Member Info for ocelot

Just posted this from Angus's Investor Questions page on the ANGS board and realised it's of relevance to UKOG, too:

Given the U.K. is suffering from a lack of storage rather than gas supply, have you not considered approaching the Gov for funding/grant to expedite the storage facility potential at SFB? Asked on 30 October 2022

We have done a thorough analysis of the storage potential of the field (which is second only to Rough platform) and we have shared the results with official bodies. Expanding into storage (battery, CH4, CO2, H2, even liquid HC) is a key aim of Angus as we believe that this is an area where we can make a commercially profitable contribution to transition.

Given the U.K. is suffering from a lack of storage rather than gas supply, have you not considered approaching the Gov for funding/grant to expedite the storage facility potential at SFB? Asked on 30 October 2022

We have done a thorough analysis of the storage potential of the field (which is second only to Rough platform) and we have shared the results with official bodies. Expanding into storage (battery, CH4, CO2, H2, even liquid HC) is a key aim of Angus as we believe that this is an area where we can make a commercially profitable contribution to transition.

For those who haven't scrolled down, my calculations are after a prudential discount of 50%.

So, before that discount, the per share figures are about 0.60p and about 1.00p, giving a potential value in the £100-200m bracket.

No need to delete your account, ells. As you say yourself, the naysayers are quite happy chatting amongst themselves.

As a whole AIM showed great resilience in 2021. The median salary for CEOs in 2021 is £348,000 and total average remuneration is £968,000. (BDO)

The above figure of 0.30p per share was based on the average annual post-tax cash flow over the lifetime of the field.

If one focuses on the 4 years 2026-29, then there is an uplift of 65% to give a per share figure of about 0.50p.

Those projected revenue figures make UKOG a very obvious buy at its current paltry share price: we are already in 2023, 2026 is the medium term.

In fact, the front-loading of revenue is as follows:

2026: £78.5m
2027: £104.7m
2028: £104.2m
2029: £84.7m
totalling £372.1m in the first 4 years of production.

One more point (see p74 of the CPR):

capex is £7.3m in 2024 and £18.7m in 2025 but revenue is shown as £78.5m in 2026, that is:

any debt taken on should be repaid very quickly.

Bringing together some posts of mine:

p74 of the CPR:
Net present value discounted at 10% pa = £123.7m
Revenue = £576.6m
Pre-tax cash flow = £530.8m
Post-tax cash flow = £236.2m

Post-tax cash flow of £236.2m generated over the 14 years 2026-39 = annual average of £16.9m.
But the years 2037 and 2038 are of negative post-tax cash flow and 2036 and 2039 of just marginally positive cash flow.
Calculated over the 10 principal years post-tax cash flow = annual average of c£23.6m.

Stick the annual average post-tax cash flow on a multiple of, say 5x, apply a prudential discount of, say, 50% and what have we got?
About £59m or about 0.30p per share.

Cash flow is discounted at 10% pa so this year's 9 becomes next year's 10.

Stick the annual average post-tax cash flow on a multiple of, say 5x, apply a prudential discount of, say, 50% and what have we got?

About £59m or about 0.30p per share.

post-tax cash flow of £236.2m generated over the 14 years 2026-39 = annual average of £16.9m.

But the years 2037 and 2038 are of negative post-tax cash flow and 2036 and 2039 of just marginally positive cash flow.

Calculated over the 10 principal years post-tax cash flow = annual average of c£23.6m.

Note the chunk taken out of cash flow by tax, £294.6m or 55.5% of pre-tax cash flow.

Anything government or management can do to reduce that will have a beneficial impact.

p74 of the CPR:

net present value discounted at 10% pa = £123.7m
revenue = £576.6m
pre-tax cash flow = £530.8m
post-tax cash flow = £236.2m

Market cap = c£12m.

Mis-match?

Seems to be a quieter day on the market in general because UKOG is the 2nd biggest volume stock (205.0m).

With the CPR in support, any farm-out of Loxley could involve:
1/ development costs being borne, in whole or in part, by the farminee(s);
2/ an upfront payment;
3/ a mix of 1/ and 2/.

Shares in the company rose just over 13% on the news (of the CPR). But the price, at 0.069p, is still well below the most recent peak of 0.17p in June 2022, when planning permission was granted.

https://drillordrop.com/2023/02/22/challenge-to-surrey-gas-drilling-goes-to-court/

re:
1/ don't know;
2/ won't they still need permission to produce from Loxley?
3/ lift the share price.