Member Info for spike501

"There is a sizeable profit but there also seem to be lots more ways to spend that money....consultants, equipment, mine upgrades, new highly paid staff."

True but mine upgrades and equipment are needed for development and as long as its not excessive I'm ok they spent money on consultants and decent staff to help them expand in the right way - the fact that the total cash cost is sub $800 shows at this stage its not excessive.

Cash might be only $3.5million but not current assets (i.e. cash, inventory, receivables minus payables and short term borrowing) has jumped to $15million which is very healthy.

Not an awful lot in the report that we didn’t know already but the all in cash cost of production at less than $800 per Oz is impressive.

"West Newton has been looked over by at least one national household gas supplier in this last year, FACT."

None of the major UK household energy suppliers have any upstream assets - they buy gas on the wholesale market from wherever it is available.

"UKOG was worth nearly £1bn with a fraction of what UJO has."

UKOG market cap peaked intraday about £450million and highest closing market cap never exceeded about £300million. They also had all the ramping about the Gatwick gusher and acreage that could contain 100bn barrels of unconventional at a time when UK unconventional was all the rage, with BBC interviews and expert promoter Lenigas pushing it everywhere.

Ribeye - 2P reserves in the current producing zone are 260,000 net to Union Jack. If 500bopd is maintained (to enable your PE calculation to be maintained) then those reserves are depleted in 4 years. Valuing production companies is always based upon 2 factors, free cashflow and reserve life.

The pennystone has another potential 750k net to UJO - its currently only contingent and not proven as it has no development plan, or planning permission - it may also need further appraisal but that is clear.

Even taking the 2P and 2C - that is only 1million barrels net to Union Jack - generously you might assign a valuation for UK onshore of $10 per 2P and $6 per 2C - that gives Wressle a valution based upon oil in the ground of around $7.5million, or £6million. It comes nowhere near to supporting the current market cap.

If you don't believe me, then maybe look at Union Jacks broker - the ones paid to promote Union Jack. They are assign a share price of 3p per share for Wressle production and 8p for Wressle appraisal - a total of 11p per share.

http://unionjackoil.com/wp-content/uploads/2020/06/UJOFINAL.pdf

“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.“

1. It doesn’t put it on a forward PE of 10 as that is only the profit of Wressle without deducting company administration costs.

2. Why would anyone pay a PE of 10 for an asset that would deplete in 4 years?

"I say the market is waiting for the CONFIRMED flow rate at Wressle. The more major players don't invest until we get confirmation.
If it's 500 b.o.p.d or more as hoped we should see 40p plus here I think."

There are no major players investing here because of Wressle - the 2P from the Ashover grit and Wingfield flags where there is current production approved is 260,000 barrels net to Union Jack - at 500 bopd it would be depleted in less than 4 years, although of course it will decline so will produce on ever reducing levels for many years.

There is the upside from the other zones, which does look decent and has 750,000 barrels of 2C net to Union Jack, but Wressle overall comes nowhere near to justfiying the current market cap, regardless how much cashflow it might produce in its first peak year.

This is all about West Newton.

Great - so what?

"Of course, persimmon. I bought at 11.42."

If you're going to lie at least take time to click on the trades to see if there were any purchases at 11.42.

As soon as EmeraldCarrots appeared a couple of days ago I knew it was time to exit.

Its fairly simple - this isn't worth 35p per share (£32million market cap) on Wressle plus the other small prospects alone. There are also a substantial amount of that attributed to West Newton with a risk weighing. There has been a brief relief rally from Wressle as the cashflow is important, but this will not likely drift around possibly back towards 30p until news of West Newton comes.

"Not producing yet so a bit under the weather and the council says 500 a day that means they got to average 20.833333 recurring barrels an hour to keep it down to 500 a day if it was 600 that would be easy setup 25 barrels an hour.
so the setup must be taking the time to stay within the rules."

I think this is the greatest post I've ever seen on LSE.

Gywnwin - you know it doesn't come out of the ground in the actual barrels? They fill them afterwards.

"They already have cash to make the upfront payments. The CEO has planned that. Stop the scaremongering."

Doesn't matter if they have the cash or not - it doesn't change the fact that from an cashflow perspective the company will likely not be cashflow positive in the first year of Wressle.

"spike501, I have to disagree.
Wressle on it's ow provides revenue that UJO were sorely missing as a junior oiler. Profits from Wressle provide UJO with much needed income that will greatly reduce the need for future fund raises and with it the risk of endless dilution."

Wressle doesn't provide enough for substantial development of other sites - this year it will likely be at best cashflow breakeven as UJO have to pay £2million to the parties they acquired their stake in Wressle from and any cashflow in excess of this will maybe cover adminstrative expenses. Next year will probably be decent and provide £1-2million after operationally expenses, but further out it will begin to decline.

I didn't expect much increase on this - operationally its great news and helps with cashflow, but the current proven element of Wressle is small, so overall is only worth a few pence per share.

The SP will be substantially one way or another by West Newton.

I wouldn’t be expecting any dividends for many years - it’s clear that any operational free cash flow is required for CAPEX.

Must be something coming out of West Newton, Reabold up 20% now and UJO 10% with the latest buy going through at 32.9

Unfortunately nothing in that RNS indicates Levi was wrong. Its been six weeks, they've clearly not achieved any stabilised flow otherwise they'd have said so, even if they didn't indicate actual rates and they also clearly haven't recovered enough liquids to know in detail what it is.

None of this means its a failure at this stage, it just means there is a lot more work to do yet and there may not be any definitive answers from this flow testing, although fingers crossed they can get some flow from continued operations on the lower section or the upper section.

Can't see a rush to buy in here today, suspect it will drop.

Bit of a curates egg that RNS - they’ve been testing 6 weeks and all they can definitely say is that the completion fluid is flowing well.

Not sure there is much to complain about the board for at the moment. They are executing successfully, I’m very happy with the progress and I’m convinced the market will wake up to this shortly.

Gold stocks and juniors in general seem to be struggling more than justified give the gold price remains elevated.