Capex2 Aug 2022 15:18
I tell you what, trying to post positively on here is like shouting into the abyss. Nobody even seems to hear.
I'll try to rephrase it once more.
It's not that we're not making money because we need to spend it on capex. We're spending this much on capex BECAUSE we're making money and can afford to spend on capex. You guys have the cause and effect the wrong way round. This is what a growth company should be doing. You don't want them building up excessive cash, you want them to reinvest into the business.
So, we are using the profits from AS to fund our capex. We don't need to raise equity like almost all O&G exploration companies. The capex is not entirely for AS, we are spending it on Maria and Jamaica as well and these two projects are actively being progressed.
The bulk of the money is indeed being spent on AS, but it's not like all that money is to keep up production. We have 5 wells this year - 3 of them are to keep up production, 2 of them are exploration. The first exploration well showed hydrocarbon migration (this is NOT the same as a duster, Google it if you're not sure), the second is to come. The increased reserves gives us the opportunity to continue drilling development wells later, keeping up production long after the capital expenditure is brought down.
So, by using the profits we're already making at AS, we're paying off the BP loan, progressing 2 large assets outside of Egypt and increasing the reserves at AS, which will result in more money coming in over the long term, ie if and when we stop spending on exploration, we'll still be making money.
I am not ignoring the decline. Of course it declined more than I expected (not more than the company expected, hence the boepd guidance). Of course I would like to be producing more and making even more money. But as things stands we are actually making money and we have exciting prospects to come.
The company is well aware of the decline and reiterated their guidance of 1500-1650 boepd.
See, ppl here are not comparing UOG to other AIM exploration companies who spend tens of millions (sometimes hundreds of millions) and still have nothing to show for it. No, we're too good to be compared to them. So ppl are comparing UOG to BP instead! How ridiculous!
In summary, for a small cap exploration company, we are doing really well. It would be great if we were doing even better of course. But we're still doing well.
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