Anyone know why this has just 'dropped off a cliff'!? I've checked around and all I can find is GOOD news!! ...
fallen off a cliff..? it's down 2% for what I see
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Shaldred
20 comments
hayashi22
Wish I had come across this one a couple of years ago. Any tips for similar outperformance from the oil and gas minnows?
gus 1065
This time last year JOG had a market cap of c. £800k. Even now after a strong run it's only £30m so it is still an O&G tiddler. 9m shares in issue of which less than half are not closely held so liquidity is quite limited. Given MGW's strong endorsement in his bucket list as "the best leveraged play" it's becoming a crowded trade as lots of punters chase a small amount of stock making it very volatile both up and down.
Yesterday saw something like 10% of the free float change hands on news of a rig being lined up to drill its Verbier prospect in the summer - not quite the delivery of the Ten Commandments, was it? On real news this could rocket but it could easily become a lobster pot - easy to get your hand in empty but hard to get out when it's full. High risk IMO although I do hold a few.
Hayashi, if you're looking for similar O&G plays you could do a lot worse than take a look at Malcolm Graham Wood's daily blog and in particular his annual "bucket list". Look in the dicussions section for Sound Energy (LON:SOU) or Ithaca Energy Inc (LON:IAE) and you will see a link to this year's list.
Best,
Gus.
Tony Russell
There is lots of information about oil/gas shares on Malcy's Blog. Hurricane Energy is a good one to follow. I am invested with Sound Energy, Hurricane Energy and SDX.
Good luck.
Shaldred
We were obviously looking at different times but when I checked around noon, the price was way down from the previous high! Luckily it's recovered a bit since then but I call an 18.3% drop pretty substantial.
buyhard
Not to be rude but I think these kind of discussions are best done on other sites, ADVFN springs to mind :-P
AlanJenkins2
From the Stocko figures,it looks as if they must be running low on cash.Placing,perhaps ?
gus 1065
Morning buyhard.
Not sure whether your concern is the quality of the discussion thread or the very act of discussing the Oil & Gas sector, but the original post was clearly labelled and you're free to read or ignore as you see fit.
Most of the subscribers on Stockopedia seem open to free discussion with a view to investing their capital to make decent returns. O&G exploration can be a high risk sector but so can many others and for investors Stockopedia generally provides a decent forum for discussion without some of the self interested ramping and scaremongering that pervades the likes of ADVFN. The MGW blog referred to in the posts above gives a decent entree for investors wanting to take on exposure in this sector and as the results for his 2016 bucket list below show, there have been some decent returns across the board in recent times. Likewise the equivalent selection for 2017 has also had a reasonable start. There have also been some complete dogs that have lost investors most of their investment which is perhaps why the sector has gained a poor reputation. Note, this is a list of all of the stocks chosen at the start of the year not an arbitrary cherry pick after the fact at the end of the year.
---------------
"The bucket list, 2016 results.
The final shake-up for the 2016 bucket list shows a very commendable result, of the 2016 squad of 14 the top three companies rose by over 400%, to get into the top 6 you needed to be up by 187% and only two stocks ended up down on the year. Indeed a difficult squad to get into and even the bottom 2 retain their places for this year.
Ithaca Energy +525%
Hurricane Energy +505%
Sound Energy +425%
Premier Oil +290%
Tullow Oil +203%
Faroe Petroleum +187%
Cairn Energy +63%
Bowleven +44%
Amerisur +19%
Parkmead +18%
Victoria Oil and Gas +11%
Pantheon Resources +2%
Rockhopper Exploration -3%
Far Limited -12%"
---------------------
Best,
Gus.
Zoiberg
JOG has farmed out its prospect to Statoil who are drilling one well this summer. If it is successful it is said the shares could be worth up to £8; if it fails, nothing. The chance of success is 30%. I think it is understandable if 'investors' get nervous now and again I prefer roulette myself - the odds are better :-)
VegPatch
I sold mine yesterday
I had doubled my money in about 10 weeks and they havent even drilled the well yet. That is great risk reward in my books = all reward, no drilling risk. Just remember less than 10% of wild cat wells come in. Or put another way, 90% fail. These guys are gunning it with a probability of success of c30%. But again, remember the inverse = 70% chance of failure....! At the time I felt the shares were 50% cheap on a risk adjusted basis. Since then the resource size has been increased a bit. But the market always over eggs these situations, especially the smaller ones where the PA investors get revved up and the shares magazines have a field day. At the time I thought it could be worth £84m. The market cap is now £30m. So if we redo the maths...
75% chance of zero = £0m
25% chance of £100m (upgraded for the increased resource)
= £25m mkt cap
so i guess the market is efficient. And frankly if the shares go to £40m that wouldnt surprise me. As there would still be a 250% upside on a successful well.
BUT....
there is still 75% chance of zero.
So good luck from here.
For a reminder and for those who wonder how the market values these situations please have a look at my maths that I posted at the time in the excerpt below (it was in a Malcy's oil blog post)
"I am told the Ithaca bid values the company on $23/boe on a 2P basis (i.e. Proved and probable barrels of oil in .the ground). This high valuation captures the fact that £430m has been spent on developing the Greater Stella field and it is shortly due to go into production.
I wonder what a sensible metric for 2P reserves which have been discovered but not yet had any capital spent on the field infrastructure yet. A bit like buying a piece of greenfield land with planning on it. I wonder if using $5 bbl on a 2P basis is too aggressive?
The reason I ask is that Jersey Oil and Gas (LON:JOG) is drilling the Verbier prospect later this summer. They have farmed out 70%to StatOil and retained 18%. The prospect is hoping to prove up a 117m bbl recoverable field (P50 basis). They are carried for the drilling of 1 well for up to $25m. The prospect is well situated between 2 producing fields Buchan and Tweedsmuir South (Talisman) about 120 miles off the coast from Aberdeen. The Buchan field started producing in 1981 and is only scheduled to close in Sept 2017, so maybe that will free up some pipeline capacity if oil is found at Verbier.
Statoil expect to drill the well this summer. It's a wild cat well, so the chance of success is low, but we know the area is oil prone but any discovery will still need a good trap and for the oil to be mobile to the surface. In a video I watched JOG management put a 1 in 4 chance on a discovery. That is much higher admittedly than the 1 in 10 or 15 that is the normal discovery rate. But it takes into account the 3D seismic that has been shot and the general area productivity.
My VegPatch maths goes like this
100m * $5 / GBPUSD 1.25 * 18% ownership = £84m
Current mkt cap £14m
= 600% upside
And probably >75% downside in the case of a duster.
On a risk basis the shares are worth probably 50% more than where they are trading
25% chance of success * £84m = £21m
75% chance the shares are basically worthless
Current mkt cap £14m
£21/£14 = 50% upside
But to be honest it's all academic. It all depends on the well being drilled.
So it's v high risk and not normally in my comfort zone but I must admit I have bought a few...
gus 1065
Topical (in that it is one of the stocks mentioned in the thread) Investor Presentation published today by Hurricane Energy (LON:HUR) on their North Sea activities.
https://www.hurricaneenergy.com/~/media/Files/H/Hurricane-Energy/documents/presentations/20170406-capital-markets-day-presentation-20170407.pdf
Interesting to see the detail behind the recent media hype (and the substantial rise in share price over the past 12 months).
Best,
Gus.
VegPatch
Jersey Oil & Gas down c70% today.
The Verbier field is dry. This was JOG's big potential field. Shares have reacted like a biotech not getting good Phase 3 data...Down in flames.
I was looking at my accounts and found i had a couple of thousand left today (which I have now sold). So that has cost me a bob or two. However although it is always annoying to lose money, actually I have made a positive net return on my overall position. E&P is about risk management and luck. I have made a 25% return on my total investment as I sold most of the position after the shares nearly doubled and i had more than recouped by original investment. The shares had rerated to incorporate the 3D seismic and potential opportunity. I used that price spike to sell most of the position and only left a residual position in place in case they found oil, even though there was a 70% chance of NOT finding oil. Effectively a zero cost option. As usual, the percentages won (did you know most options expire worthless? )...and thus JOG announced today that the drilling of the Verbier field had found zip, nowt, nothing, nootnee.
Lessons = only invest in E&P in a small way, if at all. Remember that only 10% of wildcat wells come in (even if management tells you otherwise). That means 90% fail to find oil. And dont get carried away if you do make a profit. Bank it !
For those that are interested here were my workings when the share price was 140p
"Jersey Oil and Gas (LON:JOG) is drilling the Verbier prospect later this summer. They have farmed out 70%to StatOil and retained 18%. The prospect is hoping to prove up a 117m bbl recoverable field (P50 basis). They are carried for the drilling of 1 well for up to $25m. The prospect is well situated between 2 producing fields Buchan and Tweedsmuir South (Talisman) about 120 miles off the coast from Aberdeen. The Buchan field started producing in 1981 and is only scheduled to close in Sept 2017, so maybe that will free up some pipeline capacity if oil is found at Verbier.
Statoil expect to drill the well this summer. It's a wild cat well, so the chance of success is low, but we know the area is oil prone but any discovery will still need a good trap and for the oil to be mobile to the surface. In a video I watched JOG management put a 1 in 4 chance on a discovery. That is much higher admittedly than the 1 in 10 or 15 that is the normal discovery rate. But it takes into account the 3D seismic that has been shot and the general area productivity.
My VegPatch maths goes like this
100m * $5 / GBPUSD 1.25 * 18% ownership = £84m
Current mkt cap £14m
= 600% upside
And probably >75% downside in the case of a duster.
On a risk basis the shares are worth probably 50% more than where they are trading
25% chance of success * £84m = £21m
75% chance the shares are basically worthless
Current mkt cap £14m
£21/£14 = 50% upside
But to be honest it's all academic. It all depends on the well being drilled.
So it's v high risk and not normally in my comfort zone but I must admit I have bought a few..."
I did indicate in my post above from 6th April I had sold, so I do feel like I was above board. I hope no one has lost their shirt.
gus 1065
Not sure which is worse. Buying an oil exploration co that hits a duster or selling one that you think has drilled a duster that turns out to be full of oil after all. Today's news from Jersey Oil and Gas (LON:JOG) and subsequent price spike (looking like an intra day "five bagger" at the moment) is either redemption or another kick in the teeth from the O&G roller coaster depending on your position. C'est la vie.
Gus.
vik2001
insane price hike. I looked at it in the morning it was up around 220% and its added 100% since am
