VOG 2005 New Thread

why worry on a daily basis unless you really need your money any time soon.
There is lots to come. Personally Id rather see $50/$55 oil. At higher prices people are saving, cutting back, economising. Journeys are made only as necessary in the states who have felt prices for fuel more steeply than us.
With big gas guzzlers doing 15mpg they are effectively paying as much at the pumps as us at £1/litre where some of our diesel cars are averaging 45mpg.

Way over $60/b and its definitely having an affect on the economy.

VOG floated at a time when oil was circa $38/b and it was a good oil play then.

As we move into production from Kemerkol the picture will be entirely different. As for VOG needing the cash to develop the vast potential from the West Med field - as an example Sibir bought the Russian Magma fields 5 years ago for $17m and have grown production to 8500 bopd (AND TAKEN OVER $65M IN FREE CASH FROM IT and at a time when oil prices were much, much lower) and all category reserves grown from 50 to 80.5mbo. They used the cash to develop their other interests and grow to a market cap of presently £630m today (£725m 2 weeks ago).

VOG market cap only £34m (42.25p/share) with $11.5m cash in the bank a few months back and well funded as we enter the production phase. Even at a market cap of £90m based on us starting production and proving up further the potential in Kemerkol and West Med the share price should be around £1.10/share.

Think of GED - Global Energy operating mostly heavy oil in Colombia capped at £93m (recently £122m ) in their last interims for 6 months produced 233,119 bls or 1294bopd average. Revenues $9m (Gross profit $4.9m). They aren't bursting at the seams with reserves either - 16.5mboe proved & probable!

There is potential for up to 60mbo recoverable in Kemerkol.
A vast amount of gas and approx 200mbls recoverable condensate is potentially recoverable next to the adjoining main Medvezyhe field that has produced trillions of cubic feet and hundreds of millions of barrels of condensate to date. I see VOG using the cash generated from Kemerkol to help fund the development of West Med (as Sibir have done with Magma). At 1800 bopd from Kemerkol and an export facility in place at only $38/b oil when VOG originally came to ipo, that could generate profits of around $6.5m per year from next year or $16m when we hit 4400 bopd. Of course if oil stayed around $48/b average that could net us between $10m and $24m on the above production figures.

Any success at Tamdykol which has not been factored in - should be known shortly and at present that project is currently at no cost to us.

Kemerkol is to be in production early in the new year.
Tamdykol (as yet unquantifiable) could be be in production if successful relatively soon. The main thing would be the value of a proven field being added into the assets.
West Med could have some form of production (imho/view) by mid 2006 but the main thing at present is proving up the scope of this potentially company making field.

Kemerkol alone was valued at 43p by Fox-Davies prior to any production start up (and at the time in May 05 it was only on the previous field/reserve size of 8.7mbo proven c1/7.8mbo probable c2 = total 16.4mbo.

NOW the licence area has been extended 4.5 fold with 8.7mbo proven/26.3mbo C2 and a further potential of 25.1mbo 0r up to 60mbo recoverable in Total.

This alone should add a whole new value dimension to Kemerkol alone possibly 50-60p as it currently stands against what it was percieved as back in May 05. As it moves to the production and further development stage the value from here - if reserves are proven up in the c2 category which they believe to be conservative - could be a minimum of 35mbo at $5/b in the ground or roughly £100m for the field or about £1.20 per share (just for Kemerkol).
With a possible 60mbo even if proven to around 52mbo recoverable could give £1.80 per share.


Kemerkol is looking more and more like a very lucrative deal which will be in production in the next few months. (We're just a few days shy of November right now).

To add to the above - what value can be assigned to the biggest potential asset we have - WEST MED - as we wait to prove it up. Fox-Davies assigned a value of around £1.20 on 5% recovery and no Gazprom pipeline access deal.
Therefore what price on A) - a recovery of greater than 5%.
B) a pipeline access deal with Gazprom.
c) a combination of both 5% recovery and a pipeline access deal.


At just 42.25p/share and a market cap of just £34m it certainly looks very good value based on the fact that we will shortly be in production at Kemerkol with two of the projects offering major potential recoverable reserves and not tied in one political landscape. Again the institutions were keen to buy into Kemerkol at 55p/share at a 20% discount to the then price of 70p/share. The new Kemerkol deal just got better than ever imho.

DYOR as ever.