Member Info for StarBright

Sageman - what you term the “real herd” I referred to earlier as the “cavalry”. New investors and their capital are needed to make sp progress, as the existing PI’s are at size and evidently somewhat jaded... I think the cavalry will arrive, but perhaps later than many here would like. The sp will then progress, but it’ll be a grind as many PI’s will sell out too soon once they get an opportunity close to their in prices...

At around 2p UKOG is a better investment proposition today than it has ever been. But other than perhaps a few adventurers, I dont think we’ll see true II money until free cash flow from production is within sight.

Sageman - Solo (& I suspect the other minnows) appear to be executing a VWAP order ie they are trying to sell carefully without driving the price down. This means that they will sell as fast as buying pressure permits.

The reduced daily average volumes show us that Solo isn't finding strong demand to sell into. In other words there is less buying pressure in the market today at 1.9p +/- than there was a few weeks back. This is why we shouldn't expect the price to rise (absent other factors) once Solo eventually clears its position.

seadoc - my model (now incorporating the depletion profile proposed in the scoping application) suggests that UKOG's current sp embeds initial flows of about 2,400bopd from across its various sites and licences.

Given the single-well test results we've seen, and noting that the scoping doc contemplates initial flows of 3,400bopd from multiple wells at HH alone, I am a comfortable holder at the current sp. I am therefore entirely happy to be on the other side of your spread bet...

lloydyboy - you are suggesting that buyers are waiting for the price to rise before they buy... If the demand was there, they'd be buying now and Solo would be quickly offloading their shares. We'd see that in increased daily traded volume. Once the Solo shares were all gone, the price would then rise.

But that's not what we are seeing. Daily traded volume is low, indicating that demand from buyers is depressed.

Rule(s) of thumb:

Known seller + high daily volume + stable price = buy now whilst sale lasts, price will rise thereafter

Known seller + low daily volume + stable price = seller struggling to maintain VWAP, don't expect price to rise thereafter done.

The price is at a level where demand from buyers and sellers is being met.

No-one is "holding it down"! If they were then we'd be seeing trade volume from buyers taking advantage of the artificially depressed price.

Nothing that we see requires explanations involving manipulation, Brexit, MM's, placings, iv's, farm-in/outs, big boys or any of the other internet investment fantasies so readily accepted here. 1.95p +/- 0.1p has been the price at which both buyers and sellers have been happy to transact for about a month.

Agreed. There isn't very much demand (eg people actually placing orders...) into which Solo, and perhaps the other former minnows, can sell. Don't assume that the sellers will be gone shortly, or that the sp will rise immediately thereafter as there is no evidence in current trading activity - price or volume - to support either outcome.

fudgerella - everyone knows that oil is flowing at HH so tankers are not new news. They don’t tell us anything we dont know already. To think that a few more tankers here and there will have an immediate impact on the share price now is - I’m afraid - simply naive. The game has moved on.

toughiv - two good questions thank you.

Q1. What is the market waiting for?

To answer this it is necessary to think in terms of existing holders and potential new investors. Existing investors - basically all PI’s - have had ages to build their positions to size. I think they have a degree of apathy and cynicism - “show me the money” etc. Despite what you might read here, they are not collectively waiting for EWT/whatever results to make material new investments. They have their positions and will either sit tight or (because of broken dreams...) sell into any spikes that materialise. New PI investors require more significant milestones before they will commit; “KL3 flowed at or around the rate seen in 2016” is/was evidently not enough. II’s not yet on the horizon - the old adage about a mine/well being a hole in the ground with a liar standing next to it will very much apply. Until free cash flow from production is in sight, UKOG won’t attract proper II’s.

2. Is a placing to fund new wells imminent?

I don’t think a placing is imminent, but I will be disappointed if we don’t see one during 2019. The company’s statements with respect to funding have always been very carefully/professionally couched, with the last RNS saying: “...sufficient working capital for its core projects over the next 18 months.” etc The drilling of multiple wells and the expedited development of the associated scale production platform will be costly and easily considered as outside the definition of “core projects”. I also suspect that the programme at HH has been very costly - we’ve seen a huge amount of kit on site which, with it’s associated expertise, is no doubt very costly. I am sceptical of the idea of self-financing serial wells. Better returns for shareholders might be delivered by biting the bullet and raising the money in one hit to fund everything through to scale production. Bank financing will be difficult without existing cash flows, perhaps especially in an environment where rates are rising. So I think they will return to the market for equity funding in 2019. Armed with a strong CPR and a clear field development plan I think it should be possible for the company to raise equity capital without the steep discounts that give rise to dilution. This might be an opportunity to get some adventurous II’s on board also...

Boyzee - when you refer to the "...imbeciles currently holding it back in the face of overwhelming positive evidence..." I take it you mean the PI's who aren't buying enough to offset whatever selling pressure is coming from Solo and others..?

- Average traded volume from 28th Sept (admission of the placing shares) to 15th Oct was 94m
- Average traded volume for the 30 days to 28th September was 90m
- Average traded volume for 30 days prior to 5 Oct RNS was 94m

So the evidence tells us that demand for UKOG shares hasn't really picked up since the RNS's released on 5th Oct and 10th Oct. The numerous tanker sightings and flare haze pics in recent days have had no discernible impact on demand either.

If anything, traded volume is down slightly since the admission of the placed shares so Solo (and - I suspect - the other former minnows) are having to sell into a somewhat depressed market. Remember that Solo alone has sold 76m shares in the 11 days between 28 Sep and 12 Oct. It looks like they have a VWAP objective, so this process may take longer than they might have hoped. The data also does not support the idea that the price will rise once the placing shares have been absorbed, This because there is no evidence of additional demand since the RNS's.

Whilst recent news form the EWT has been really positive, the data (both volume and price) tells us that it hasn't been sufficiently compelling to attract new investors and their capital. Until the cavalry arrives, the price is like to stay in 1.7p - 2.4p channel we've had since February. Clearly we are all hopeful that successful completion of the EWT on the remaining Kim layer(s), declarations of commerciality etc will provide the necessary impetus. In the meantime, holders should just....... hold.

Vernony - I don’t think Lenigas’s claims were for RECOVERABLE barrels.

And another initial hypothesis entirely unburdened by knowledge or experience...!

There are two routes to a takeover. Very simplistically:

1. Direct offer - an offer document would be prepared and sent to shareholders. The bidder needs to secure acceptances from 50% of shareholders. At this point they are successful in terms of board control. Only if 90% acceptances are secured can the remaining minority shareholders be "squeezed out". However at 75% the bidder could de-list the target company shares - not a situation a "hold-out" minority wants.

2. Scheme of arrangement - Where a scheme (a court based procedure managed by the target company) is used to effect a takeover, the 50% acceptance level tests and the 90% squeeze-out tests are not relevant. Instead, in order for the scheme to go ahead, it must be approved at a meeting of the shareholders of the Target by a majority in number, representing 75% in value, of those voting. Court approval is then sought. Following this, the scheme becomes effective with 100% ownership and control passing to the bidder.

There is thus no possibility of UKOG being taken over without shareholders having an opportunity to vote. Either 50% of all shares would need to voted in favour of an offer, or 75% of those attending a meeting would need to vote in favour of a scheme. There are strict prohibitions on the actions of management during an offer process that are designed to protect all shareholders.

At one level these protections are good for PI's where they are in aggregate the largest grouping on the register. They ensure that the company won't be sold from "under their feet" by making life very difficult for potential bidders.

However the flip side of this is that - by making life very difficult for potential bidders - the protections make any form of takeover much less likely. As a result the SP is far less likely ever to incorporate a "bid premium" whilst the register is dominated by active PI's.

My views is that Primorus and Gunsynd are also active sellers. They took 94m between them in the placing.

I think we are about to see - in vivid hypercolour! - the principal reason why an early bid for UKOG (with its PI dominated register) is unlikely....

Some very very basic misunderstandings on display here...

To match the Solo deal would require the HHDL valuation to be left at £30m. If payment was in shares, terms parity ie 10 day VWAP from the date the deal was agreed would determine the number (& therefore cost basis) of UKOG shares employed.

The post suggesting that trading DOR's share in HHDL for UKOG equity would increase DOR's economic exposure is nonsense.

Why not....?

It's not the fact of issuance that matters, but the extent of any discount.

Could someone please remind us what DOR's holding in HHDL is please?

will1734 - could you use the reply button when responding to posts rather than creating a new thread every time? It makes the board so much easier to read.

People who tell you they traded top tick to bottom tick (or vice versa) are nearly always fantasists...

seadoc - I think this board is closer to Jeremy Kyle than it is to Countdown. I started visiting because there were more posters like yourself, Penguins and JayKay, and fewer like ... ... well, you know. I try to use my professional knowledge and experience to contribute constructively in the hope that it will encourage others - perhaps particularly the oilmen who have knowledge that I don’t - to do the same. At times it can be heavy going. I also recognise that there are so many inexperienced investors here, many of whom are (frankly) just being taken for a ride, so occasionally post somewhat educational explanations. Clearly so many who shouldnt be within a country mile of a volatile AIM oiler. It worries me when I read posts from those who are taking lifestyle risk with their investments here, without anywhere near enough understanding. As a result I object to the cynical rampers with their 1500 foot columns of Rolexes etc. The derampers are just as bad, but are the subject of intensive community policing as their views provoke cognitive dissonance in the dreamers...

darko - that is such a fundamental misunderstanding of how the world works! I would be open to the idea that there might be some sort of tax rate differential or similar, but to suggest that there is a different selling price for an open-market traded commodity because of the regulatory status of its producer makes no sense whatsoever.

Once again: Who is being allowed to buy the HHDL oil at a price “below market rate”? Why are they being handed the immediate premium from its onward sale..?