Member Info for ocelot

Economics 1.02 - the Discount Rate for NPV has nothing to do with the risk - it's to do with the "cost" of money - you discount future income supposedly at the cost of finance to get a number NPVx which allows you to compare different investments.. Different companies may use different rates- years back oil companies would use 15% or even 20%. Generally it's a rate decided by the BoD - an investor may use their own rate to suit their own circumstances.
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In present circumstances, 10% pa would appear to be conservative. Page 56 of the CPR provides a range of alternative discount rates.

On the contrary, it would be an oversight not to make mention of the tax losses used in the CPR's net revenue forecasts.

The accumulated tax losses in the 100%-owned operating subsidiary AEWB No.3 Limited at 30/09/19 form part of the Saltfleetby CPR:

£15.64m at the total tax rate of 40% (p47) gives them a value of £6.256m, provided there are the taxable profits against which they can be offset.

Given that the Competent Person has made use of these tax losses in their net revenue forecasts, I fail to see what the objection is to mention being made of them.

Please can you confirm that you continue to have not received any notice of formal action from the so-called shareholder action group? Asked on 30 August 2020
Yes. This can be confirmed and even no informal correspondence.

PPS: admin expenses in the half-year to 31/03/20 were £1.389m v £1.648m the previous year.

PS: not all of the risks in the CPR are to the downside, suspect some of them are to the upside.

There are risks in the CPR, of course, Mirasol, that's why they use a discount rate of 10% pa to arrive at the net present value at 01/01/20.

But, at least imho, these are not the same risks as those that come to mind when evoking a "small oiler".

For myself, honestly don't know.
Turkey hasn't started yet, but will hopefully do so before Winter sets in.
The Kimmeridge remains a still largely unknown reservoir, but, if they obtain permission from WSCC, then Angus may begin their ewt of the horizontal at Balcombe by the year-end - if that was to prove a success, UKOG's share price would benefit in its turn.
We await news re the choice of the 3 options for the future concerning HH 2-z and for the re-perforation of HH-1.
There is also the Loxley council meeting on the near horizon.
It's not easy to make price predictions for the next 3 months, let alone the next 3 years!
But the stock is currently down in the dumps and the potential remains there.

Never say never, but things would need to start going right for them in a big way for 6p to become a reasonable target price.

In the meantime, 0.35p would already be a useful improvement on the current price!

Given the off-take agreement with Shell for the project's entire production and that National Grid on board, not sure Saltfleetby poses the same risks as those of a "small oiler".

Not sure the off-take agreement with Shell doesn't open up the possibility of alternative sources of finance than a placing, should additional finance be required.

The OGA and Lincolnshire CC have approved ANGS's Saltfleetby plans, National Grid and Shell are active participants in them.

Mid-case post-tax net present value at 01/01/20 (CPR, p56):

discounted at 10% pa: £25.2m or 4.17p per share;
discounted at 5% pa: £29.9m or 4.95p per share;

of which 1.04p already exists in the form of tax losses at 30/09/19 in the 100%-owned operating subsidiary, AEWB No.3 Limited.

There's an Investor Question re Brockham/Lidsey to be answered after the Bank holiday weekend.

Re Saltfleetby, we are close to entering the construction phase, so let's hope that proceeds according to plan..

They are under an obligation to inform the market of price-sensitive information without delay.

From the annual report for y/e 30/11/19:

At 30 November 2019 the Company held the following interests in subsidiary undertakings, which are included in
the consolidated financial statements and are unlisted.
Name of company Country of
incorporation
Proportion
held
Nature of
holding
Business
Aurum Mineral Resources Ltd Ireland 100% Direct Exploration
Mauritania Ventures Limited England & Wales 50% Direct Non-trading
Obsidian Mining Limited England & Wales 90% Direct Exploration
White Eagle Resources Limited England & Wales 100% Direct Exploration
White Fox Resources Limited England & Wales 51% Direct Exploration
Dragonfire Mining Limited England & Wales 100% Direct Exploration
Gold Mines of Wales Limited Jersey 90% Indirect Holding Co.
GMOW (Holdings) Limited England & Wales 90% Indirect Holding Co.
GMOW (Operations) Limited England & Wales 90% Indirect Exploration
White Deer Resources Limited England & Wales 100% Direct Non-trading

Isn't GMOW Gold Mines of Wales, Alba's 90%-owned subsidiary?

Quite simply, Offtake Agreements make many projects bankable. (extract from globaltradefunding.com - from my post of 17:25 on Thursday).

In Angus's case, the agreement is with Shell.

ALBA knows as much as we do.
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Agreed, nhawan.

So, until we know which of the 3 options re HH -2z UKOG has decided to take up, all 3 remain open.

Penguins, agreed.

"At the time of writing (27/08), we (Alba) await confirmation of the likely timelines for these well interventions (HH -2z, HH-1) ...

... assuming the plans to improve productivity at the two existing Horse Hill oil wells bear fruit, our investment in that asset will also begin to take on a much healthier hue, notwithstanding the recent downturn in the oil price".

So, until confirmation of the likely timelines is provided by UKOG, it is all pure speculation.

I think we all appreciate that exploration for oil is not without risk.

Re HH, as Alba said in yesterday's half-year report, we await a decision concerning the 3 options for HH-2z and the re-perforation of HH-1.

Re the Kimmeridge, ANGS has now submitted its application for an ewt at Balcombe: the deadline for comments is 28/09, ie one month from now.