Research7 Jan 2023 11:30
Hi all,
I bought and have read all recent JOG analyst research. I thought it would be helpful to share some key snippets for those that are interested/not already aware. I am not allowed to copy and paste the notes themselves. Needless to say, there is some serious upside here on a farmout.
Arden - 21 Nov - Update on Govt windfall tax announcement:
'We expect the effect of these changes to be limited, for JOG'
'Extension of the tax to 2028 will allow all CAPEX on initial Buchan element of GBA project to qualify for the 91 pence in the pound tax relief'
'Farming into JOG's GBA project remains an attractive source of tax relief for existing producers, alongside the underlying value of the project itself'
'The tax changes represent additional fiscal instability for UK oil and gas, though this is already well established and anticipated by operators, in our view'
'Overall, we do not currently expect these changes to have any major new impact of JOG's ongoing farm out process'
'Our modelling implies that the value of a typical UK North Sea development to an existing UK producer could increase by as much as 52% overall under the new tax structure, through bringing tax relief forward and using it against existing company production'
'Our revised target share price is 700p , with a total risk NAV of 856p'
Arden - 29 Nov - Verbier licence extension update
'JOG shares have seen weakness in recent weeks on the higher UK windfall tax and lower oil price. We see this as unjustified, with the tax continuing to create a strong incentive for existing UK producers to invest in new projects, including JOG's'
'The cash holding and zero debt creates a strong funding position for farm out process'
'The market is yet to fully appreciate JOG's current asset position'
'Alongside the farm out process updates, there is also the potential for new production acquisitions as assets continue to change hands in the North Sea. This provides plenty of potential for news flow in the coming months'
finnCap - 29 November - Update
'Our risked NAV and price target is raised 15% to 660p per share'
'the attractive investment allowance is a key attraction for partners in the GBA development'
WH Ireland - 29 November update
'We reiterate our 720p fair value estimate for the company (which assumes 20% of the success-case value of the GBA project)'
'We would not be surprised if the GBA is the first major project of its kind to secure development funding via farmout. It is substantially de-risked and of significant scale, essentially the perfect asset to develop as the acute energy crisis escalates'
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