Member Info for Limmo1

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I think the talk of dilution is getting overdone a bit while we all wait for news. Are we in imminent danger of running out of money.. no, will there be additional dilution later this year early next.. possibly (probably) or possibly not depending on deals, will there be people willing to step up to buy the placement.. well given the platform seems to work and appears safe we are now waiting for efficacy and so the potential risk/reward is good.. so yes it will be bought. If I was to guess I'd say we will almost certainly have further dilution along the way, to what degree.. 5%..10%..20% of m/cap who knows, I've always worked on 500m shares as my base but if it's 550, even 600m who cares really. If this works i.e. patient outcomes are as good as people are hoping, it won't matter, if it disappoints then it won't matter either in the long run. If you're not trading then forget it, allow it to play out and wait for 6103 data later this year, if it's good it will be worth the wait regardless of dilution. I've sold many big winners early, not this time... I'm in till we get proof one way or the other.

What does this company have or potentially have that would warrant quality poeple getting involved? Or is it purely a play on the people themselves and what they may bring in future? Can anyone give me any pointers?

@Couerdelion ..it seems your suggestion of how the OGPM tax rates will be applied may well be the correct one, revenues to be taxed at 40% on the portion up to $90 and the additional 35% is only levied on the portion above $90. So if you sell for $105 you pay 40% on the first $90 and 75% only on the remaining $15 not 75% on the whole $105. So very analagous to income tax and, it seems to me, a very workable and satisfactory outcome. Additionally if the existing EPL stays in effect until 2030 and you have a large capex project to do, surely it makes sense to do it sooner rather than later to gain the benefit of offsetting against the 78% rate.

The standout comment in the new OPGM for me is this:

'...will tax only the proportion of revenue earned above new OGPM trigger levels, those being $90/barrel and 90p/therm (for 2026 to 2027)..'

As I read that it works in a similar, but not identical, way to income tax. During the year you add up all the revenues you made selling below the threshold price and they get taxed at 40% and all those you made above the threshold price and they get taxed at 75%. So we dont get the completely unfair state of affairs where once the Levy kicks in on a price trigger everything after that is taxed at 75 or 78% regardless of price. That looks pretty reasonable to me... or am I wrong?

I don't know anything about the Prax deal but I assume it's a purchase of distressed assets at a price below the norm, Jog's oil would not be valued at the same metric. Jog has > £10 million in cash plus, I believe, another £15 million to come from it's partners if/when the project proceeds plus > £75 million of tax losses for a profitable buyer to offset plus it's Buchan project has a free carry to production.. nothing to pay and no debt to take on. Even at $2.30 a barrel, which I don't for 1 minute believe would be accepted if the tax situation is resolved favourably, it would be valued at £100 million or £3 a share. Serica have signalled their commitment to the NS with this and mention of possible future aquisitions. The budget / EPL is all that matters to JOG.

Greener101, I sat and watched it live, it was very unequivacol.. her exact words on allowances were "..we will remove the 29% Investment allowance... to ensure that that the oil and gas industry can protect jobs and support our energy security so we will maintain the 100% first year allowances and the decarbonisation allowances too.."

My take on Labour's statement was not as negative as pretty much everyone elses it seems, they didn't say anything we didn't already know other than the mention of reducing Capital Allowances. EPL tax at 78% we knew, the 29% Investent allowance going we all but knew anyway.. the crux of the statement is Capital Allowances in the EPL being "reduced" but crucially not abolished. So in effect they've confirmed the CA stays and there is to be a consultation period with the industry, so now it's up to the O&G industry to lobby like crazy to get a CA level that works. It's been suggested many times on this board and by analsts that Buchan still works under all but the worst case tax scenario.. if CA allowances are staying at a reasonable level then, bearing in mind the lack of other good projects available for NS operators, the FID should still be positive and the project should be going ahead and that's all JOG, as a stock, needs.

All the rulng does, as far as I can see, is force planners and assessors to take account of the full impact of the project on the climate, including downstream impacts, in coming to their decision. That means the impact of not going ahead must be taken into account as well which, unless someone can prove that oil demand will fall as a result of the project not going ahead, is increased imports from countries with potentially more climate unfriendly extraction and transport processes and therefore higher greenhouse gas emmissions, higher energy costs, decreased national energy security and lower tax receipts to plough into green initiatives and Net Zero. It actually could strengthen JOG's case for approval with it's low carbon footprint if the ruling is applied fairly and to the letter... if.

The use of the word "giants" intrigued me as well, and it's used more than once... simple rhetoric playing to a particular audience or in there for a reason.. or both? Also the phrase the market didn't like about removing the "unustifiably generous investment allowances".. rhetoric or relevant, it also leaves wiggle room for Labour in that they only need remove the ones they feel are "unjustifiably generous" which may not be all of them otherwise they needn't have qualified it. And as you point out it also leaves the door open to the allowances being removed only from certain company situations and not all which, as we and surely Labour themselves know, would decimate NS investment (I'm also not niave enough to completely rule out that being exactly what Labour want anyway without they themselves havng to do it outright. Interesting,..

The cause of todays sell off and the key to the possible fate of JOG's project is this one statement taken directly from Labours new manifesto..... "We will also increase the rate of the levy by three percentage points, as well as removing the unjustifiably generous investment allowances"

The 3% increase was known and not news, what still isn't clear even after today is does "Investment allowances" include the Capital allowance or not, it depends how you read and interpret the sentence.. it's ambiguous, maybe deliberately so. Once in power Labour could certainly say yes of course it means ALL allowances.. in which case JOG is probably screwed or at least on hold but they could just as easiliy say we stated "investment allowances" we made no mention of capital allowances and we fully understand that we will choke NS investment royally if we include that. Autumn budget is still the decider for JOG.

Canada at 43.5 cents now.. 25.7p equivalent.

Very positive article on a possible shift in thinking on North Sea oil/gas in the Telegraph. Energy security starting to take precedence over the green agenda.
https://www.telegraph.co.uk/politics/2022/02/03/ministers-urge-boris-johnson-rethink-net-zero-plans-cost-living/

Now $0.32 5 that's 18.8p!!