Thursday, April 30, 2015
LGO UPDATE
LGO today announced that Well GY672, the first well in its 2015 drilling programme of 7 wells has reached TD at 3,608 feet. Total oil net pay encountered was estimated at 496 feet, comprising of 336 feet in the Gourdron Sandstone at 1,100 - 1,700 feet, and 160 feet in the deeper C-Sands at 2,460 feet.
Drilling at GY672 was done 10 days earlier than the previous wells, which showed improved efficiency.Drilling of Well GY673 will begin imminently.
Total production has fallen to 1,550 bopd compared to the earlier estimated 2,000 bopd.
However, with a 12 well recompletion in place, production is expected to touch 2,000 bopd.
The first recompeltion well is done, pending further clean up.
With 7 new wells, I believe LGO's production could grow by 50% (conservative) to 100% (optimistic).
The share price dropped early this morning as investors exited when news of the drop in production came in. I am not perturbed due to the following reasons:
1) Many of LGO wells have been choked back to reduce production in view of the unattractive oil price. There was a well which had an open flow rate of 6,000 bopd which was choked back to 1,000 bopd. Another had a completion of only 30 feet whereas the net pay was 248 feet in the C-Sands.
I believe LGO purposely choked back the production because of the oil price while also avoiding a mandatory payment of $2 million to the previous vendor whom LGO bought the field from in the event production exceeds 2,000 bopd.
2) LGO just ordered a LACT meter to measure continuous flow of oil to Petrotrin, and a new 5,000 barrels storage tank, increasing the storage capacity to 7,750 barrels on site. Petrotrin had also built a larger pipe linking the Goudron Field to its refinery. Now, would all these have taken place if LGO had no intention to uplift its production?
3) With the additional drilling information being included in the CPR to revalue LGO's Goudron Field, one thing is certain. The Field is getting bigger and the oil asset larger. An increase in oil price too will help in boosting the reserves value. This will likely happen in June, which is just less than 2 months away.
My disclosure: I am long LGO
Drilling at GY672 was done 10 days earlier than the previous wells, which showed improved efficiency.Drilling of Well GY673 will begin imminently.
Total production has fallen to 1,550 bopd compared to the earlier estimated 2,000 bopd.
However, with a 12 well recompletion in place, production is expected to touch 2,000 bopd.
The first recompeltion well is done, pending further clean up.
With 7 new wells, I believe LGO's production could grow by 50% (conservative) to 100% (optimistic).
The share price dropped early this morning as investors exited when news of the drop in production came in. I am not perturbed due to the following reasons:
1) Many of LGO wells have been choked back to reduce production in view of the unattractive oil price. There was a well which had an open flow rate of 6,000 bopd which was choked back to 1,000 bopd. Another had a completion of only 30 feet whereas the net pay was 248 feet in the C-Sands.
I believe LGO purposely choked back the production because of the oil price while also avoiding a mandatory payment of $2 million to the previous vendor whom LGO bought the field from in the event production exceeds 2,000 bopd.
2) LGO just ordered a LACT meter to measure continuous flow of oil to Petrotrin, and a new 5,000 barrels storage tank, increasing the storage capacity to 7,750 barrels on site. Petrotrin had also built a larger pipe linking the Goudron Field to its refinery. Now, would all these have taken place if LGO had no intention to uplift its production?
3) With the additional drilling information being included in the CPR to revalue LGO's Goudron Field, one thing is certain. The Field is getting bigger and the oil asset larger. An increase in oil price too will help in boosting the reserves value. This will likely happen in June, which is just less than 2 months away.
My disclosure: I am long LGO
Wednesday, April 29, 2015
WHERE IS OIL HEADING?
Couple of months ago, I read with interest that Goldman Sachs and Citibank were calling for oil to drop to US$20 per barrel. At that time, oil was trading at US$44 - US$45 per barrel.
Did it happen? No.
Similarly, just before the Global Financial Crisis, Goldman Sachs was calling for oil to reach US$200 per barrel.
Did it happen? No.
If everyone can accurately predict the price of oil and other commodities, then none would require any bailing out by the US Government when the crisis struck.
With oil touching more than US$58 per barrel, we continue to have bearish call that oil will soon drop to US$20 - US$30 because there are more than a thousand wells in the US which can be put on line within weeks.
Should we fear that oil will fall off the cliff to US$20 - US$30 per barrel? In my opinion, that is unlikely to happen and here are my reasons:
1) When oil started falling many of the US producers said that they were shutting down unprofitable wells to move to profitable ones. The unprofitable wells are mainly due to their geological structure or geographical location. So when oil was at the US$40s range they shut off the unprofitable wells. What makes you think that they might even consider producing from the unprofitable wells when oil is at US$20 - US$30.
In all likelihood, oil will not reach US$70 or US$80 in the medium term. I anticipate that as soon as oil touches US$60 - US$65 per barrel then producers will increase their production and oil would fall back to the US$50+ per barrel.
2) Fear that Iran will expand its production and add to the global supply. I think the Mideast will remain very volatile. The crisis in Yemen could provide a support for oil. I also believe the negotiations with Iran will drag on.
3) Shale oil producers are running out of cash. Few ever operate with a profit. Even if you have a low debt to EBITA, without profit how are you ever going to pay off the debt? In recent months several producers have run out of options. There were thousands of layoffs, and many have stopped paying a dividend. Some have opted for bankruptcy protection, the others, sold shares at a heavily discounted price. This is a sign of an industry in distress. So by the end of the year, few producers will survive this crisis.
4) Shale oil wells deplete at a much faster rate than conventional wells. So unless there is additional drilling or discovery of new oil, production will drop off at some point. With less options on financing, and a heavy debt burden. I doubt that many producers could afford to replenish the fall in production.
So in the medium term I think oil will remain in the US$55 - US$65 range.
But with many cutbacks in explorations, we could see a major oil spike in the next 2 -3 years. Despite what many said that renewable energy will become cheaper and cars become more energy efficient, oil is not just all about energy and cars. Oil is used for an increasing number of consumer goods, and as long as the population expands, there will be demand for oil.
As a mature economy looks at renewables and energy efficiency, another growing economy steps in, and consume more oil than they ever did before.
Did it happen? No.
Similarly, just before the Global Financial Crisis, Goldman Sachs was calling for oil to reach US$200 per barrel.
Did it happen? No.
If everyone can accurately predict the price of oil and other commodities, then none would require any bailing out by the US Government when the crisis struck.
With oil touching more than US$58 per barrel, we continue to have bearish call that oil will soon drop to US$20 - US$30 because there are more than a thousand wells in the US which can be put on line within weeks.
Should we fear that oil will fall off the cliff to US$20 - US$30 per barrel? In my opinion, that is unlikely to happen and here are my reasons:
1) When oil started falling many of the US producers said that they were shutting down unprofitable wells to move to profitable ones. The unprofitable wells are mainly due to their geological structure or geographical location. So when oil was at the US$40s range they shut off the unprofitable wells. What makes you think that they might even consider producing from the unprofitable wells when oil is at US$20 - US$30.
In all likelihood, oil will not reach US$70 or US$80 in the medium term. I anticipate that as soon as oil touches US$60 - US$65 per barrel then producers will increase their production and oil would fall back to the US$50+ per barrel.
2) Fear that Iran will expand its production and add to the global supply. I think the Mideast will remain very volatile. The crisis in Yemen could provide a support for oil. I also believe the negotiations with Iran will drag on.
3) Shale oil producers are running out of cash. Few ever operate with a profit. Even if you have a low debt to EBITA, without profit how are you ever going to pay off the debt? In recent months several producers have run out of options. There were thousands of layoffs, and many have stopped paying a dividend. Some have opted for bankruptcy protection, the others, sold shares at a heavily discounted price. This is a sign of an industry in distress. So by the end of the year, few producers will survive this crisis.
4) Shale oil wells deplete at a much faster rate than conventional wells. So unless there is additional drilling or discovery of new oil, production will drop off at some point. With less options on financing, and a heavy debt burden. I doubt that many producers could afford to replenish the fall in production.
So in the medium term I think oil will remain in the US$55 - US$65 range.
But with many cutbacks in explorations, we could see a major oil spike in the next 2 -3 years. Despite what many said that renewable energy will become cheaper and cars become more energy efficient, oil is not just all about energy and cars. Oil is used for an increasing number of consumer goods, and as long as the population expands, there will be demand for oil.
As a mature economy looks at renewables and energy efficiency, another growing economy steps in, and consume more oil than they ever did before.
Monday, April 27, 2015
UKOG LICENCES: PEDL137 AND PEDL 246
Following some irresponsible writing by the press on the expiry of licence on Horse Hill due on 30 September, 2015, UKOG today confirmed that the expiry dates for the above mentioned licences are as following:
PEDL 137 - Expiring on 30 September, 2015
PEDL 246 - Expiring on 30 June, 2019
UKOG further reaffirmed that the Horse Hill Consortium (which UKOG owns about 20% interest) has applied to the Oil & Gas Authority (OGA) for a one year extension of exploration for PEDL 137. The consortium intends to conduct a flow test late rin 2015 and that it has already submitted applications to the authorities for their consent. Planning approval for the flow test is already in place.
Subject to the results of the flow test being successful, the consortium would seek, in conjunction with the OGA and other regulators, to move PEDL 137Licence to the Production period, via submission of a Field development Plan to OGA.
The above shows the importance of doing your own research. Poor research can only lead to you falling prey to unfounded fear.
PEDL 137 - Expiring on 30 September, 2015
PEDL 246 - Expiring on 30 June, 2019
UKOG further reaffirmed that the Horse Hill Consortium (which UKOG owns about 20% interest) has applied to the Oil & Gas Authority (OGA) for a one year extension of exploration for PEDL 137. The consortium intends to conduct a flow test late rin 2015 and that it has already submitted applications to the authorities for their consent. Planning approval for the flow test is already in place.
Subject to the results of the flow test being successful, the consortium would seek, in conjunction with the OGA and other regulators, to move PEDL 137Licence to the Production period, via submission of a Field development Plan to OGA.
The above shows the importance of doing your own research. Poor research can only lead to you falling prey to unfounded fear.
Friday, April 24, 2015
WHY SINGAPORE AND HONG KONG ARE MY TOP PICKS FOR DIVIDEND STOCKS
For those who are new to investing in the Singapore and Hong Kong stock markets, there is no withholding tax on any dividends earned by non-residents.
Now compare this with following countries and their tax on dividends:
The US and Australia have a 30% withholding tax for non-residents.
The UK and Malaysia have a 10% withholding tax for non-residents.
So Singapore and Hong Kong remain my top choices for dividend stocks. The yields there can be attractive, ranging from 6% - 9%.
Now compare this with following countries and their tax on dividends:
The US and Australia have a 30% withholding tax for non-residents.
The UK and Malaysia have a 10% withholding tax for non-residents.
So Singapore and Hong Kong remain my top choices for dividend stocks. The yields there can be attractive, ranging from 6% - 9%.
Thursday, April 23, 2015
IMPACT OF CURRENT OIL PRICE ON LGO AND UKOG
Oil is up. Current price is US$57.60 for WTI and US$64.70 for Brent.
What is the significance of this?
LGO's income is derived from selling WTI crude. At US$57.60, LGO's net income will be:
US$57.60 - US$22.00 (all in cost) = US$35.60 gross profit before royalty payment which is 50%.
US$35.60 x 50% = US$17.80 net profit per barrel.
US$17.80 x 2,000 (bopd) = US$35,600 net profit per day.
One year net profit = US$35,600 x 365 days = US12.994 million
Any increase in the price of WTI crude will ass LGO's net profit further.
UKOG's revenue is derived from selling Brent crude. Although its revenue is small based on the percentage of interest in several operators, UKOG's valuation of its oil assets in the Horse Hill and Isles of Wight is based on the price of Brent.
So the higher Brent moves up, the higher will be the value of UKOG's oil assets.
My disclosure: I am long in both LGO and UKOG.
What is the significance of this?
LGO's income is derived from selling WTI crude. At US$57.60, LGO's net income will be:
US$57.60 - US$22.00 (all in cost) = US$35.60 gross profit before royalty payment which is 50%.
US$35.60 x 50% = US$17.80 net profit per barrel.
US$17.80 x 2,000 (bopd) = US$35,600 net profit per day.
One year net profit = US$35,600 x 365 days = US12.994 million
Any increase in the price of WTI crude will ass LGO's net profit further.
UKOG's revenue is derived from selling Brent crude. Although its revenue is small based on the percentage of interest in several operators, UKOG's valuation of its oil assets in the Horse Hill and Isles of Wight is based on the price of Brent.
So the higher Brent moves up, the higher will be the value of UKOG's oil assets.
My disclosure: I am long in both LGO and UKOG.
WHY THE CEDROS PENINSULA IS SUCH A BIG DEAL TO LGO
If you look at the picture below, the Cedros Peninsula lies smack in the middle of the Venezuela Basin, site of one of the world's largest petroleum deposits. The Cedros Peninsula is located in the South West of Trinidad Island, which is the elongated tip of land seen on the map
LGO has more than 10,000 acres of land in Cedros Peninsula and drilling is expected to start in 2016. This is the 800 lb gorilla in the room and likely to be the catalyst which will make LGO a major player in the Trinidad.
LGO has more than 10,000 acres of land in Cedros Peninsula and drilling is expected to start in 2016. This is the 800 lb gorilla in the room and likely to be the catalyst which will make LGO a major player in the Trinidad.
REM (RARE EARTH MINERALS PLC)
Today, I am initiating a coverage on REM, a UK AIM listed company with interest in the following mines:
El Sauz - Fleur, estimated to be able to produce 69,000 tonnes per annum (tpa) of battery grade LCE (Lithium Carbonate Equivalent) with a Net Present Value (NPV) of US$2,023 million
La Ventana, estimated to be able to produce 35,000 tpa of LCE with a NPV of US$848 million
Both mines have a 20 year mine life and REM holds a 40.1% in El Sauz- Fleur and 14.4% in La Ventana.
Yangibana, Australia, estimated to contain Rare Earth Element (REE) deposit of 5.56 million tonnes of Total Rare Earth Oxides (TREO) with a NPV of US$950 million of which REM has a 30.0% interest.
Kings Valley, Nevada, estimated to contain 0.49 million tonnes of LCE with an NPV of US$552 million of which REM holds a 3.0% interest.
Greenland with Exploration licenses surrounding Kvanefjeld deposit which REM has a 100% interest.
No production has started yet. So when the time comes for production to start there could be some dilution or heavy borrowing. This is the risky part of the investment. Also because this is in the UK AIM expect some wild fluctuations too.
The share has been trading in the 1.00 - 1.20 pence in the last 2 weeks. It has a 52 week low of 0.40 pence and a high of 2.07 pence.
Why I think REM is a BUY:
. EL Sauz - Fleur and La Ventana are in Mexico and across the border in the US is the proposed Tesla gigafactory and Ford assembly plant. We all know that the trend is moving towards electric cars.
. Tesla just announced that their new product will be Lithium batteries to power homes.
. The price of Lithium is expected to increase from US$6,000 per tonne to US$8,000 per tonne in the near future.
. Standard Life has more than 4.6% stake in REM.
My disclosure: I do not own any REM shares currently, but will consider to invest in the next few months.
Still always do your own research as our risk appetite often differs.
El Sauz - Fleur, estimated to be able to produce 69,000 tonnes per annum (tpa) of battery grade LCE (Lithium Carbonate Equivalent) with a Net Present Value (NPV) of US$2,023 million
La Ventana, estimated to be able to produce 35,000 tpa of LCE with a NPV of US$848 million
Both mines have a 20 year mine life and REM holds a 40.1% in El Sauz- Fleur and 14.4% in La Ventana.
Yangibana, Australia, estimated to contain Rare Earth Element (REE) deposit of 5.56 million tonnes of Total Rare Earth Oxides (TREO) with a NPV of US$950 million of which REM has a 30.0% interest.
Kings Valley, Nevada, estimated to contain 0.49 million tonnes of LCE with an NPV of US$552 million of which REM holds a 3.0% interest.
Greenland with Exploration licenses surrounding Kvanefjeld deposit which REM has a 100% interest.
No production has started yet. So when the time comes for production to start there could be some dilution or heavy borrowing. This is the risky part of the investment. Also because this is in the UK AIM expect some wild fluctuations too.
The share has been trading in the 1.00 - 1.20 pence in the last 2 weeks. It has a 52 week low of 0.40 pence and a high of 2.07 pence.
Why I think REM is a BUY:
. EL Sauz - Fleur and La Ventana are in Mexico and across the border in the US is the proposed Tesla gigafactory and Ford assembly plant. We all know that the trend is moving towards electric cars.
. Tesla just announced that their new product will be Lithium batteries to power homes.
. The price of Lithium is expected to increase from US$6,000 per tonne to US$8,000 per tonne in the near future.
. Standard Life has more than 4.6% stake in REM.
My disclosure: I do not own any REM shares currently, but will consider to invest in the next few months.
Still always do your own research as our risk appetite often differs.
Monday, April 20, 2015
UKOG - THE TOUGH DECISION AHEAD
On 6 September, 2014 I recommended my readers to BUY UKOG, then at 1.19 pence. Since then, the stock has been on a wild roller coaster ride, dropping below 0.40 pence then swinging to 4.75 pence to touch a new historic high on 9 April, 2015, and then dropping to 1.57 pence on 17 April, 2015.
I have stressed many times that the UK AIM is subject to high risks as well as rewards. I do hope many did sell into profit above 4.0 pence which would translate to a gain of a few hundred percentage points if you have bought below 1.0 pence.
But why the drop from 4.75 pence to 1.57 pence in a matter of days? Well, I personally think the media overplayed the discovery. UKOG mentioned that the consortium at Horse Hill (which UKOG has a 20% share) discovered potential oil in place of 158 million barrels per sq mile, based on the analysis of electric logs by NUTECH, which is a leader in petrol analysis in the US. The Horse Hill consortium owns 55 sq miles of the prospect. So this works out to a total potential oil in place of 8.7 billion barrels.
The prospect lies in Weald Basin, a widely known area in the UK with ongoing production in several fields. However, the Weald area is 1,100 sq miles and UKOG said that the potential for the entire Weald area could be as much as 50 - 100 billion barrels of oil. This was when the media misinterpreted the information and said that UKOG discovered 100 billion barrels of potential oil in place. And what follows next, were a lot of skepticism by short traders, geologists and journalists who claimed that it was not possible for UKOG to discover so much oil within a prospect and with only ONE well. They even wrote several pieces on the information being unreliable and that the Chairman, David Lenigas has been widely known to ramp up his own companies' shares. Several short traders too wrote damaging articles and said that UKOG was over stating its find.
UKOG later issued another RNS to clarify that they did not say they discovered 100 billion barrels of potential oil in place but merely 8.7 billion barrels. What follows next was another barrage of criticism being leveled at UKOG and David Lenigas, stating that the authorities demanded that UKOG retracted its statement. And the share price tanked further.
In my view the media had gotten many of the facts wrong:
. UKOG did not mention they discovered 100 billion barrels, merely 8.7 billion barrels as reported in its RNS
. The discovery of the 8.7 billion barrels was supported by detailed analysis by NUTECH, a leader in its field. The Bakken oil field was discovered by NUTECH, and you should probably know by now that the Bakken is one of the most prolific producers in US.
. The analysis by NUTECH is not done with reference to only one well, but by extrapolating with more than 113 wells which NUTECH has anlaysed in the Weald Basin. This was completely left out by the media.
. The authorities did not reprimand UKOG. UKOG released the clarification upon the advise of their lawyers. But again the media twisted the facts.
So it is important that one separates the facts from lies or half truths.
Having said that, I must disclose that I am long in UKOG. No, I did not sell into the rise, but for anyone who did, and made a good profit, well done. For those who did, they did nothing wrong. A bird in hand is still worth more than two in the bush.
My reason for not selling:
. NUTECH is still in the process of analysing the Portland Sandstone structure at Horse Hill and the Kimmeridge Clay structure at the Isles of Wight. UKOG has a 77.5% interest on the PEDL (Petroleum Exploration and Development Licence) at the Isles of Wight. These news are still pending and could increase the amount of potential oil in place, benefiting UKOG further
. Besides Horse Hill and the Isles of Wight, UKOG also holds interests in several oil producing companies. UKOG does earn a revenue.
. NUTECH estimated that the 8.7 billion barrels have a recovery factor of 3% - 15%. Supposing we adopt the lowest at 3%, the amount will be
8.7 billion x 3% x 20% (UKOG share in Horse Hill) = 52.2 million barrels.
Using the minimum of 1 Pound per barrel of potential oil in place, this is equivalent to having 52.2 million Pounds.
Dividing that with the current market cap of 30 million Pounds, that is equivalent to a price of at least 3.20 pence.
The 3.20 pence does not even include the following:
.The potential of the Isles of Wight which NUTECH estimated contain 40 million barrels in the Portland Limestone, and 76.5 million barrels in the Triassic Sherwood Sandstone. On top of that, the Triassic Sherwood Sandstone is estimated to contain 197 billion standard cubic feet of gas (bcf).
. The Kimmeridge Clay structure at the Isles of Wight which NUTECH is presently analysing.
. The estimate of the Portland Sandstone, Oxford and Lias structures at Horse Hill which NUTECH is also presently assessing.
. All other interests in companies which are currently producing.
Now, some have opined that the value of potential oil in place in the ground could be anywhere between 5 - 7 Dollars or 3 - 4 Pounds per barrel. Now multiply that by 3.20 pence. Remember, we assume that only 3% of the amount is recoverable. What if it is 9% or 15%? If UKGO can prove commercial success in extracting the oil then it will worth a lot more - A LOT MORE.
That is why I am holding. But neither am I encouraging you to hold as well. Our risk appetite differs so you have to evaluate the potential yourself. The worst case is that UKOG fails to prove that the oil can be extracted commercially, then the share price will tank. The tough decision is that whether you can afford to lose more than 1.0 pence per share (based on 1.57 pence close on 17 April, 2015) vs the gain of many multiples. That is why I always tell my readers, never invest in anything you can't afford to lose.
I have stressed many times that the UK AIM is subject to high risks as well as rewards. I do hope many did sell into profit above 4.0 pence which would translate to a gain of a few hundred percentage points if you have bought below 1.0 pence.
But why the drop from 4.75 pence to 1.57 pence in a matter of days? Well, I personally think the media overplayed the discovery. UKOG mentioned that the consortium at Horse Hill (which UKOG has a 20% share) discovered potential oil in place of 158 million barrels per sq mile, based on the analysis of electric logs by NUTECH, which is a leader in petrol analysis in the US. The Horse Hill consortium owns 55 sq miles of the prospect. So this works out to a total potential oil in place of 8.7 billion barrels.
The prospect lies in Weald Basin, a widely known area in the UK with ongoing production in several fields. However, the Weald area is 1,100 sq miles and UKOG said that the potential for the entire Weald area could be as much as 50 - 100 billion barrels of oil. This was when the media misinterpreted the information and said that UKOG discovered 100 billion barrels of potential oil in place. And what follows next, were a lot of skepticism by short traders, geologists and journalists who claimed that it was not possible for UKOG to discover so much oil within a prospect and with only ONE well. They even wrote several pieces on the information being unreliable and that the Chairman, David Lenigas has been widely known to ramp up his own companies' shares. Several short traders too wrote damaging articles and said that UKOG was over stating its find.
UKOG later issued another RNS to clarify that they did not say they discovered 100 billion barrels of potential oil in place but merely 8.7 billion barrels. What follows next was another barrage of criticism being leveled at UKOG and David Lenigas, stating that the authorities demanded that UKOG retracted its statement. And the share price tanked further.
In my view the media had gotten many of the facts wrong:
. UKOG did not mention they discovered 100 billion barrels, merely 8.7 billion barrels as reported in its RNS
. The discovery of the 8.7 billion barrels was supported by detailed analysis by NUTECH, a leader in its field. The Bakken oil field was discovered by NUTECH, and you should probably know by now that the Bakken is one of the most prolific producers in US.
. The analysis by NUTECH is not done with reference to only one well, but by extrapolating with more than 113 wells which NUTECH has anlaysed in the Weald Basin. This was completely left out by the media.
. The authorities did not reprimand UKOG. UKOG released the clarification upon the advise of their lawyers. But again the media twisted the facts.
So it is important that one separates the facts from lies or half truths.
Having said that, I must disclose that I am long in UKOG. No, I did not sell into the rise, but for anyone who did, and made a good profit, well done. For those who did, they did nothing wrong. A bird in hand is still worth more than two in the bush.
My reason for not selling:
. NUTECH is still in the process of analysing the Portland Sandstone structure at Horse Hill and the Kimmeridge Clay structure at the Isles of Wight. UKOG has a 77.5% interest on the PEDL (Petroleum Exploration and Development Licence) at the Isles of Wight. These news are still pending and could increase the amount of potential oil in place, benefiting UKOG further
. Besides Horse Hill and the Isles of Wight, UKOG also holds interests in several oil producing companies. UKOG does earn a revenue.
. NUTECH estimated that the 8.7 billion barrels have a recovery factor of 3% - 15%. Supposing we adopt the lowest at 3%, the amount will be
8.7 billion x 3% x 20% (UKOG share in Horse Hill) = 52.2 million barrels.
Using the minimum of 1 Pound per barrel of potential oil in place, this is equivalent to having 52.2 million Pounds.
Dividing that with the current market cap of 30 million Pounds, that is equivalent to a price of at least 3.20 pence.
The 3.20 pence does not even include the following:
.The potential of the Isles of Wight which NUTECH estimated contain 40 million barrels in the Portland Limestone, and 76.5 million barrels in the Triassic Sherwood Sandstone. On top of that, the Triassic Sherwood Sandstone is estimated to contain 197 billion standard cubic feet of gas (bcf).
. The Kimmeridge Clay structure at the Isles of Wight which NUTECH is presently analysing.
. The estimate of the Portland Sandstone, Oxford and Lias structures at Horse Hill which NUTECH is also presently assessing.
. All other interests in companies which are currently producing.
Now, some have opined that the value of potential oil in place in the ground could be anywhere between 5 - 7 Dollars or 3 - 4 Pounds per barrel. Now multiply that by 3.20 pence. Remember, we assume that only 3% of the amount is recoverable. What if it is 9% or 15%? If UKGO can prove commercial success in extracting the oil then it will worth a lot more - A LOT MORE.
That is why I am holding. But neither am I encouraging you to hold as well. Our risk appetite differs so you have to evaluate the potential yourself. The worst case is that UKOG fails to prove that the oil can be extracted commercially, then the share price will tank. The tough decision is that whether you can afford to lose more than 1.0 pence per share (based on 1.57 pence close on 17 April, 2015) vs the gain of many multiples. That is why I always tell my readers, never invest in anything you can't afford to lose.
Saturday, April 18, 2015
MY DISCLOSURE
For those who are new to this blog, this blog is set up to facilitate readers in searching for articles posted in the past and provide a more systematic record of the history. My previous articles were all posted in Facebook. For a history of posting prior to 16 April, 2015, kindly refer to the Facebook link of Invest In Foreign Shares:
https://www.facebook.com/pages/Invest-In-Foreign-Shares/514018342076822?ref=hl
With reference to some of the articles posted in this blog, I would like to disclose that I am long in the following stocks:
LGO Energy (UK)
Keppel REIT (Singapore)
Keppel Infrastructure Trust (Singapore)
Hopewell Infrastructure (HK)
Readers are advised to exercise their own due diligence and assessment of risks involved before investing.
https://www.facebook.com/pages/Invest-In-Foreign-Shares/514018342076822?ref=hl
With reference to some of the articles posted in this blog, I would like to disclose that I am long in the following stocks:
LGO Energy (UK)
Keppel REIT (Singapore)
Keppel Infrastructure Trust (Singapore)
Hopewell Infrastructure (HK)
Readers are advised to exercise their own due diligence and assessment of risks involved before investing.
Friday, April 17, 2015
US RIGS COUNT FELL BY 42
Last week, the number of US oil rigs in use fell by 42 to 760, the lowest total since December 17, 2010.
Combined oil and gas rigs declined by 40 last week to 988, the lowest since August 2009.
This could provide some support for oil in the immediate term.
Read more here: http://www.businessinsider.my/baker-hughes-rig-count-april-17-2015-4/#QHOmX13rZr0kzptF.97
Combined oil and gas rigs declined by 40 last week to 988, the lowest since August 2009.
This could provide some support for oil in the immediate term.
Read more here: http://www.businessinsider.my/baker-hughes-rig-count-april-17-2015-4/#QHOmX13rZr0kzptF.97
LGO ENERGY (UK) - INVESTING FOR THE FUTURE
New drilling commencing on Pad 4 for Well GY672, GY673 and GY674. It will be a back to back drill.
Petrotrin has laid the majority of a new 4 1/2 inch pipe to ugrade existing 2 7/8 inch pipeline from Goudron Field. Now awaiting a pipeline crossing agreement between Petrotrin and the owners of the major gas pipelines lying just outside Goudron Field boundary to complete tie-in.
Substantial progress also being made with the instalaltion of the new 5,000 barrels storage tank and the LACT meter to assist in the long-term efficient operation of the field.
LGO intends to conduct approximately 12 well recompletions in existing pumped wells over the coming months. This recompletions will offer additional production capacity. This includes the perforation of 275 feet of known C-Sand reservoirs and 955 feet of existing Goudron Sandstone reservoirs.
Once the wells on Pad 4 have been drilled the rig will be moved to Pad 5 where four further wells will be drilled. preparations also being made for the drilling of up to 10 further wells from pad 6 and 7.
All the above will add to existing production for sure. This is why I maintain my BUY position.
But the future of LGO lies in the Cedros Peninsula which is smack in the middle of the rich Venezuelan Basin. LGO has more than 10,000 acres of land in the peninsula. Just off the coast of the peninsula, reserves of up 200 million barrels of oil have been discovered. This is the gorilla in the room.
Petrotrin has laid the majority of a new 4 1/2 inch pipe to ugrade existing 2 7/8 inch pipeline from Goudron Field. Now awaiting a pipeline crossing agreement between Petrotrin and the owners of the major gas pipelines lying just outside Goudron Field boundary to complete tie-in.
Substantial progress also being made with the instalaltion of the new 5,000 barrels storage tank and the LACT meter to assist in the long-term efficient operation of the field.
LGO intends to conduct approximately 12 well recompletions in existing pumped wells over the coming months. This recompletions will offer additional production capacity. This includes the perforation of 275 feet of known C-Sand reservoirs and 955 feet of existing Goudron Sandstone reservoirs.
Once the wells on Pad 4 have been drilled the rig will be moved to Pad 5 where four further wells will be drilled. preparations also being made for the drilling of up to 10 further wells from pad 6 and 7.
All the above will add to existing production for sure. This is why I maintain my BUY position.
But the future of LGO lies in the Cedros Peninsula which is smack in the middle of the rich Venezuelan Basin. LGO has more than 10,000 acres of land in the peninsula. Just off the coast of the peninsula, reserves of up 200 million barrels of oil have been discovered. This is the gorilla in the room.
HOPEWELL INFRASTRUCTURE (HKEX CODE 0737)
On December 19, 2014, I recommended a BUY if Hopewell Infrastructure falls below HKD3.80. Hopewell infrastructure did fall to HKD3.78 on 16 January, 2015.
Since then it has been trading at a range of HKD3.80 - HKD3.90.
I now have a HOLD position on that stock.
Since then it has been trading at a range of HKD3.80 - HKD3.90.
I now have a HOLD position on that stock.
NEW CREST MINING (ASX)
On 7 January, 2015, I recommended New Crest Mining (NCM) as an alternate play for commodities. The price then was AUD11.69. Today NCM is trading at AUD14.18, representing a gain of AUD2.49 or 21.3%.
TRADING CAPITARETAIL CHINA TRUST
CapitaRetail China Trust (CRCT) fell back to SD1.66 today after staying at the SD1.70 - SD1.72 region for the past few days.
Look out for a trading opportunity if it falls back to SD1.63. CRCT pays a half yearly distribution. Should you BUY at SD1.63, in the run up to the half year results where CRCT will announce a distribution, CRCT will most likely touch SD1.72 again. You could trade and earn a potential profit of 5.5% in the next 3 months.
I did a trade by buying at SD1.58 and selling at SD1.69 for a SD0.11 or a 7.0% gain.
If you know the behaviour of CRCT, you can trade profitably.
Look out for a trading opportunity if it falls back to SD1.63. CRCT pays a half yearly distribution. Should you BUY at SD1.63, in the run up to the half year results where CRCT will announce a distribution, CRCT will most likely touch SD1.72 again. You could trade and earn a potential profit of 5.5% in the next 3 months.
I did a trade by buying at SD1.58 and selling at SD1.69 for a SD0.11 or a 7.0% gain.
If you know the behaviour of CRCT, you can trade profitably.
Thursday, April 16, 2015
WHERE TO BUY INVEST IN FOREIGN SHARES!
You can buy the book at Popular Bookstore or online at:
http://www.mphonline.com/books/nsearchdetails.aspx?&pcode=9789675945342
KEPPEL REIT Q1 2015 RESULTS
On 11 December, 2014 I recommended a BUY on Keppel REIT at SD1.215. Today, it is trading at SD1.22, representing an increase of SD0.005. Including the distribution of SD0.0026 paid on 27 February, 2015, the total increase is SD0.0076 or 0.6% for a period of 5 months.
KIT just announced its Q1 2015 results.
Revenue fell by 9.4%
Profit fell by 8.4%
Current Ratio fell below 1 while Gearing Ratio was excellent.
Total distribution paid for 2014: SD0.0723, representing a yield of 6.0% of initial buying price of SD1.215. Keppel REIT pays a distribution every quarter.
As Keppel REIT is still sorting through its financials after the acquisition of Marina Bay Financial Centre, I would recommend a HOLD.
Still, always do your own research as our risk tolerance may differ.
KIT just announced its Q1 2015 results.
Revenue fell by 9.4%
Profit fell by 8.4%
Current Ratio fell below 1 while Gearing Ratio was excellent.
Total distribution paid for 2014: SD0.0723, representing a yield of 6.0% of initial buying price of SD1.215. Keppel REIT pays a distribution every quarter.
As Keppel REIT is still sorting through its financials after the acquisition of Marina Bay Financial Centre, I would recommend a HOLD.
Still, always do your own research as our risk tolerance may differ.
KEPPEL INFRASTRUCTURE TRUST - Q1 2015 RESULTS
On 11 December, 2014 I recommended a BUY on Keppel Infrastructure Trust (KIT) at SD1.07. Today, it is trading at SD1.115, representing an increase of SD0.045. Including the distribution of SD0.0469 paid on 13 February, 2015, the total increase is SD0.0919 or 8.6% for a period of 5 months.
KIT just announced its Q1 2015 results.
Revenue fell slight;y by 1.1%
Profit increased by 23.1%
Current and Gearing Ratio are excellent.
Total distribution paid for 2014: SD0.0782, representing a yield of 7.3% of initial buying price of SD1.085. KIT pays a distribution every half a year, so buying at current levels will ensure you get the half yearly distribution, although the yield will be lower at 7.0%.
Still, always do your own research as our risk tolerance may differ.
KIT just announced its Q1 2015 results.
Revenue fell slight;y by 1.1%
Profit increased by 23.1%
Current and Gearing Ratio are excellent.
Total distribution paid for 2014: SD0.0782, representing a yield of 7.3% of initial buying price of SD1.085. KIT pays a distribution every half a year, so buying at current levels will ensure you get the half yearly distribution, although the yield will be lower at 7.0%.
Still, always do your own research as our risk tolerance may differ.
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