Stephan Bernstein, CEO of GreenRoc, details the PFS results for the new graphite processing plant. Watch the video here.
The gas BOE is not irrelevant because there is a near term (entirely industry standard) plan to monetise that with gas to grid power installation. Work out the BOE for the gas currently burned and that gives you an estimate of the future cash flow.
The NAV is also contained by how they can value West Newton/Biscathorpe, and by the pending CPR for Wressle.
Current forward wholesale Offgem UK electricity price weekly average is £80 - https://www.ofgem.gov.uk/energy-data-and-research/data-portal/wholesale-market-indicators - although peak load can be way over £150 MWh
Typical gas engine efficiency in the MW+ range is about 45% (just looked it up). Still £1500 per day at only 60 boepd gas production.
Doing the maths on Wressle, and extrapolating from the figures in the last update on 21 Sept:
$480,000 net to UJO after (restarting production on 19th August) in 33 days. Thats $14,500 per day.
The average oil price between those dates was about $70. The average price between 21st Sept and today is about $75 (and climbing).
If you divide $14,500 by 70 you get just over 200 barrels net per day (its averaging the 500 barrels per day production gross over 33 days).
If you multiple that 207 barrels by $75 you get $15,500 revenue per day.
Its been 16 days since the last update, so that's another $250,000 net to UJO
That's $500,000 per month net easily. Thats $6,000,000 per annum.
That's assuming an average POO of $75 and Wressle averaging only 520 barrels per day! So the upside is the oil price, the production rate and any revenue from gas to power.
Egdon is therefore pulling in $375,000 per month net minimum at that conservative estimate, so the risk of default on UJO's £1m loan in now tiny.
My gut feeling is that they will settle for Wressle at 750bpd with gas about 70 boepd.
Lets talk gas-to power - the energy evivalent of gas is 1.7 MWh per barrel of oil equivalent. Call it 1.5 MWh in a gas engine. That's 105 MWh per day. The current whole sale electricity price is >£80 per MWh (hTTps://www.ofgem.gov.uk/energy-data-and-research/data-portal/wholesale-market-indicators):
Lets say average of £70/MWh realised = £7300 per day gross, and £3000 net to UJO per day......£1m per annum.
Obviously there will be purchase/leasing costs for the containerised gas engine(s) and grid hook up costs, but then again the engines can be programmed to go harder at peak times when prices per MWh can be well over £150.
So essentially, with gas to power, on the Ashover interval of Wressle alone, UJO is valued at less than 5 times net income before G&A costs, with other production, royalty income and interest from load to UJO, West Newton appraisal, Biscathorpe, North Kelsey, Broughton and Kirklington and Duke's Wood, AND CURRENT CASH all valued at ZERO.
Which rather begs the question that Toonarmy on ADVFN and others have been asking......how has the company been allowed to be portrayed in such a lowly manner, that investors are refusing to believe what their eyes are telling them?
To be fair, the Half Year update is overdue compared with 2020 so it could be any day - THAT is when I would expect DB to start talking, and not before.
It will cover the eyar to 30th June, so the impact of Wressle on cash will be evident. It would also be an ideal opportunity to update of Wressle cash flow after the 3 weeks leading up to the last RNS on the subject. The oil price has been averging higher since then, and the average daily production may well be higher .
Again, the recent RNSs re Wressle and the West Newton development presentations talk about installing gas to power ASAP.
This is not rocket science and easy to do, and its actually normal to do (Singleton has installed gas to power). OK they can't monetise 80 boepd gas right now, but had the local council not ****ed things up via planning for years that would now be in place as well as several years of production and development of the other 2 intervals.
Also, when gas prices are HIGH, so are electricity prices. the 2 correlate massively. So high gas price = high income from gas-to-power (which at 80 boepd is a few hundred grand per year net to UJO).
"The price of oil here is irrelevant to the sp, It might be someday, but not at present, if it was, the already massive spike in O&G prices since oil futures were minus 3 dollars a barrel during Covid, would reflect on the share price and the share price wouldn't be continually falling as oil is rising..."
Erm, WTF? UJO is now a PRODUCER with a £6m+ per annum cash flow. It previously wasn't which is why the SP didn't correlate with POO. It is now a dependent and leveraged play on POO in every sense as an OIL company producing OIL with four cash generative assets.
BWRM has a roughly 15-20% exposure to primary Gold mining.....and these guys are ****ting cash at the moment.
A 4% dividend yield, in a stagflationary world with government bonds at negative real rates, is a huge positive.
I also see a migration out of cash and treasuries into tangible assets, in search of yield as the theme for 2022. Chinese demand is here to stay whatever in my book.
I posted this on ADVFN earlier:
1) Given Wressle is now generating cash flow, why debt based funding has been discounted out of hand in favour of the traditional 50% discount for spivs leaked September 'placing'. If it's too early, then why not wait?
2) Why an open offer allows PIs to take part in the price discovery has not been considered, or explained away? I'd rather a take part as a shareholder in a more expensive (to the company) mechanism, that see the value of my shareholding reduce by 30-50% each September.
3) Sufficient details of the mechanism of the existing 2.5% Royalty Unit (which I was happy with on the face of it as a small diversification), let alone the mechanism of the proposed 25% Royalty acquisition. Additionally, why must the company buy ALL 25%? Is that a condition of the vendor?
4) Proposed timescale of the gas-to-grid development. Obviously a containerised gas engine needs to be sourced (from Germany normally) and some export/connection infrastructure will be needed. These plans should be relatively well advanced as the gas is not a surprise.
5) Why a merger with EDR/UOG with simultaneous equity raise has been discarded. Mr Abbott of EDR would be an asset as an experienced operator, and allow Dave to step back with dignity as non-exec Chair.
On the plus side:
1)1 month production extrapolates to $6m per annum NET to UJO.......CONSTRAINED.....BEFORE gas-to-power revenue......OR any upside from an increase in the price of oil (a $5 increase would bring in over $500k extra per annum).
2) The energy equivalent of 80 boepd gas is 130 MWh. This is a LOT of energy. Last August the wholesale price was £37/MWh - that would be £700k per annum NET to UJO. This August the wholesale price was £107.....and climbing. Gas engines can also be programmed to run PEAK load for even greater income, assuming some kind of onsite storage can allow 'surge' at peak times.They would probably need TWO of these babies to ensure constant production at the well head and allow for downtime/maintenance:
hTTps://www.edina.eu/gas-engines-mwm?ppc_keyword=gas%20engine&gclid=CjwKCAjwhaaKBhBcEiwA8acsHPNxf84ndWJyh4guvXSJNEvUWEyyWkrwXyegr_pW6RE1QjoTzLIRFxoCs-UQAvD_BwE
I think the gas to power thing is a BIG deal myself. It also presents a template for a possible way to monetise West Newton in a preliminary and early fashion from an existing well bore, without buggering up the future development options.
3) For me, the company needs to have another conventional Wressle-like discovery ideally - North Broughton (Appraisal) or North Kelsey (lower CoS) to underpin things as a producer. West Newton is a ****-or-bust thing, and Biscathorpe is bonkers and difficult to visualised geologically for me.
ADVICE FOR DAVE:
1) TALK ABOUT GAS TO POWER MORE...now!
2) EXPLAIN THE MECHANICS OF THE ROYALTY UNITS BEFORE ASKING FOR MONEY
3) ASK US (The shareholders) FOR THE MONEY
4) GET INTO BED WITH EDR MORE VISIBLY, and DRILL BROUGHTON OR N.K
Deplete in 4 years my arse!
Oil and gas Reserves and Contingent Resources identified by the Competent Person in aggregate exceed the Operator’s original pre-drill estimates
? Gross P Mean Oil Initially In Place (“OOIP”) is 14.18 million stock tank barrels in aggregate across three reservoir sands, the Ashover Grit, Wingfield Flags and *****tone Flags, of which 2.15 million stock tank barrels are potentially recoverable (2P+2C)
? Gross 2P oil Reserves of 0.62 million stock tank barrels in aggregate identified across two reservoir sands, the Ashover Grit and Wingfield Flags that form the basis of the initial development plan which currently excludes development of the material *****tone Flags reservoir sands
? The initial development plan utilising the Wressle-1 discovery well has been submitted to the Oil & Gas Authority (“OGA”) and for which a planning application is currently being considered by the North Lincolnshire Council
? Commercial oil production is expected to commence in early 2017 at an estimated 500 barrels per day gross and generate significant net cash flow
? Gross 2P gas Reserves of 0.2 billion standard cubic feet
? Development options and production planning for the *****tone Flags reservoir are
expected to be progressed following commissioning of the initial Wressle development and will include monetisation of the produced gas by pipeline or electricity generation which will be sold to the National Grid.
Nonsense. Wressle alone puts the company on a forward PE of 10, with other assets producing and 3 more assets ready to drill/sidetrack, CASH and the royalty deal already announced taking care of most of the G&A costs.
I'm just wondering what it exactly it was that lifted itself 1000m up the wellborn when the well was drilled.
There may be skin damage interfering with stuff in this reservoir - they haven't drilled this test remember, they've done a mild stimulation with acid.
An oily gassy duster.......
· Locations for the West Newton A-1, A-2, B-1, B-1Z and a proposed B-2 well, which has planning permission in place and is provisionally planned to be drilled in H2 2021, and a demonstration of where the B-1Z well represented a considerable 2.5 kilometre step-out to the south of the A-2 well
· Good seismic calibration across the West Newton project area, highlighting both the Kirkham Abbey "platform" and "slope" formations
- Demonstrated hydrocarbon column of at least 118 metres with no hydrocarbon-water contact
- Thick porous section identified in both A-2 and B-1Z wells suggesting a contiguous structure across the Kirkham Abbey formation
- B-1Z well de-risks the southern component of the West Newton licence area and crucially supports the accuracy of the seismic interpretation across the entire platform
· Log results at B-1Z well were excellent, exceeding Union Jack`s pre-drill expectations
- Good porosity throughout the interval
- Kirkham Abbey interval hydrocarbon saturated
- Mudgas concentrations observed while drilling through the Kirkham Abbey formation at B-1Z well were as high as 9.8% total gas
· 18 metres of core cut and recovered from the B-1Z well
- Visible natural fracturing, micro fracturing and vuggy porosity demonstrated from core-lab inspection and analysis
· Numerous additional leads and prospects, including Ellerby and Spring Hill, identified across PEDL183