreed merger, current SP is the driver. Why would shareholders in one of the merging companies accept less for his/her shares than they could sell them for in the market?

There are many ways to value shares in companies. The value of small minority holdings (ie PI's shares) in a listed company is easy to establish. It is what they can be sold at in the market, via a broker, who deals via a market maker. Larger minority holdings in listed companies where the holder wants to exit are generally either sold over a period in volumes the MM can handle, or sold (placed) directly by the seller with a willing buyer/s, usually at a slight discount to SP. "Gurney's Share Valuation Manual" was my bible when I did it for a living (I only occasionally needed to refer to it for guidance after a while).

Instead of posting material certain people (ENQ holders?) appear to intend will result in SQZ holders accepting value for their shares that is a long way below the value the market attaches to them, they might consider what they would do in the event of receiving what amounts to close to a '1 for 1' offer for their shares from a company with a market worth of half the one they have shares in The response they would give would end with the word "off". It will be mine too if SQZ's directors recommend anything that does not include a premium to take account of the fact SQZ's present SP is below what it should be as a result of what should only be short term production issues that should resolve by the summer. In my experience markets punish short term underperformance to an excessive extent.

The types I refer to would do well to give some thought to the overall concept of investing in shares. Ultimately everything comes down to investment return. The skill in investing, for a longer-term private investor at least, lies in identifying shares that are undervalued (based on fundamentals - research will tell you what these are) then waiting for the fundamentals to play out. The sage of Omaha (Warren Buffett) describes it well in two of his many sayings:

1 Price is what you pay; value is what you get

2 The best time to sell shares (in a good company) is never

As for EV being the driver here, they'll have to think of something better to come up with because it isn't going to cut the mustard. It is one method of measuring the value of an enterprise, but it is unrelated to market worth. As is P/E, dividend yield and a number of other attempts to get to fair value. One wonders whether the types I refer to have ever heard of the Dunning Kruger effect? https://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect

Here's a good one for one of them to answer. How much is a share worth (any share)?

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