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.
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