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Cyan2,

You're right that UKOG have made estimates for the costs and pre tax profit given to the appeal hearing - thus an estimate of reward which will now be almost certainly higher because of the gas price used - but risk is a major drag on any valuation.

Reward - still unknown though with success high.

Risk - UKOG say 60 to 70% probability of success - actual risk probably higher - UKOG did say Loxley had similar risk to Basur-3.

So maybe the risks (which extend beyond technical risk) will put off farminees, but there are other reasons (news flow) that will be attractive to other AIM oilers if they can afford the entry fee.

But as regards market cap 'valuation' Angus seems to be demonstrating that despite astronomically high gas prices expected to extend into the future that until gas is actually flowing at anticipated rates it makes little difference - risk.

15m. Mcap Is a bit on the low side'

Depends how you value a company. Ocelot is using today's as price for the total recoverable gas estimated from UKOG's mapping both within and outside PEDL234 to calculate what it could be worth.

Angus has 31BCF audited 2P reserves and is about (hopefully) to start delivering to the grid and has a market cap of about £33mm. There's a vast difference between valuation of reserves and contingent resources. Below the Mid case published Portland gas resources in UKOG's licence are 32BCF - with no flowed well proving it, not CPR'd, no firm plan for drilling it ,and no idea, even if successful, of when it might be brought into production.

The Xodus figures that UKOG published in 2020 for Loxley in their licence were:-
Low case 18BCF, Mid case 32BCF, Mean Case 34BCF and High case 54BCF.
and whole structure:-
Low case 23BCF, Mid case 42BCF, Mean Case 44BCF and High case 70BCF.

These were described then by Xodus as 'technically recoverable gas that UKOG now quote as Contingent Resources in the Annual Report.

However SS in his letter to Jeremy Hunt is quoting the whole structure and only mid/mean case and High case figures without mentioning that the whole range for the whole structure (ie not net to UKOG) is 23BCF to 70BCF.

Of course ocelot slavishly copying and pasting any utterance by UKOG wouldn't be aware of, or care about, these inconsistencies

One further point is such a high range between Low and High case suggests a high degree of uncertainty, and these figures are dependent on the accuracy of UKOG's mapping, which wasn't audited by Xodus, and the success of Loxley proving the same gas water contact as Godley Bridge and starting to prove the top surface map correct.

Ocelot has no idea what the risk reward is for Loxley - for reward you'd need to know the cost of appraisal and development, the forecast of production and the gas price forecast of a farminee and then their view of risk, not UKOG's - repeating the skewed quote by SS of Loxley gross technically recoverable resources is not a good start

'It takes so l o n g to do anything in this country. This extract is taken from a presentation designed for local Loxley people dated 25/09/18'

It sure does 5/12/2016:- 'A further well is also planned, subject to normal regulatory approvals, before mid-2018, to test the eastern extension of the Godley Bridge Portland Sandstone gas discovery and an underlying KL oil prospect.'

30/06/2017:- 'Within the same licence, UKOG is seeking to lease a suitable well site to drill a Godley Bridge-3 appraisal well. A planning application for appraisal drilling and well testing is being prepared.'

Planning application submitted 29/04/2019......
Still amending / clarifying the application May / June 2020
29/06/2020 - first planning committee refusal.
27/11/2020 - second planning committee refusal
17/12/2020 - appeal process bagan
07/06/2022 - appeal won
20/07/2022 - announce start of farm out for Loxley

Ocelot,

sure quote figures and words that UKOG have put on their web site - but do you believe them. I presume you believed the figures for Portland production, possible recoverable oil for the Kimmeridge or the oil volumes for Resan-Basur from an obviously wrong map?

But to then take 2 fantasy figures, multiply it by a gas price of today is rubbish - even you must acknowledge doesn't represent a 'valuation' even if Loxley is as successful as UKOG claim it might be.

Yes it is entirely surprising that you come up with a valuation that's a minimum of 60 times that of Angus - 100% owner of a redevelopment of a field about to sell gas to the grid of similar size 2P reserves to UKOG's published figures for net recoverable gas (not reserves).

Any explanation - market doesn't understand how to value gas assets vs your method?

Because everything you're saying is fantasy.

There isn't a Loxley Portland discovery - or if there is it hasn't been flow tested as it would be seperate from the Godley Bridge Portland discovery that's never been developed.

and as for 'The order of magnitude of the figures for the gross value of Loxley should, therefore, come as a surprise to nobody'

Well with Angus Energy the 100% owner of Saltfleetby's market cap being about £33mm with 2P reserves of about 31BCF and about to sell gas to grid - rather than a fantasy mid case net recoverable gas of a similar volume (not gross as ocelot quotes) somehow justified as Contingent Resource - it is surprising you're assigning a value of over £2billion to a so called appraisal - only about 60 times the value of Angus Energy.

How long though? 4 years a strong buy so far? Price then 1.325 - 15 times today's SP.

'InvesterInvester
Posted in: UKOG Posts: 1,438
Price: 1.325
Strong Buy
Were are the derampers...? 19 Jun 2018 22:44
Trolled off to another share.... ? They are truely pathetic.... UKOG is IMO a great long term hold. Good Luck all...'

I suppose the 'derampers' weren't saying it was a strong buy, or a great long term hold?

Wonder why?

Rereading that post I guess I should say:-

'Ocelot must be dismayed that the market cap of Angus, who's main asset is the Saltfleetby Field' is about £33mm.'

Which attributes zero value to Brockham that initially was producing about 50 bopd from the Portland (UKOG about 60bopd at HH).

To expand further on ocelot's bizarre valuation of Loxley - similar to the claims being made in 2015 to 2017. He has previously claimed using recoverable gas times current gas price helps compare field against field.

However.

Angus has a nearly fully commissioned gas export facility at Saltfleetby on a field thar has wells, a production history well defined and a large positive following making all sorts of claims to bolster the share price (including you know who).

So it is on the verge of starting to produce the 2P reserves of 31BCF, an audited number.

Yet the market cap is about £33mm.

UKOG has an appraisal of a structure that they assert is an extension of the Godley Bridge- 1 discovery which is updip of the declared dry well (Alfold) they say has a 26ft gas column. The area has significant issues with depth conversion which according to previous applicants requires further field work to better calculate static corrections- UKOG phased matched the data - easily performed in seismic interpretation packages.

According to the published Xodus figures Loxley-1 will test whether the 32BCF of unrisked net mid case recoverable gas attributable to UKOG in PEDL234 exists.

Ocelot must be dismayed that the market cap of the Saltfleetby Field is about £1mm per BCF with multiple wells, proven production history, fully installed infrastructure and with audited reserves which is about to deliver gas to the grid.

But how he has the nerve to post here a valuation of about £50million per BCF of untested, unaudited recoverable gas based on a letter to Jeremy Hunt, IDK.

Ocelot,

Seem to remember similar calculations for the value of the Kimmeridge.

I hope the nurses can calm ocelot down tonight - the excitement must have been more than the calculations of what billions of barrels of oil x any oil price you care to guess came to when ocelot first invested for the long term.......

All I need to say is garbage in, garbage out.

Ocelot,

has there been an RNS or tweet I've missed about all these 'potential' farminees being announced?

and as for this complete BS from UKOG:-

"the significant Loxley Portland gas discovery, assessed to be the second largest gas accumulation ever discovered and flow tested in the UK onshore" (UKOG's home page)"

There is no Loxley Portland gas discovery.

The Godley Bridge well did flow gas at 1.44mmcf/d - hardly significant - but until Loxley is drilled there is no certainty that the Loxley structure exists and is connected to Godley Bridge (other mapping shows it as a seperate smaller feature with a shallower gas water contact) - and it's assessed, by using UKOG's map, to be the second largest gas accumulation.

UKOG haven't submitted their Loxley mapping to independant audit which would assess the reliability of this claim and risks associated with it. There's also the re-interpretation of Alfold which luckily has enabled it to be included within the overall closure. I suspect it will be an interesting topic of discussion in any farm out review. This has also meant the axis of the Loxley structure no longer follows the east-west trend of Godley Bridge and now heads ESE towards Alfold.

It's also imperitive for the Loxley structure to share the same gas water contact as Godley Bridge - I noticed this in the evidence in the appeal (SS evidence):- 'A gross gas column of 100 ft is considered by the Appellant as the minimum
necessary to establish a commercially viable accumulation.'

With regard to mapping if the gas water contact is higher then it's very possible that even if it closes and has gas the column won't be enough.

from a post ysterday:-

I ended a post 18/8/2019 with this, as true today as then:-

'Keeping to realistic expectations and awareness of risk is not being negative - posters seeing them as such suggests likely outcomes are more negative than they think.'

and since those heady days of a SP over 1p - when I was also being accused of being negative, nimby, greenie etc.........as now.

One day something fundamentally positive may happen - and I'll be certain to say so. Until then it's just hope with risk - or as rampers would put it - it will happen.

Mullins

I assume the rampers here only want the price to go up so they can buy some more shares?

BTW accusing posters of being green etc when they're just honest about, in this case, UKOG is as pointless as ocelot posting about 'front month gas prices'.

However I do care about the environment but it was rather stupid of the government to stop the trial of fracking the Bowland just when it was about to yield results - though perhaps the companies involved had a good idea how successful it was likely to be? Until there's a clear path to a so called 'green' future gas and oil will be needed, however dependancy on imports will continue for some time yet - in fact the Portland gas storage project depends on it to some extent - 'Addition of a new planned LNG import facility in the port'.

New low???

Ocelot,

Probably most 'investors' in UKOG haven't chosen it because they are here for the long term - once upon a time maybe and those may be trapped with shares so worthless they're not worth selling.

You rejoice in the huge turnover of shares on P&D days - not the sign of most investors seeking a long term investment - which wouldn't have worked out well so far whatever day anyone bought in.

It would also help to understand the risks which over the past years have been (and continue to be) pointed out, rather than seemingly a strategy of believing every (often caveated) utterance in RNS, tweet or interview (or even irrelevant Bloomberg articles / next weeks / next months / next years gas price)- and repeat it here ad nauseum without any sign of critical analysis until finally the facts overtake the fantasy.

You filter any poster that dares to analyse and research the projects while casting far and wide for any seemingly positive word that has the word oil or gas in it or (positive) view about UKOG to repeat here.

John Redwood is one of the bigger idiots in a cabal of idiots - not sure that the chancellor is the one to remove obstacles to producing gas. But the blind belief every drill will be successful and fracking will work on the Bowland Shale is naive - try it (wasn't it the Conservatives that stopped it?) - but don't kid anyone that it will help tackle the cost of living even in the timeframe of the current government - or unless they bring in price controls protect the UK from global pricing.

Strategically a good idea but it won't help any time soon. With shortages if they happen.

PS as for Loxley if UKOG believes the appeal will fail they should get on with progressing at least all the conditions through planning,

Ocelot,

As you sort of say it's a contract price speculators are prepared to make 'now' - probably for relatively small quantities of gas. There may be winners and there may br losers.

It almost certainly won't be the actual price. I wonder 4 years ago what prices were contracted for August 2022?

So quoting a price for almost certainly relatively small quantities of gas for delivery 4 years away is pointless, as is quoting a price for any time soon because UKOG won't have any sales gas 'soon' - and may never having any sales gas.

Given the complexity of the facilities required massive compression both ways new large pipelines etc and the legal complexities of a several years hedge that is going to make far more cash for the 'hedgeors' than storage would make and therefore a need to produce as well as store and then be able to recover the stored gas at very high levels by maintain a cushion (by leaving significant gas in place). Which year would SFB be ready to take gas and more importantly deliver it?

If GL reads this board he's probably loving the excuses put forward on ANGS behalf for the extended 'official' silence.

When an AIM company goes radio silent it's rarely because they're witholding 'good' news - eh lemonleaf.

PS the economics of gas storage depend on buying cheap in the summer and selling for more in the winter - storage is not there to lower gas prices - unless the government legislates - which would mean no storage would be commercial and cause all sorts of issues with the market.

But let's pretend that SFB could be storing gas to lower prices this winter - it wouldn't even if it was operational, BV is correct.

ocelot,

What would the bid be - value of HH-1 (NPV less than £4mm) less the cost of 2 risky wells?

As a regular on ANGS board you'll be aware of the gap between the fanciful valuations by certain posters and the bids received.

ocelot,

acquiring seismic is an expense - a 'modest' amount of money raised which has dropped the SP to below the placing price and about £2mm off the mcap as of today. The purpose is to find out if the new target for Basur-4 exists at all, and the same for another loosely defined lead to the SW of Basur-1.

Maybe have a look at the latest map (in UKOG tweets - July 20) and have a look at the closure that is currently mapped (dotted red line - about 3 sq km) vs the large outline of Basur & Resan UKOG had in the first presentation in 2020 (about 20sq km) - but UKOG haven't recalculated the OIP etc.

Will there be an update on the Turkey trip - next week on 20 July?

and surely another ocelot 'positive' is today another 52 week (and all time UKOG low?) low was achieved to add to the rest of recent lows - will this time be the turning point?