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UKOG and LGO SIBseries

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UKOG and LGO and yet more reasons why these two are set to rise significantly this year.

 

Hi all,

Today (24/6/15)  we will be looking at the news that was released from UKOG and LGO today.

UKOG released an unaudited result which I will go into first.

Firstly in the RNS (LSE:UKOG) declared £8million in cash and receivables which shows UKOG is in a cash strong position and this is very important. The significance of  this would be huge for any junior company but for UKOG the significance is amplified. UKOG has the opportunity every small oil company would kill for. They have the potential to upgrade every asset they own in the Weald basin and potentially increase anchorage in said assets at a discount as a result of the impact the low oil price is having.

Secondly, they declared that they had received  approximately £200,000 from 3,434 barrels of oil sold, which was UKOG’s share of production from the Horndean and Avington oil fields in the Weald Basin. This shows that they have cash flow which means they can avoid overly relying on their cash and receivables for day to day costs.

UKOG also declared they  have still got $9.6million left in their loan facility. The loan facility includes some conditions which mean that using it would only be sensible should no other finance be available, or should instant cash be required. the facility can be replayed in shares but this would dilute the company and as such it would be wise to borrow what they can afford to pay back in cash.

The RNS continues on and describes the assets UKOG has a stake in, I have already discussed these assets in my previous UKOG review so I wont go into it again.

For those who missed it the first time round https://uk.advfn.com/newspaper/anthonywintle/34979/ukog-safe-investment-with-bagger-potential-sibseries

The RNS then goes on to give an insight  into what UKOG is planning next.

Quote from the 24/6/15 RNS

“In order to provide us with leveraging cutting-edge technology and techniques to exploit the potential of our Weald assets, the Company is working in very close cooperation with two leading oil service companies and technical specialists, Nutech and Schlumberger. As a junior company we are privileged to call these organisations our technical consultants and will seek to exploit the potential commercial advantage they provide.

 

The HH-1 flow test, in addition to establishing the likely commercial viability of the Portland conventional oil discovery, is designed as part of a wider program of proof of concept for the resource play, and is expected to take place before the end of 2015.

 

The Company will be thoroughly investigating, in the coming period, the use of potential new non-fracking related drilling based stimulation and completion technologies, in both our conventional Oolite reservoirs and the tight limestones of the Kimmeridge. If successful these technologies have the potential to increase economic viability and potential returns from the company’s entire Weald portfolio.”

End of quote

As you can see, UKOG are planning huge things for the Weald basin and are planning to do a flow test that will not only hopefully prove the commercial viability of the Portland play but also act as a proof of concept test for the wider resource play.

Overall I feel UKOG are in a very strong position moving forward and I am excited at what UKOG will achieve in the very near future.

 

Now onto LGO.

The upgrade resource assessment by LR Senergy showed just why LGO is such a great growth prospect. With an upgrade to the P50 of over 500% since the 2012 assessment bringing the P50 to 805mmbbls and a 60% increase on the P2  to 11.37 the RNS should of had a very positive impact however the market let the price drop. This is relative to how long people are willing to invest for, I always go into an investment expecting 6-12 months before an appropriate exit price. Looking at LGO its clear to me that should Pad 4 flow at a combined rate of 1000bopd or more then 4pps would be broken.

As more pads come on line, LGO will again be in a position to reevaluate the Goudron field. This company is a sustained growth company and one that any keen investor should be watching.

Production from single wells have produced up to 1000bopd and the experts at LGO are gaining more and more data and knowledge every well that’s drilled. LGO is one of them rare oil companies that are very much in control of their growth. They are getting faster and faster at moving rigs and drilling wells and are at very much a cash rich and streamline company.

I would hold until November then sell for the winter lull.

My full analysis of LGO and the Gourdron field can be found by following the link bellow.

https://uk.advfn.com/newspaper/anthonywintle/34860/lgo-and-a-2000bopd-question

I hope you have all found this insightful and wish all investors the est of luck.

All the best and as always.

All in my opinion and not to be taken as fact nor advice.

Always seek professional advice before investing in any company.

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