Member Info for ocelot

AimDogs

:-)

Not sure that I can be described as upbeat, the funding requirements of UKOG are undeniable, but do think the market is focusing exclusively on those funding requirements without taking into consideration the valuation of UKOG's asset portfolio.

Bit of a contrarian, so very suspicious of consensus thinking when almost everybody appears to express the same opinion (the financial crisis wasn't that long ago!).

So, in summary, think UKOG's share price should be higher.

UK ENERGY STORAGE LTD: There's plenty in store

+ 2 earlier tweets of yesterday re the AGM

From PPP's interim results RNS of 28/12/23:

About Horse Hill Oil Field ...

" Following its discovery in 2014, Horse Hill was successfully production tested in the Upper Portland sandstone and underlying Kimmeridge limestone section from 2016 through to the start of long-term continuous Portland production in 2020. UKOG advise that, as of mid-March 2023, continuing oil production from HH-1 totalled an aggregate of over 185,000 barrels of 35 - 41 API sweet crude. Full planning and environmental consents are in place for four additional infill production wells.

A 2018 Xodus CPR for UKOG estimated a gross mid case P50 Portland oil in place ("OIP") of 30 million barrels, with a corresponding mid-case 2C recoverable Contingent Resource of 1.5 million barrels. The estimated mid case 5% recovery factor being stated as in accord with other analogous fields in the Weald Basin. It should be noted that the recovery factor being stated as in accord with other analogous fields in the Weald Basin. It should be noted that the total HH-1 Portland production to date potentially leaves around 1.36 million barrels of the estimated mid-case recoverable Portland resource available to infill drilling and remaining HH-1 production.

In addition to the 132,000 barrels of 35-36 API Portland continuous production as at mid-March 2023, approximately 53,000 barrels of 41 API sweet crude were produced from multiple zones within the Kimmeridge limestones during production testing, before being shut in to allow for longer term Portland production. In 2015 a Schlumberger report calculated an estimated mean OIP of 8.262 billion barrels lying within the entire Kimmeridge section underlying the Licences.

Note: OIP should not be construed as either recoverable Contingent resources or Reserves. The Kimmeridge therefore remains a potentially viable secondary production target at Horse Hill. "

On October 31 st 2023, Frack Free Balcombe Residents Association filed an application for permission to appeal the judicial review’s decision at the Court of Appeal ...

This will be decided by a judge reviewing our grounds for appeal. We expect to hear their decision in 3 to 4 months’ time.

We look forward to hearing of the Operator's plans for enhancing productivity and delivering on the inherent, and to date largely untapped, value of the Horse Hill Oil Field. (Alba's George Frangeskides in their final results RNS of 19/05/22)

As you show in your post of yesterday 20:51, the valuation of HH-1 has been progressively and severely impaired.

It means that the £19.3m valuation of HH essentially relates to the net present value calculation of other wells than HH-1 (and HH-2).

Deltavegatheta,

HH-1 isn't HH.

I was looking for the valuation elsewhere in the report, so missed that missed and thank you.

From note 12 of Alba's report:

The majority owner and operator of HHDL, UK Oil & Gas plc (UKOG) recently announced its results for year ended 30 September 2023 maintaining its carrying values for the assets relating to the Horse Hill oil field and the HH1 well, based on net present value calculated utilizing an internally generated depletion curve that was independently reviewed. Costs were based on current costs less any anticipated savings. A long-term average Brent oil price of US$78/bbl was used being the Brent curve until 2031 and then kept flat at $75/bbl. A discount rate of 2.79% was based on a Capital Asset Pricing Model analysis being the weighted average costs of capital of Horse Hill Developments, the holding company of the producing well HH-1. There is inherent uncertainty in any oil field valuation due to the uncertainty of future oil price movements.

Management relies on the valuations of the majority owner of the project as they have access to fuller information and therefore have maintained the current valuation of the investment in HHDL, in line with UKOG.

On what basis are you able to value HH differently from Alba which relies upon UKOG in its published accounts?

Concerning the calculation: yes, of course, but it does provide UKOG's valuation of HH.

Concerning your assertion that nobody believes UKOG's valuation (apart from Alba):

don't agree, believe the market is focusing its attention on UKOG's funding requirements and excluding from consideration the valuation of its assets portfolio.

That is, both Alba and UKOG consider HH to contain considerable potential which remains unexploited.

So, Alba values its own 11.765% holding in HH at £2.6m v UKOG's holding of 85.635%.

UKOG's holding is valued at £2.6m x 85.635/11.765 = £18.9m.

So, Alba values its own 11.765% holding in HH at £2.6m (v UKOG's holding of 85.635%), ie 2.6x UKOG's current market cap.

UKOG still has (a bit less than) £0.42m of convertibles to reimburse to RiverFort/YA and will require further funding behind that, but that still looks like a very high discount is being applied by the market to UKOG's share valuation.

From Alba's RNS of this morning:

Carrying value of investment in Horse Hill Developments Limited - £2,600,000

The Company's investment in Horse Hill Developments Limited (18.1%, HHDL itself holding 65% of HH) is carried at fair value, as, in the judgement of the Directors, it has been possible to estimate a reliable fair value for the investment. For further details of the valuation see Note 12.

The Directors believe that the intrinsic value of the oil field has not been diminished during the year and this is mirrored by the majority owner maintaining the asset valuation in their balance sheet from 30 September 2022 to 30 September 2023. As the majority owner has access to more information for valuation purposes than the Group, management relies on their published information to support the Group's assumptions.

Envoi Limited - list of selected clients:

https://envoi.co.uk/about-envoi/clients-of-envoi-limited/

The "high risk" is because they remain dependent upon the equity market for funding and the UK equity market has been going through a hard time for quite some time (although there are currently signs sentiment is, at last, improving).

Their principal projects, however, continue to be de-risked at speed, as yesterday's RNS from GROC demonstrated.

Bubblepoint,

Think it best not to expect too much, agreed.

But it is their first growth initiative outside of Saltfleetby so appreciate their effort and wish them well.

RH has himself sought to limit expectations re Brockham. From my post of 30/04 12:49 which was a repeat of my post of 12/04:

Needs to manage expectations: relatively modest production, not currently set up for 24 hour production.

Certainly, if we are encouraged by early production, we will consider moving to 24-hour production.

Re Andover West:

At the time of writing, we are in the process of carrying out confirmatory due diligence during our 30-day option period.

The farmout is subject to approval by the shareholders of the operator of the field, Horse Hill Developments Limited ("HHDL"), including Alba. UKOG announced in December 2023 the extension of those terms to 30 June 2024. As at the date of this report, the shareholders have not approved the farmout.

Re Brockham, they plan to be doing the work-over in May with production anticipated in late May/early June. (from the Richard Herbert CEO Broadcast interview thread, my post of 21/04 15:55).