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You would be one of the right people to identify "a coordinated attempt to manipulate the share price" argus1....

To complete the analysis started in JBG’s post:

UKOG has placed an additional 328m of shares at an average of 1.88p, in part payment for an additional 22% of HHDL. Relative to the current mid-price of 1.925p, the dilution impact is 328m * 0.045p or £147,600, or 0.0028p per share. If you owned 1m shares prior to the placing, the dilution impact you have suffered is £28.

Yes you can, but if you could do so by hitting reply in the relevant thread (instead of starting a random new thread) it would make this board so much easier to read...

Scandic - the placing funded the acquisition of the HHDL stakes from the minority shareholders. Nothing unusual about this. The transactions were based on a £30m implied valuation for HHDL. WIthin the next year or two we’ll know whether that was a good deal for UKOG, or a good deal for the sellers.

I can’t answer with authority on what they will do next.

That’s nonsense Scandic. Placings are a fact of life for capital intensive resource companies. How else will the company pay for cranes, drills, BOP’s pumps and the crews to operate them? The important questions are the level of discounts given and the use of the funds acquired. If good ie ultimately productive assets are acquired using the funding from low discount placings, that is to the advantage of all shareholders. UKOG has mixed history on this - I think that the YA deal was negotiated in a panic and was ultimately to our detriment, but the recent placings look to have been executed more effectively. We’ll see how productive the assets acquired are.

*”...328m new shares at a discount;” Sorry.

Of course it’s a placing.

Gun, Prim and Solo agreed to the sale of their HHDL holdings to UKOG in return for consideration shares (a meaningless phrase, they are just ordinary shares) issued at discount by UKOG.

In principle they could have remitted cash to UKOG for the placed shares, and then received back from UKOG exactly the same amount as consideration for their shares in HHDL. But transferring the same amount of cash back and forth was rightly deemed unnecessary. The outcome is the same: Gun, Prim and Solo no longer have holdings in HHDL, UKOG has issued 243m new shares at a discount; these shares are held by Gun, Prim and Solo.

dhc - as I have said before, your posts frequently reveal your lack of knowledge and experience in corporate finance. Greater awareness of the perimeters of your understanding would help you avoid exposing yourself in this way,

Definitely sloppy drafting Penguins. It contains an ambiguity. Look at the difference between these two posssible “clarifications”:

Original: 'HHDL's internal declaration of Portland commerciality is therefore expected shortly following receipt of Xodus' final connected oil volume analysis.'

Possibility 1: 'HHDL's internal declaration of Portland commerciality is therefore expected shortly, following receipt of Xodus' final connected oil volume analysis.'

Possibility 2: 'HHDL's internal declaration of Portland commerciality is therefore expected after receipt of Xodus' final connected oil volume analysis.'

Perhaps posters here have subconsciously chosen 1 as it reflects their preference for quick news...?

If the company meant 2, then it is possible that the Xodus analysis might not be completed before the end of the testing period.

I think that tankers are somewhat irrelevant now. We should expect to see some, as they are testing a well which has already produced oil. I guess if there are no tanker sightings that will be a -ve, but tanker sightings alone won’t be the catalyst for a sustained rise in SP.

Eye on the ball when you strike it dhc, not the net.

Although your misunderstanding (misdirection?) is entirely in character...

Penguins - is your question whether Xodus are preparing a “full CPR” or just a “..connected volume analysis”? Or is it whether any such CPR will be released?

The answer depends on how easy it is to get the billion barrels out..!

The eagerly anticipated Kim results and Xodus CPR should provide some evidence to help assess this.

I’ve read this three times, and still have no idea what you are asking jptop.

Do you mean “oil price” not share price in your first line? What do you mean by “the asset”..? What do you mean by “unit”..?

YL - as part of the sale & purchase agreement, it would be normal for UKOG to have been required to warrant that they have not withheld information (on results etc) from the sellers. They may have a different interpretation of the results (I suspect this is the case) but the agreement will require that factual information is not withheld. If that subsequently turns out not to have been true, the sellers will have a potential action for their lost gains.

The most hopeful interpretation I have is that the sellers were struggling to finance cash calls for the funding of HHDL, and that selling their stakes offered a face-saving way out. They can own UKOG shares without having to stump up for further activities at the well site(s). Let’s hope that this is the case, and that the price was negotiated effectively against this background.

Not a ramper(!) but I am going to point out that your assertion regarding shares going to institutions is perhaps misleading. Whilst UKOG would have you believe that the placings were made to “investing institutions” I think we all know that those shares were pretty quickly sold (to PI’s....) in the market, and that there are no material institutional holders on the register today.

It is also misleading to attempt to measure dilution by referencing only the number of shares in issue. If there are 6.5x as many shares, holders have not necessarily been diluted 6.5x over as cash and other assets (HHDL stakes) have been received in exchange for the shares issued. What matters is the discounts allowed on issue, specifically the cumulative effect of these.

I do agree that material dilution has taken place here, but that is normal for capital intensive resource companies on AIM. If there had been no shares issued (which tend to require discounts) then how would all of the activity at the sites be being funded? Rigs, cranes, BOP’s, pumps etc and the crews to man them cost money. That money has come from the placings.

It is pointless to criticise the incidence of placings - they are a fact of life for companies of this nature. Investors should look at how well capital raising was conducted (by examining discounts etc) and at how the funds raised were deployed. I don’t think that UKOG has covered itself in glory - the YA deal being perhaps the worst - but it is still in the game and has the possibility of generating substantial value should the wells be capable of full commercialisation.

Not a ramper(!) but I am going to point out that your assertion regarding shares going to institutions is perhaps misleading. Whilst UKOG would have you believe that the placings were made to “investing institutions” I think we all know that those shares were pretty quickly sold (to PI’s....) in the market, and that there are no material institutional holders on the register today.

It is also misleading to measure dilution by referencing only the number of shares in issue. If there are 6.5x as many shares, holders have not necessarily been diluted 6.5x over as cash and other assets (HHDL stakes) have been received in exchange for the shares issued. What matters is the discounts allowed on issue, specifically the cumulative effect of these.

I do agree that material dilution has taken place here, but that is normal for capital intensive resource companies on AIM. If there had been no shares issued (which tend to require discounts) then how would all of the activity at the sites be being funded? Rigs, cranes, BOP’s, pumps etc and the crews to man them cost money. That money has come from the placings.

It is pointless to criticise the incidence of placings - they are a fact of life for companies of this nature. Investors should look at how well capital raising was conducted (by examining discounts etc) and at how the funds raised were deployed. I don’t think that UKOG has covered itself in glory - the YA deal being perhaps the worst - but it is still in the game and has the possibility of generating substantial value should the wells be capable of full commercialisation.

Just suppose for a minute that the Kimmeridge layers flow freely from a huge connected reservoir. Great news for holders of UKOG, because its stake in HHDL will be worth substantially more.

What would this mean for shareholders of SOLO though? And how might this differ from the outcome if they hadn’t sold their stake?

This is perhaps best examined through an illustration. Excuse the few roundings - they are not material.

SOLO sold 15% of HHDL for £4.5m receiving 234m UKOG shares at 1.9p.

If the value of HHDL increases by £100m then UKOG’s shareholders will benefit by £72m, moving UKOG’s Mcap to approx £180m and the SP to about 3.2p. SOLO’s gain on this will be (3.2p - 1.9p) x 234m = £3m

If they’d held onto their 15% stake, SOLO’s gain would have been £15m.

Whilst it is true to observe that the sellers of the HHDL stakes can maintain some exposure to HHDL by holding UKOG, it is important to recognise that their exposure is greatly reduced relative to when their HHDL stakes were held directly.

If HHDL is a roaring success, the sellers at £30m will have to explain to their shareholders why they sold at too low a price! If HHDL is a failure, then those who sold will have limited their downside and will - no doubt - by thanked by their grateful shareholders...

Any chance that you could use “reply” rather than starting a new thread?

Surely you must realise you are doing something wrong when you have to put a posters name in the subject box..? It’s like watching someone try to use a screwdriver to drive a nail....

YorkshireLife - the problem is that it is easy to ask your question the other way, from the perspective of the sellers.

Can anyone explain why Gunsynd, Primorus and Solo would sell their stakes “unless” they had a very sound reason to expect disappointing results here?

To suggest that they preferred to hold exposure to HHDL via UKOG rather than directly is nonsensical. If the value of HHDL is going to fly on the back of EWT results, then why not just hold and sell after the uplift has happened? The truth is that the sellers thought the £30m valuation of HHDL implied by the price they took represented a good deal. Those sellers will have had access to the same information as UKOG.

Your constant posting of every “buy” you see and every tick up of the share price is just pointless spam.