Member Info for dickupham

I hadn't spotted the latest (video) update on JOG's impressive UKCS assets: well worth watching and listening to.
https://www.jerseyoilandgas.com/

Strange time for people to be bailing out, when news could land anytime of what's happened since announcing: "The #GBA farmout process is underway, with broad interest and participation from multiple parties"? I've decided not to resort to the weekly Friday afternoon cliché: "wouldn't want to be out of this over the weekend", although others may take a different view...........

I've been gently increasing my holding of late as cash has emerged from unexpected places. One can't have too much of a good thing, I've concluded.

The above are my own views only as to likely outcome. JOG's assets are so far undervalued it's unreal. But we knew that already. Fundamentals always win in the end (or so it's said). 20 cents a barrel for discovered and super-efficiently recoverable 33° API in a prime UKCS location? Who's kidding whom?

Yawn...................

all imo/dyor

Maverick - ref uplifts, the base I used for BKR was the reported volume in SQZ's 2020 annual report: https://www.serica-energy.com/downloads/reports/annual/Serica-Annual-Report-2020.pdf

............+ 67% of BKR production wef 1 Jan 2022?? Would make your estimate close to 70kbpd

Or am I confused?

PS: the train video (with question marks) was supposed to suggest the train might have finally set off. I didn't look hard enough for the right sort of train - apologies. If you look carefully, you'll see me sitting in the penultimate carriage drinking cocoa
Try this one:
https://www.youtube.com/watch?v=vjD3EVC1-zU&ab_channel=YazzVEVO

A company is a legal entity in its own right; "corporate persona" if you like. The responsibility of the directors, who are appointed by the members (ie shareholders), is to run the company in ways commensurate with the company's longer term performance. It is entirely correct for them not to be influenced by the individual preferences of members - what suits one might not suit another; everyone is different.

When it eventually comes to realising value from the company, members will have the opportunity to vote for whatever is proposed at the time. It is illogical (but perhaps understandable) for individual members to think they know what's best in regard to realising the fair value of JOG. The best thing one can do (I have concluded) is to trust the directors and back them in what thy are trying to achieve. They are, after all, armed with all the information they should need to determine the best way forward.

My personal view is that if JOG can successfully conclude a farm out on terms that make commercial sense, the market will quickly re-rate the shares on the back of implied industry validation of what, up to now, has been a story very few have bought into. You should then get the chance to sell your shares at perhaps £5 a go, to a buyer who sees much higher returns in the longer term.

Somewhere mixed in with all the above is the possibility of a sale of the whole company in the relatively near future. It doesn't seem likely a low-ball bid would stand much chance of success, because most shareholders don't bother to vote and enough members would vote against a deal that clearly undervalued the company. It's the number of votes cast at a general meeting that counts, not the number in issue. 25% + 1 share would constitute a blocking minority.

I'm hanging on for £43

:-)

https://www.youtube.com/watch?v=iZgzRfa-xPQ&ab_channel=BaltimoreAndOhioRR

........" We also need directors Then we might be in business".........

.......we definitely need directors! I meant to write: "we need directors with their feet on the ground, not in "Robert Trice" (HUR) or "Rupert Cole" (XEL) fashion harbouring aspirations it is beyond them to deliver without taking risks that would not be acceptable to the majority of shareholders if they were asked for their views. Always leave something for the next fella.

Deals struck at the right price leave both sides feeling unhappy - one for having got too little and the other for having paid too much.

Brief medical update for those who might be interested. I'm still here - only the good die young. My PC is presently being held at bay according to the oncologist. Bloods being tested quarterly, hopefully to confirm this continues to be the case. I remain positive about most things.

contd (this is the final bit)

Knock off the debt and call it a round $1bn - or roughly $30ps. It’s happened to other companies, what to prevent it happening here? A sale now would still be the best answer to me but wdik? We need the usual winds to blow in our favour, a slightly less hostile environment to work in and above all the price of oil to stay where it is now, or increase some. We also need directors Then we might be in business.

Last week’s update cheered me up no end: “(the) Farmout process (is) underway with broad interest and participation from multiple parties”. Just the news we needed to hear. Add it to what AB stated when the 2020 results were published and it all starts to look decidedly promising: “Our Concept Select findings have yielded some encouraging economic estimates. Our management estimates show the GBA to be a significantly cash generative asset, with the first full year of production expected to generate US$840 million in EBITDA. Expected pre tax free cash flow for the core discovered volumes is estimated to be in excess of US$6 billion and this has the potential to double on the back of near field exploration success.

Cost estimates for each phase have been prepared in accordance with the detailed work break down structures for Phase 1, 2 and 3. CAPEX costs for Phase 1 are estimated to be approximately £1 billion. Operating costs during plateau production are estimated at US$8/boe to US$9/boe, with a payback period estimated at under 3 years. Plateau production is estimated for more than 3 years”.

JOG talks of cash payback inside 3 years, although more for a farminee with (say) 60% for (say) 90% of Phase 1 costs – but still less than 5 years. This would make the whole project attractive to a farminee if due diligence doesn’t cast doubt on the numbers and assumptions. Why would it with Rockflow Resources, Schlumberger & Vysus all involved, not to mention a small group of very talented people in JOG, plus consultants?

Everything I write above and in previous posts is intended only to stimulate informed discussion. Please dyor and make up your own minds. I’ve simply outlined some of (what I regard as) the reasonable possibilities as to how this will all play out. Risk never goes away – it is all around us all the time and will remain so until the money is in our bank accounts, assuming any ever gets there. In the meantime, console yourselves with the thought that the market might have got this one spectacularly wrong. Adjusting for what JOG is holding in cash, the market has JOG worth about £30m – or $40m; this puts a value on JOG’s discovered 2C resources of 21 cents per barrel and applies a ‘nil’ value to the 220mmboe of live prospects. Surely this can’t continue for long now?

That's it from me for a while at least (phew, I hear).

GLA

contd........
The real winner will probably be the GBA’s carbon neutrality at a time when the world is pretending it can function without oil and the likes of BP, Shell and many other oilcos are under the cosh and treading on eggshells where any form of carbon investment is concerned. In JOG we might have a winner – a NS oilco that is leading by example at a time when oil prices are in the eyes of many set to increase, despite exploration continuing to be frowned on, with existing production methods incurring the inevitable wrath of Greta and her followers who continue to pretend that oil is the problem as they continue to ignore the real culprits of global warming, which are overpopulation and the destruction it causes, combined with uncontrolled deforestation and a stubborn refusal of almost everyone to adopt completely different lifestyles. Note how the loudest complainants continue to use plastic (mobile phones are 95% made of it) or to use modes of “non- carbon” travel yet to be discovered. It’s a myth to suggest that lithium battery cars are a big part of the answer, with the fact being that the process of lithium collection is incredibly destructive and carbon unfriendly, and everything except the battery continues to be produced by conventional means, meaning that the average battery powered vehicle has to be driven between about 70k and150k km before there’s any real carbon payback. Commercially available oil will have dried up by the time there are viable non-carbon means in place to power the planet’s present ~8bn people, which will probably have increased by a couple of billion by the time it happens.

Anyway, to cut to the chase, my preferred scenario for JOG (apart from selling the company now for about $5pb netting present holders up to £20ps) would be to sign up two farm-in partners, each taking a 30% WI for funding (say) 45% (each) of Phase 1 costs. These companies to pay JOG enough in cash up-front to meet its pre-production costs (FEED, work leading up to FID, then FDP etc) plus enough working capital to see it through to 2025/6. These farminee cos to fund JOG’s 10% share of Phase 1 costs, with repayment to be made from JOG’s (say) 40% of production revenues when the latter start to materialise. This would avoid further dilution, shareholders most recently having been kicked unnecessarily hard in the balls when they weren’t expecting it.
Then sell the company when the FDP is approved. With oil hopefully stabilising at around or above $70pb and opex at less than $10pb, how much pb would JOG’s carbon-neutral (from an extraction perspective) 40% of the GBA licences be worth in a neatly-wrapped package tied up with a bow? $15? $20 maybe? It’s speculation but why not? Ignoring for now the valuable prospects we know about (Cortina, Wengen, Verbier Deep – there are more) 40% x 190mmboe x $15 would produce north of $1billion.

tbc

contd.........

All this is too long, for which I apologise. I’m not being deliberately verbose. There’s a lot to think about for the serious investor. Please put your own interpretation on anything I say and what we’ve been told so far by JOG. My views are my own and I certainly don’t claim they’ll turn out to be anywhere close to what actually happens. It’s impossible even to guess at what importance different companies expressing interest in the GBA project will apply to different aspects of what’s on offer. Hopefully a competitive situation will develop and many more than just one or two companies will want to go all the way – wdik? Every deal is different – there’s no standard outcome to expect.


What think I failed to factor into my original thinking (as outlined in previous posts) is the potential “premium” the industry could apply to a well-proven investment case that is significant in size and virtually carbon neutral as a result of the smart and insightful thinking of JOG’s multi-talented and totally focused and committed team. The scale of the project JOG has patiently and carefully put together over the course of the last 4 years or so, its location in the NS and the quality of the oil that JOG has spent countless thousands of hours first of all proving beyond reasonable doubt exists and then planning how to bring to the surface (so to speak) in the optimum way for the times we live in, means it can’t be ignored by any serious NS-focused oilco with any credibility .

tbc

contd..........
Thinking along conventional lines, and talking in US$, with GBA Phase I development costs forecast to be c.$1.4bn and JOG having said it is looking to farm out a % of its GBA 2C TRR (Technically Recoverable Resources) to provide a “major funding contribution for capex” (https://wp-jerseyoilandgas-2020.s3.eu-west-2.amazonaws.com/media/2021/03/02230445/CS-RNS-3-March-2021-vF-website.pdf) I couldn’t work out how the way JOG has told us it is planning to proceed was achievable, without giving away too much of the action and significantly diluting the interests of existing shareholders at the same time.

I’m sure I’ve read somewhere in the literature that a farm out of the GBA licences of around 50% is contemplated to provide the bulk of the funds needed to get to first oil. The question I was asking was: “what contribution might be defined as "major” in the context of (Phase 1) capex of $1.4bn; and how much would this leave JOG to find to meet remaining costs?” In other words, what % of the Phase 1 (and subsequent) costs would a farminee expect to take on for (say) 50% of the 190 million barrels of oil equivalent ("mmboe") of discovered P50 recoverable resources net to JOG in the GBA, in addition to significant exploration upside potential of approximately 220 mmboe of prospective resources in close proximity to the Company's planned Buchan platform? I won’t go into all the possible permutations because they’re endless and it would be pure guesswork. But I was thinking along the general lines of a farminee perhaps agreeing to meet 80% of the estimated Phase 1 costs of $1.4bn ($1.12m) in return for a 50% WI in the GBA licences, ignoring JOG’s prospective resources of 220mmboe. On reflection, this was a mistake because the prospects clearly have a significant value. My calculations (ignoring the prospects) suggested a farminee taking a 50WI in return for paying 80% of the Phase 1 costs would be paying around $12pb for the privilege, which would still leave JOG to find the remaining $280m of the estd $1.4bn total Phase 1 costs. Phase 2 & 3 costs (2027 & 2028) will easily be met from production revenue so don’t really come into the equation.

These numbers didn’t add up to me; hence my thinking that perhaps what would make more sense for everyone involved would be for JOG to “sell the lot” now to avoid the very real risks associated with a project of this size and nature in the hands of a small entity with very limited cash resources.

tbc

Apologies for the delay in replying to your post of 17 May, afish - the general issues you raised required some thought and couldn’t sensibly be addressed in a few lines.

Your question was mainly about the prices oil was changing hands at before the world was turned upside down by Covid – and by inference what sort of ppb might someone be prepared to pay to buy into the GBA at this stage in its development. The quick answer is that imv whilst (pre-Covid) there were deals that fell into various price bands ($6-$8pb for “pre-infrastructure-spend” reserves; $12+for funded to production reserves – and a range of prices above and below these numbers for producing and exploration interests at various different stages of the relevant fields’ lifespans) not much has changed hands over the last 2 or 3 years that’s close enough to what JOG has to offer to make meaningful comparisons valid or worthwhile. That’s my view anyway fwiw.

I set out in an earlier post why I had difficulty understanding how a farm-out might work in JOG’s particular circumstances. Mixing up £ with $ didn’t help much in this regard but that said, I doubt it made much difference whether it was £ or $ I was talking about, so far out with my calculations was I in the lines I was thinking along at the time. My conclusions were based on conventional thinking which, on reflection, probably wasn’t the right way to be looking at the situation here.............

tbc

https://www.proactiveinvestors.co.uk/companies/news/951165/jersey-oil-and-gas-tipped-for-upside-as-stockbroker-eye-upcoming-farm-out-951165.html

Arden Partners gives JOG shares a total risked value per share of 917p and sets a target price of 750p.

dyor

https://www.investegate.co.uk/jersey-oil---38--gas-plc--jog-/rns/gba-development-project-operational-update/202106020700034974A/

.........whilst nothing surprises me in regard to the market continually ignoring anything that's positive about JOG's forward progress, ignoring what JOG has told the market this morning takes some believing:

"Farmout process underway with broad interest and participation from multiple parties"..........

"Our chosen development concept ensures that, through electrification, the GBA Development could produce less than 1kg of CO2 per barrel produced; fully aligned with the UK's "Net-Zero" targets. The submission of the CSR ahead of schedule is testament to the growing project team's continued hard work."............

"The Board believes the GBA is optimally located in the heart of the UK Central North Sea such that there is exciting potential for JOG to be an enabler for regional electrification. Collaboration with other regional operators could reduce overall capital costs associated with the subsea cable infrastructure. The Company continues to progress collaboration opportunities that may ultimately lead to a reduction in the cost of the electrification infrastructure"...........

"The GBA farmout process, which was launched in March 2021, has received broad interest and participation from multiple parties. With the diligence process ongoing it is premature to comment further on the process at this stage"......

..........and the market continues to value JOG's 190mmboe of discovered 2C resources at 20 cents a barrel or thereabouts........

.....yeah.........

dyor

....should have been titled: "OGUK" (not the POS oilco aka UKOG)

https://oguk.org.uk/

Apologies

https://dailybusinessgroup.co.uk/2021/06/uk-must-avoid-losing-another-industry-jewel/

https://www.investegate.co.uk/longboat-energy-plc--lbe-/rns/proposed-farm-in--fundraise---trading-suspension/202106010700123139A/

Interesting to see what Longboat is valued at when the suspension is lifted next week. The deal is 100% exploration - not that this seems to make any difference where JOG's 2C discovered resources (with a mountain of work done to show how they'll flow and a min NPV of $1.3bn) are concerned. Everyone else's oil - no matter at what stage in its life, discovered or not - is worth a lot more. Take a bow Camarco (JOG's non-PR people).

LBE's deal is difficult to decipher but will most probably result in a valuation that puts its shareholders in a much better place than JOG's are at present.

https://dailybusinessgroup.co.uk/2021/06/longboat-energy-to-raise-35m-for-ep-deal/

Sorry I haven't got back to you yet, afish. I have it on my list of things to do, although there's not much that's been around that's comparable with what JOG supposedly has to offer.

dyor

I wouldn't place too much reliance on the colour of the reported trades, robs12. I did a small round-up (of 550 shares - to round up my holding to the nearest thousand shares) at 160.50p @ 11.15 hrs yesterday. This showed as a "sell. Many other trades at around the same price were evident around the time I dealt, probably also buys (but reported as sells). Don't ask what MMs get up to because they're cheats of the highest order.

JOG handed them a new price level to play to their advantage - 165p. I don't make forecasts about share prices because it's a mug's game, but I'm not expecting any fireworks unless and until there's good news on selling the company. I can't see how a farm-out can work, given the numbers and the prices at which oil in the ground changes hands at. I'm probably wrong - it wouldn't be the first time

GL whatever

dyor

.......ahh.........I see, MP. Thanks for the clarification. I claim mental incapacity on health grounds for my failure to understand. I was also foxed by the fact you regard £40k as "not a lot". You are clearly very rich................:-)). If you are, please buy a lot more shares and send the price back to the £4 it briefly hit back in 2017, so that we can consider if we still like the risk.

Les Thomas didn't have to buy any shares and seeing him dip his hand into his own pocket was encouraging. It was relief not to read of more options for the ones that count.

Thanks for your good wishes. I'll know more later this week. Fingers crossed.............

GLAL
dyor

I think this might be more relevant:
"Jersey Oil & Gas (AIM: JOG), an independent upstream oil and gas company ?focused on the UK Continental Shelf region of the North Sea, was notified on 10 May 2021 that, on 7 May 2021, Leslie Thomas, a Non-Executive Director of the Company, bought 25,000 ordinary shares of 1p each in the capital of the Company ("Ordinary Shares") at a price of 159.25 pence per Ordinary Share (the "Acquisition"). As a result of the Acquisition, Mr Thomas' total shareholding in the Company comprises 25,000 Ordinary Shares, representing approximately 0.08 per cent. of the Company's issued share capital".
https://www.investegate.co.uk/jersey-oil---38--gas-plc--jog-/rns/director-dealing/202105101044500886Y/

dyor