Member Info for risehall1

It is impossible to say whether the dividend will be cut, if the price of oil does not increase in the next year or two and if the demand for oil reduces due to the economy, it is a possibility. Hence the fall in share price, the market is pricing in the risk. What is becoming increasingly certain though is that the tie up with BG is a bad deal. Once upon a time drilling in the Arctic was a good idea, it isn't anymore because the figures don't stack up. The reasons for purchasing BG were right, it will leave Shell in a dominant position in the gas market and gas is the future of energy, but the timing is all wrong. Shell have overvalued BG and miscalculated on oil prices. By spending much of their free cash on BG, this increases the risk that there will not be sufficient funds to maintain dividends. It is also bad management and poor accounting to expend cash reserves purchasing an asset, only to then subsequently have to borrow money to sustain dividends. Shell have said that they intend to offload assets to pay for the deal, but in the current market, those assets will have to be sold at an undervalue, again that's bad management. The downturn in oil prices is proving to be sharper and more prolonged than they anticipated when the offer was made. Had the offer not been made when it was the BG share price would be much lower than it is today. Shell need to renegotiate the deal or walk away. There are plenty of other oil and gas assets out there are present such as Tullow or Premier Oil which represent much better value and there are many companies offloading oil and gas assets at an undervalue which Shell could mop up very cheaply.

Don't panic. I believe deal has to be struck between FOGL and PMO/RKH over Sea Lion development due to some of the reserves falling within FOGL's blocks, and according to FOGL their reserves are substantial. Then there are the discoveries at Zebedee and Isobel and the fact that the discoveries have derisked neighbouring prospects in the NFB which are 100% owned by FOGL. In the near future FOGL has no further planned drilling or development expenses that I am aware of. But will FOGL sell or farm out some of their interests or get bought out? No need to issue more shares or raise capital, if you have assets to sell. In the current climate I can't see any further drilling in SFB though until revenue starts coming in from the NFB. At present, it would seem that the biggest risk to FOGL is any delay in development of the Sea Lion and development of the North Falklands Basin. I think that may depend on the results from Isobel and the oil price. If the appraisal of Isobel is good, that may encourage Premier to press ahead and could tempt a partner to join in. I still think it too early to say if Sea Lion will be delayed, it is looking more commercial with these neighbouring discoveries. The oil prices in 2016 and 2019 when first oil is due could be very different from today.

I wouldn't sell into this. Commercial or not in the present climate, Humpback never can be a disaster. That's because there is Isobel and Zebedee and the increasing reserves in the NFB. We are going to come out of this drilling campaign with substantially more proven reserves, and more assets (regardless of cash in bank), than we went in with together with the certainty that there is oil in addition to gas in the SFB and a better chance of finding that oil in future. Of course, if you have assets you can raise cash against them. Humpback doesn't worry me, I am more concerned about RKH and PMO getting a move on with development of Sea Lion and the commerciality of the NFB. The share price here could shoot back up very suddenly. FOGL takeover is a distinct possibility for one of the oil majors to buy into NFB depending on the outcome of the further drilling. I also think that the current oil price has not priced in the risks in the Middle East. Oil infrastructure is very vulnerable to terrorist attack. But at some point the Saudis will have to turn down the tap anyway because even they cant cope with oil below $100 for a sustained period. I also don't buy any nonsense about oil prices never recovering, they always have in the past and if the current trend for cutting investment bears out, the price will end up higher after this rout than it was before.

I can't understand why the Berkeley share price is so low and why its performance over 2014 is not reflected in the share price. It has one of the best dividend yields out there at the moment and the strong performance looks set to continue according to the last trading statement. It has the most exposure not only to the London property market, but more importantly to the high net worth London market. This is a recession where they poor have got poorer, the middle have got poorer and the rich have got a lot richer. Why is that exposure to the London market a weakness? The London market is the strongest property market in the UK and is now driven more by London's position internationally rather than domestic demand. London is seen a safe haven, I cant see that changing. I cant see demand falling at all, I can see prices stabilising, but given that prices have risen 20% over the last year, what does that do for Berkeley's profit margin even if the market were to fall by 10%? ; ) Much of the housing sold by Berkeley is aimed squarely at high net worth individuals, these people are not affected by recessions or down turns. I rate Berkeley more than the other housebuilders and as a high dividend payer with good medium/long term prospects, it has no peers.