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Frustrating for those shareholders. I would say it's a gas FO which is trading low and probably structurally will for some time I've heard said? Oil on the other hand has been very resilient in spite of all sorts of bad news. They didn't even close it before all the EPL malarkey.

North Sea redevelopments ‘on the rise’, but which projects are seeing success? https://www.energyvoice.com/oilandgas/552437/north-sea-redevelopments-on-the-rise/

Good write up of projects including Buchan. Nothing new.

I tend to agree Einbert, not without risks however. Egos and still having a job are important. Also I would say it's hard to have to scrap the WI instead of using in at Buchan.

Sometimes I think that Tories went for EPL knowing it would have to be rescinded by Lab. Lab were going to do it anyway, so why give them the money and the brownie points? Forcing Lab to have a better tax regime for O&G in NS would be quite an irony. Quite the spoiling play. But I'm definitely over thinking. I think.

If Labour keeps capital allowances, project goes ahead, EPL removed by 2028 we'll do a whole lot better than £4

Rather than 1984, re-reading Catch 22 might give more peace DU. I'm thinking of the conversation between Yossarian and the old Italian gent who has learned to accept history as a tide that washes in and out. Can't stop the vicissitudes of people and politics.

It's all happened before and will happen again - 1970s here we come, but we'll come out the other side. Trident probably keeps the Russkies at bay!

I say this as someone who saw JOG as a one-in-a-lifetime and bet the farm. So it's pretty bloody disappointing.

I am also exhausted by this act of self-harm by UK Gov, but I believe Labour HAS to wake up to this sooner than later. The consequences are clear. Shell de-listing, a bankruptcy in NS, Cambo being pulled, escalation in Ukraine could all precipitate the noises the industry need to hear. Even without a bit of luck, HMRC and Treasury calculations are being prepared - James Murray asked for this in the Hansard document. It will be prepped and published.

It was squeaky bum when they missed the FO deadline. We have seen this before too! GLA

"My hon. Friend is right to say that it is important that we offer as much certainty as possible to those companies affected. We recognise that by its very nature, the windfall tax is expected to be a one-off levy in response to extraordinary profits, and will ultimately come to an end. We have set out that if we win the next general election, the energy profits levy will end no later than the end of the next Parliament. We also fully support the energy security investment mechanism in clause 19, and the signal that it gives, which helps with investor confidence in the UK’s offshore energy sector." James Murray (Lab).

That was the interesting bit for me from the Hansard. If this comes to pass, we may see a delay in FID but some pretty exciting changes to the model post 2028! NEO will likely close FDP, make the payments to create the 'option'. It may make sense to even just get the project going due to the costs of waiting. Maybe a 12 month delay to FO and a year to go before no EPL?

Https://hansard.parliament.uk/Commons/2024-04-17/debates/E252BA67-75BD-4130-A02B-80A485DCC632/Finance(No2)Bill?highlight=tribute%20act#contribution-741A653F-EE7B-40FF-B04C-3838A6EB4BF5

Interesting

I can't make that, can anyone watch do a JOG LSE board RNS?

IMHO we will have to no way wait til first oil. Signs that project is en route to first oil, FID by Ping, would roof the stock ×5 at least. Market discounting massively as project may be on ice until tax improves.

The loan is not an issue. It'll be repaid by whatever cash raise they do (debt or equity). It's personally guaranteed by SB.

This play is about Labour softening their stance on NS O&G. SB is assembling an incredible amount of acreage, and is setting up viable options for heavy oil. My take is that Labour will have their hand forced by GMB and fiscal pressures to soften their stance.

If this comes to pass, though risky, ORCA will be a 10 bagger minimum. It's almost upsetting to calculate FCF if Pilot and the other projects go ahead. Could be a twenty bagger in 3 years in a best case scenario that Labour are forced to reverse EPL completely.

It's hard to see political situation getting much worse - so maybe this is a time to buy.

GLA and IHMO.

Interesting, thanks. Jockvest111 - did you make that purchase with a broker like HGL (who I understand make an internal market in their trades) or a direct market access broker? I wonder why it's reported late. I'm genuinely interested in how this works.

I always assumed the unknown / grey trades are related to brokers like HGL making good their internal ledger with the market. I wonder why yours is 'unknown'.

Everyone is loving your posts DU. Our IQs go up a point or two as we think about them. Just not much to add tis all

It literally is - 'permanent destruction'. Even at pre-EPL conditions production declines much quicker than demand - because NS is one of the most expensive places in the world to extract oil on an OPEX basis. Much investment depends on legacy infrastructure - once it closes, it accelerates other things to close - and would never be profitable to re-establish.

I notice Waldorf is in the news looking extremely precarious on bond covenants. There will be more to follow. Politicians must come to their senses, but the longer it goes on the more embarrassing the U-turn.

To equate the global profits of super majors with NS tiddlers is one of the the most egregious needless deliberate misunderstandings ever. But we are a big, dumb post industrial democracy and will chase ourselves into obscurity whilst the developing world takes over.

Some type of clarity on taxation and positive signs on GBA progress will push the stock much higher. Here's hoping.

Enjoyable if depressing post DU. UK really is going down the economic swanny in more ways than one. I just don't have the nuts to move to Texas however.

I watched Steve Brown talk on the Orcadian presentation, one of his interesting points was that the NSTA is increasingly lining up behind low emissions projects, and getting tougher on high emissions ones.

My dream would be that Lab use this as the way to proceed. Investment allowance only on electrification ready stuff, and tax raid the rest. Morally that's grim but it does suit a JOG shareholder. Perhaps it would be a good to to push green agenda without killing NS.

Politics is key. I did a lot of posting on the JOG board if anyone is interested. ORCA's situation is very similar to JOG. I wonder in fact whether JOG shouldn't buy ORCA, what an option that would be!

Https://www.heraldscotland.com/news/24232398.wet-blanket-brings-chill-north-sea/

Steve Brown from Orcadian published yesterday. The consequences for Labour are so dire by meddling with this, I think the industry is in disbelief that it will happen.

DU's NAV calculation

I don't want to shock the board, I haven't sold and I will say I even added recently (which is crazy but there you go). The reason for me is: the worst case scenario is still investible, with a massive upside if Lab back off loopholes.

I believe the project will continue its sprint to FDP. I also believe Neo and Sereca will pay their FDP millions to JOG - sometime in H2 this year, pre-election. People all over (Ping with Orcadian) are planning to spend small amounts (in comparison with project CAPEX, Revs and profits) to create oven-ready (sorry) options to develop fields that would be hugely successful in the right tax regime. This money is stranded in UK regime anyway. The alternative with Neo is basically to shrivel into nothing and HiTech lose their money.

DU's NPV calculation shows JOG's oil unvalued, with cash in bank and tax losses alone valued at this market cap. You will note that NS M&A is a desperate effort to optimise tax losses, rather than an excitement to get new money into UK barmy banana regime.

Unlike pre-farmout, where JOG's value goes to zero on failure, we are already bouncing along the bottom with worst case baked mostly in.

For reasons in my other post, Lab will moderate its stance pre election - and we will finally be released from our grim grinding down.

I'd welcome some critiquing to my post, ideally not in the form of a giant elephant defecation.

I think it depends on the profile of the firm. If you own producing assets, having bought them with leverage (or added to your assets through M&A), you have a finely-tuned model that has been blasted to bits by EPL. Consider - if you have an expensive, moderately producing asset with loads of tax-losses, you are not paying 40% normal corporation tax for O&G. Pre-EPL, you eek out your profit tax-free, minus cost of leverage and decommissioning costs (paid into an escrow account and adjusted for inflation). During the last few years, EPL (not deductable) has cut a big hole in your profits. The cost of leverage has skyrocketed. Inflation has pushed up your decommissioning cost payments. This renders some firms basically bust, and meanwhile you have to ask the regulator to be able to stop producing, a timeline of maybe 2 years! It's basically nationalisation.

If however you don't have tax losses, and you have more profitable fields, Investment Allowance is more critical. GBA is in shallow water, reused infrastructure and should be a profitable, lower cast development. GBA can tolerate EPL at 78% - the asset value just drops to accommodate the yield. However in our case the Investment Allowance is critical as it dramatically reduces CAPEX.

I believe from having talked around, the worst case tax scenario (both EPL increase + removal of all allowances) puts GBA at risk - even then Neo might proceed as what else will they do with the FPSO - instead of modest profit they now scrap it, lose an asset as well has reserves etc. I think some kind of moderation will save the project. As 'loophole' is undefined, it's not a U-turn for Labour to clarify this in a more advantageous way.

Finally - I have had industry friends tell me that if Labour does remove the investment allowance completely, all NS investment other than a bit by BP and Shell (who do it probably to take pressure of their global profits by their HQ nation) will stop. Cambo, Rosebank, pretty much everything. This will be communicated to Labour - I doubt they will want be forced to renege on punishment taxes in order to facilitate high-profile developments that ignorant greenies in our country hate. That is some egg banjo eating.

To address your question more specifically, I don't think you can use the allowance to invest in renewables. I had a look here: https://www.gov.uk/government/publications/cost-of-living-support/energy-profits-levy-factsheet-26-may-2022

One interesting point is that there are a whole host of deductions (loopholes!). Labour could remove only one deduction and still have 'closed a loophole'.