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If one of UKOG's past expectations had come true even that wouldn't justify blindly believing that something they are claiming with no detailed backup - like every previous claim - was likely to come true this time.
Even the Loxley CPR which is based on minimal data has errors that significantly increase the risk of failure or at best a find that is not commercial - otherwise UKOG has avoided any examination of their projects or detailed forecasts of the financial benefit of the results of their activities - if successful.
Perhaps that's why a company with an income stream dependent on issuing ever cheaper shares just to help pay the salaries, let alone do anything, and appears to have no way of doing anything now without farming out half the family silver has such a low cap.
Unless valuations are backed up by full details UKOG are prepared to publish then it's very likely that there is a flaw in the valuation.
UKOG claim the £19.3 million intangible valuation (money spent on HH) is supported by a valuation based on 4 further wells being drilled - what are the assumptions, all successful? what costs to drill? what flow rates? water injection works? - wouldn't it be nice if UKOG CPR'd HH to justify that, and the valuation they carry for HH-1 which has risen this year (from £0.8mm to £1.4mm) despite using a lower OP ($78 then flat $75 after 2031 vs last year's $81 then flat $81 after 2031), but possibly resulting from using a more favourable discount rate (about 25% lower). With over a year of testing and 4 years of production surely there's enough data for a CPR - they had a Kimmeridge report done in 2019 (only mentioned as a footnote to justify contingent resources in the Kimmeridge) based on the testing - after that any Kimmeridge work at HH appeared to be stopped.
To claim that any estimate by UKOG, with a record of exaggeration and failure of potentially transformational. or national significance projects that clearly weren't, is reliable is absurd. The fact the 'successful' well out of 2 (HH-1) was 'worth' £0.8mm last year and this £1.4mm, but 4 new wells are worth £19.3mm after the cost of drilling new wells has been accounted for suggests there's no risking, a favourable view of possible production - and probably the super low discount rate - at least a CPR would have some indication of the sensitivity of the valuation to different inputs and pi could make their own judgement of what's likely.
If UKOG want to be believed put the calculations to the test of a CPR, otherwise it's just ramper fodder.
UKOG has never learnt to live within their means - lead by an overpaid unsuccessful CEO who has a record, for whatever reason, of persevering with lost causes - out of the three wells SS has drilled the testing of both BB and Pinarova should have been abandoned long before it was, even with HH-2z pi were strung along until it was impossible to hide the failure (HH-1 was drilled by the Angus team I believe).
Now, and for years, instead of sorting out HH, getting HH-2z converted to an injector (although this may not be the certain win UKOG suggest) and drilling HH-3 they've wasted millions in Turkey and now more millions on the Portland port gas storage vanity project.
It hasn't even been bad luck - the Kimmeridge was a long shot out of structural closure, and AME were clearly farming out their dross it Turkey - and for BB failing to shoot seismic before drilling in the wrong place is unforgiveable - and then admitting the wells in the Resan section of the structure had issues with water - that was either known about but not mentioned or they're due diligence was lacking. Pinarova was a ridiculous but at least cheap well.
Unless there's a dramatic improvement in the SP nearly 4 billion shares won't even fund salaries for much more than 6 months, and they obviously won't, by 29 May, have cleared the loan notes so maybe a billion of the 3.8 billion will have to be set aside for that.
The current plan seems to be let's hope some mug comes along and funds Loxley 100% (and perhaps making the same mistake of not shooting seismic first) while hopefully some international investment company joins the Portland Port project in some unspecified way.
Maybe either happening will improve the SP but then there's the threat of issuing billions more shares the moment the SP improves - and with a guaranteed 10% of the shares voting in favour UKOG could call a GM at any time to get the confetti factory up and running when the 3.8 billion run out.
I had hoped that the AGM notice would have a plan that wasn't just more of the same but perhaps a plan that accepted cash was constrained so maybe somethng along the lines, for instance, that unless participation is assured in the near future the Portland Port gas storage project would be put on hold for a later round, as they already accept they may not get an allocation in the 2024 round and would then apply in the next.
Someone previously pointed out that last year Stephen Paul Sanderson incorporated UKEN Holdings Limited with himself as the only shareholder.
Is this a cunning plan to sell this company to UKOG as a holding company for the multiple gas storage subsidiaries as it couldn't possibly be a vehicle to take parts of UKOG private - although on reflection if nothing else Mr Sanderson has been well funded over the past 9 years by thousands of investors buying shares from various lenders given the shares at a price that's briefly (or in the future) below the market price.
Whilst most projects remain early stages, even though they've been on the books for years, HH with very little expenditure could be a nice little earner for a private company that doesn't have huge overheads and expensive and risky ambition. 40 bopd may not fund a company with staff costs over £2mm, let alone all the other costs, but with just a couple of site operatives and a manager the profit could fund a very pleasant retirement - and there's always DL waiting in the wings to help with going public - billions of barrels I tell ya........
They don't care they aren't even trying to pretend they're running the company in the interest of anyone but themselves.
The sequence after Wednesday’s BS about Loxley was predictable, Thursday a CLN conversion, today the EBT allocation followed by the AGM announcement – but not the resolutions or supporting statements – or should I say BS for posters like ocelot to repeat as if they’re facts rather than hopes – just like every ‘positive RNS since 2015.
Apologies for this but.......
Prior to today’s RNS the EBT had a total of 325,500,000 shares – the recent 3,005,000,000 plus 250,000,000 as of September 2023 (in the Annual Report) in the EBT, divided by 10.
But it seems they can’t be bothered to calculate 10% properly – and it isn’t a difficult calculation - the new award of 62,087,925 increases the total holding to 387,587,925 – 3,671 shares too many based on the total as it will be of 10 May.
It should have been 62,083,845 shares, bringing the UKOG total shares to 3,875,838,459 shares and the total shares in the EBT to 387,583,845 without rounding up. Because they got it wrong it means the EBT has 4,079 more shares than it should.
The previous EBT holding of 3,255,000,000 shares was also more than 10% the then total shares.
Who’s doing the maths at UKOG.
The same one doing the accounts? The predictions of production?
ZYX,
Maybe I wasn't clear - having pointed out how cheap shares were - '40 shares to a penny' - I thought this was self explanatory - 'Anyone who wanted to turn up could, the main cost would be trading fees', maybe I should have put the main cost apart from buying a few shares would be trding fees.
so not as far as I know
Ocelot forgets that at 40 shares to a penny a multipack of decent toilet tissue has about 20x less sheets than you could buy shares in UKOG, but does ocelot actually know what the SP is?
Even after consolidation everyone in the UK could have 4 shares each (worth about a tenth of a penny) just from the EBT holding and there would still be millions left over for the employees.
Anyone who wanted to turn up could, the main cost would be trading fees - does ocelot really believe in holding shares in UKOG forever is smart?
Ian,
....and what would be the point - they don't take published minutes it isn't broadcast and judging by their actions they are well aware they are unpopular - this EBT business illustrates they are defiant in the face of dissatisfaction with the way the company is run.
There's been nearly 560,000,000 shares issued since the GM so 10% is another 60 million shares to add to the 300 million odd already in the EBT - and they aren't considered part of the authorisation for issuing shares
The sequence of announcing unsubstantiated claims about interest in Loxley, perhaps hoping to help out the next days announcement of another conversion, followed by an announcement about gerrymandering the votes at the AGM shows they no longer care - if they ever did. Though maybe a little worried about the 75% passmark votes.
Can't wait for the AGM announcement which must be soon after this RNS, though if they wait a while longer the opportunity to stuff the EBT with more shares with the next conversion is surely on its way.
What are all these 'reward' shares for anyway apart from votes - extra share of the pot if they sell UKOG?
After consolidation there were 3,253,992,610 shares, and there was authority to issue 1,626,700,000 shares. Since then there have been 3 conversions, 13 March 206,965,282 @ 0.054p, 19 April 200,000,000 @ 0.405, and today's 152,796,721shares at a price, based on the £46,603, of 0.0305.
Those 3 conversions amount to 559,762,003 leaving authority to issue 1,066,937,997 more shares.
UKOG give a figure of £420,000 remaining of the £2,000,000 loan. Pretty obvious that unless the SP rises the remaining authority is insufficient to pay off the loan, and there's 4.5% of each conversion added to the debt so eventually that adds £90,000 to the £420,000 - so ultimately over half a million to pay in shares - at the current mid price that's about 1.9 billion shares.
Finally a tranche of today's announced conversion appear to have been sold on Monday - 32,796,721 shares (the last 7 digits the same) at a price of 0.026p.
Perhaps UKOG could explain how shares supposedly admitted to trading next week look as though they were sold on Monday?
Ocelot,
'this sounds very much like business as usual.'
Spot on, a BS RNS - and likely eventually to come to nought, even if Loxley is farmed out.
Ilovesushi,
you're right that the resolution to authorise more share would have been passed without the 3 billion EBT shares, the problem was disapplying preemption rights that previously the company insisted was required had to pass with 75% of the votes - without the EBT shares voting in favour that resolution wouldn't have passed.
By the way I expect the NPV valuation to be fairly arrived at, what stinks is by not having a published CPR UKOG can hide what the testing and production meant, and what the future production from HH-1 is expected to be, and possibly more telling whether what has happened was predictable and should have been conveyed to investors, rather than what was RNS'd.
.........of which by far the largest part was 'intangible' assets - intangible being 'not having physical presence', in this case money spent on projects that have not yet been totally proved to be valueless. Until the subsidiaries publish their accounts in June what the £30mm plus of intangible assets fully comprises won't be known - and even then there will probably lybe some gaps.
Of the 'tangible' assets (ie ithey exist) only those not operated by UKOG have valuations fully carried out by an external competent person, the UKOG board choosing to arrive at a valuation for HH-1 but avoid the embarrassment of the full 'workings' being published. Oil and Gas properties (HH-1 and Horndean) comprise just under £2mm, of which £1.4mm is the self determined value of HH-1.
Suspect the dump of the next conversion is already underway with the 31 million plus sell after hours on Monday. Now we're in May the CLN holders can ask for a new allocation of shares that they can choose a vwap for as their purchase price that won't be known until UKOG decide to report it, so far that's been when the following allocation is announced, policing it is impossible as they don't specify what date the vwap is from and share sales appear to precede any announcement. Like a casino allowing a roulette player to place a bet after the wheel has stopped.
Surprised the SP has only shifted a little, maybe the market has finally rumbled UKOG's MO - rampy (but on inspection meaningless) RNS followed by CLN RNS.
Envoi is a well known marketer of last resort. They're currently marketing Terrain's onshore UK portfolio including 10% of Brockham and Lidsey - sale rather than farmout though. Looking forward to seeing the flyers for Loxley.
A miracle?
They seem have put themselves in the position of not being masters of the company's destiny - with not even the spare cash to convert HH-2z, assuming it has ever been anything but a plan to keep the punters strung along.
So they have to wait and hope that something 'comes up' that creates a rise in the SP even if it's only temporary when the punters realise that news/plans and subsequent activity are months apart.
Plenty possible, though these have been expected soon for a while, the Loxley farm out expected 'soon' since 2022.
Supreme Court judgement which will expose whether the PPP HH farm in will happen, starting with 3D, some arrangement for Portland Port, Loxley farm in, something in Turkey.
'Any company can apply to NSTA when UKOG's PEDLs lapse due to insolvency.'
If the liceenses lapse that's it - there would need to be an Onshore Licensing Round for anyone to re-licence the areas- and there hasn't been one for a while - I suspect that the NSTA would be happy for all the onshore licenses to lapse.
But UKOG (or the receiver) can sell the licenses, or the companies, or UKOG's shares in those companies that hold them to a company that has, or can get, approval from NSTA.
PEDL 234 (BB & Loxley) is licensed by UKOG (234) Ltd, PEDL 137/246 (HH) UKOG Has shareholding in HHDL the licensee andUKOG isn't the operator of Avington or Horndean.
Will UKOG go to the expense of challenging the BB retention refusal - the alternative may be a more expensive restoration of the site.
But I'm sure when there's a sniff of supposed good news the ambulance chasers will arrive hoping to sell the idea the patient is alive , well and has years to live and ignore any diagnosis that the prognosis is not good.
DVT,
'At the last GM the special resolution, even with the 10% EBT votes, only passed by 78%'
Special resolutions do require 75% - but re-appointment of board members and the authority to issue shares is 50% - but for shares they are stuck with disapplying pre-emption rights that does require 75%.
Last time the pi were revolting the bribe was an open offer to get approval - which meant paying over the market price so there was only a modest (but surprising) participation, not sure it would work again. Will there be a stern warning tht the company, without the ability to issue billions more shares, will fold, however that's probably beeen true every year, and a promise to change - forgotten the moment the vote is won.
UKOG has spent a ridiculous amount of cash on supposedly potentially transformational, nationally important projects that even before they are drilled show little chance of delivering - at the AGM they need to lay out a focused costed work programme with an honest assessment of risk to justify any further authority to issue shres.
They also need to cut costs - dump the dead wood off the board that seemingly do nothing except agree, shares instead of at least half of pay, substantial purchases of shares in the market by directors to show they have 'belief' in what they're doing - something lacking since 2015 except the forced measly £12,000 by SS.
Sort out the farmouts at (almost) any equity cost for 100% carry or drop Loxley and be honest about HH. Get those international companies interested in the Portland Gas storage to pay up and participate or abandon the project that has no near term cashflow - and farmout their interest in Turkey or get out.
If any of these projects have worth in another companies opinion they should be snapped up - if not they're probably too risky anyway.
Could result in the company just being HH - but it would either show there could be some value in the supposed 'assets' or that the company hasn't communicated realistically about their value.
DVT,
UKOG hasn't held an AGM before end March since 2017, there must be a 'get out' - or it's considered such a minor infraction of the rules it isn't enforced.
But now UKOG has rumbled that the EBT can hold 10% of the shares - and it's almost certain that less than 10% of pi will vote - they can propose anything and guarantee it being approved. The BoD was forced to act before because of the support for 'Sanderson Out' and that garnered a committment for the BoD to buy shares that only SS followed through on - of course ocelot was joyful that even the 'Sanderson Out' movement failed to get 10% of shares - and judging by what happens elsewhere (Angus) the deception just continues so it was unlikely to change anything.
Not sure if there's anything pi can realistically do, most are traders uninterested in whether the company exists beyond the next P&D. Any legal approach would cost (and is there one?), and the non-execs who should better represent pi appear happy to take their £50k and go along with the execs.
With 6 month delays for accounts (9 months for the subsidiaries) the current state of UKOG's finances is complete guesswork but more cash will be needed some time this year. The current CLN seems structured completely against pi interests with no transparency, and UKOG doing anything is dependent on others farming in (Loxley), a Supreme Court decision then a farm in (HH - except, perhaps, the long delayed HH-2z conversion) , agreeing the next activity (Turkey) or being selected in a government beauty pageant.
But none will see instant activity, just news and plans, with the next drill 2025 - if ever - given UKOG's apparent priorities perhaps a salt cavern drill in a few years time.
Ocelot,
Pinarova was a way of stringing out the gamblers until the next news. Just like the PPP farm in, Loxley farm out and HH-2z conversion.
Once the Supreme Court judgement is handed down - not next week? - then it will be the application for a government hand out later this year, though when will the successful applicants be announced- so fitting for a company that has been loss making every year since the Gatwick Gusher / Kimmeridge fairytale.
This in the Annual Report:-
'Our loyal shareholders will hopefully be rewarded as soon as the Portland Port development consent application has been submitted in due course.'
So much for the O&G business, but it would be helpful if UKOG was going to become a gas storage company, a venture all the money raised appears to be spent on, if UKOG could present a business plan to investors with timelines lass vague than 'meeting Southern UK's predicted storage needs in 2050 and beyond'. Apart from a P&D to help out with hyped up news whoever thay've taken cash from (though perhaps that is, and has always been the business plan) what and when will be the long term investment justification?