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Ignoring the truckman..
I agree that the risks involved in a sidetrack is significant here. It's definitely not easy when you take into account you have one chance at it.
Wouldn't it just be easier and potentially better to just drill a new well at an angle into the Victory? Would make sense to me, as you are then able to target oil, plan for water injection and gas caps.
Sure it might cost more, but definitely removes that risk factor and you are able to (potentially) drill at an angle of your choice.
Oh wells, BOD missing the weather window this year has the most impact on the future of this company, imo. Just stupid.
Next year (2022) - AM termination fees, Bondholders interest payments, OPEX costs, AM interest payments/liability, etc. all adds up and makes any sort of FWP expensive without capital/liquidity to pay these liabilities whilst drilling.
Some solidifying of bond prices in last week
Expect we may see some further news this week on shorts and Crystal Amber's Net Asset Value report
Unless there is some financial reconstruction here the Bondholders hold no sway,unless they are major shareholders too but I am not sure whether the BOD consult anyone anyway
I don’t think our suggested technical implementation of much importance at present as whatever solutions we may think is good and the bod should do do now ..but in reality they will not be able to spend and risk the money without the bond holders agreement.....
Imagine you are the bond holders and the most important thing to you at this stage is to recover as much as you can from your company irrespective of any other stakeholders interest here....and why would they risk their cash in the bank now to expedite further discovery in a failed morons of bod..!
It’s not that simple just saying to go and remedy this or dig another hole without CB agreement...the cash accumulation is belong to them and not to us in reality as the take the priority and not us . It is the debt to them and got to be considered first.
Yes we have 15 months to pay it but if according to bod that we don’t have much oil and oil price is not $80+pb to manage paying the debt ,working capital and expansions or remedies then one choice is left and that is a massive dilution and the bod were repeatedly mentioned this ..unless CA has something under their sleeves to sort it all out and I want to believe they do...
Currently stalemate until further developments and hopefully changes in the bod and take over bid under the direction of CA...
High angle cased hole sidetrack ?
Firstly, the further you go back the less the angle you have in the current wellbore... so it’s not a high angle sidetrack.
It ain’t risky either, it’s bread a butter in the oilfield, has been for years.
Set a whipstock with a Packer inside the casing, orienting the ski slope and take out the side of the casing with a milling assembly. Once 20ft of new hole has been taken out, trip and get your 8 1/2” drilling assembly.
Come off the low side of the wellbore using gravity angle with the mills, then start building angle with a rotary steerable drilling assembly ; it’s simple..
8 1/2” assembly is capable of 7-8 degree build rates but the well will probably be planned with 4’s maximum to minimise kinks for liner running.
Oh and it ain’t much more expensive than drilling a conventional well... so your comment is wrong ..
The management said they needed another year to plan it?
If that’s not saying it’s too difficult then I don’t know what is..
And ... they didn’t instigate the sidetrack first... they said they were going to drill a water injector first then changed their minds to go sidetrack first.. listen to that finance chaffe guy in previous mumblings...
Smacks of incompetence to me...
" Liner is flexible and will be able to slip round any doglegs that are put in the wellbore...whilst drilling..
Hence my disgust at management saying it’s too difficult ..."
You didn't read my post in reply to Slift properly. The main point of which being that with the current well architecture, 7z has essentially zilch access to the Victory sands. Any sidetrack will have to be initiated well above the Victory.
Also I haven't read anythying about management saying it's too difficult. Indeed it's they who a proposing a sidetrack as a possible plan. Either way, though, any high-angle cased-hole sidetrack is inherantly risky and expensive, and personally I remain sceptical as to whether it will provide a 'cure'. But that's all imho, of course.
No problem with the sidetrack out of the 9 5/8” casing as the new wellbore will be 8 1/2 hole drilling assembly and 7” liner ; not big rigid casing.
Liner is flexible and will be able to slip round any doglegs that are put in the wellbore...whilst drilling..
Hence my disgust at management saying it’s too difficult ...
It’s not, it’s easy to experienced people with the knowledge ..
"I'm not sure if either well 6 and well 7z had access to this. But I could be wrong. I mean, if well 7 had access to victory, likely well 7z and 6 also had access?"
No, not really. 9-5/8" casing was set at the very base of the Victory at the interface between the sandstones and the 'basement'. Except on Lincoln, where the casing was inexplicably landed lower, well into the basement. No explanation for that was given: it was possibly even a mistake.
Any sidetrack into the Victory will involve cutting a 'window' in the 9-5/8" higher than the existent casing shoe, as build-angle cannot be too severe, given that any sidetrack into the sandstones will have to be cased, unlike the open-hole 'barefoot completions' in the basement.
From a previous update by HUR:
"Building on the initial results of the technical review announced in September 2020, a remapping exercise has been completed to more accurately define the complex reservoir horizons now recognised in Lancaster. The reservoir simulation model has also been extensively rebuilt, utilising this remapping work, recognising the contribution from sandstones onlapping fractured basement, and using additional historical and regional data. This simulation model has been used to assess various near-term development options which are currently under technical and commercial review."
^ This could be why ERC's estimates lower?
"While no firm decisions have been taken, the Company has focussed on the location, operations planning and execution in 2021 of a new production well in the central "attic" high of the Lancaster field, by re-entering and side-tracking the existing 205/21a-7z well. This could add meaningfully to the production capacity from the existing 205/21a-6 well, accelerate production of existing reserves, and, depending on oil price, materially improve near-term cashflow generation. Development costs are currently estimated at c.$60 million. Subject to a sanction decision early in the first quarter of 2021 and securing a suitable rig and equipment, first production from this well should be possible by late 2021."
^ This is the sidetrack targetting victory at then "central attic"
"Implementing a water injection programme is important to provide pressure support generally, but also to sweep oil towards the producing wells in the centre of the field, which could materially improve recovery from Lancaster. Preliminary evaluation has identified that injection into the northwest of the field could provide the greatest benefit. Ongoing assessment of this water injection option is focussed on finalising the well location, subsurface and FPSO modifications, operations planning and execution in 2022. Costs are currently estimated at c.$75 million."
^ When they say "sweep", they mean displace the oil at depths of victory sandstone with water, and hence moving oil towards the upper "central attic" of the victory layer where the wells are.
Sure the RPS CPR got the FB numbers wrong. But surely they couldn't have got the sandstone numbers wrong (very conventional)..
RPS CPR states 394mmboe STOIIP in Rona (29mmboe) and Victory (204mmboe) for Lancaster.
We know Well 6 has it's toe in Rona, and likely well 7z has drawn some of the Rona
At P50, that's 6.5mmboe, and majority of this already produced (most likely).
Now with Victory sandstones, at P50, that'll be 45.9mmboe - This is what HUR meant by "significant sandstone oil" (refer back to interim presentation).
I'm not sure if either well 6 and well 7z had access to this. But I could be wrong. I mean, if well 7 had access to victory, likely well 7z and 6 also had access?
Either way, the ERC CPR attributes 37.9mmboe 2C resources here. I'm going to say all of it is Victory sandstones based on well 8 being in the attic of lancaster (Victory layer) and also the injection well providing pressure support for this.
With regards to Basement, I think it's more that there could be oil there... but non-recoverable or has a very low recovery factor for it to be commercial.
No idea what's gone on with Lincoln and Warwick.
Note ERC summary has only provided us with 2C resources for the FWP (Lancaster) and generic 2C resources for Lincoln and Warwick, as opposed to STOIIP numbers and recovery factors.
Will be interesting to read the full report.
slift - so they also miss read the "significant" sandstone oil from september? impressive
I was thinking water cut of well 7 being about 50%- i cant remember the last figure- 30-40%? so there is some manipulation going on unless the water is suddenly going to disappear!..lol
confused of clapham
Capt, no don't buy the CPR company deliberately being late. Mainly as I've seen enough Safety studies go out for third party review and can't think of many that came back late. The review companies want their money which they don't get until their report is issued to company and a further 30/60 days net after that.
Do agree re miss reading drilling samples. Is someone try to tell us that Trice, the man that nailed well 6, 7z and the 3 spirit wells, all of which found at least a show of oil made a mistake reading the Halifax samples such? pull the other one
Capn my man,
The ERC CPR takes into account an EVEN SHALLOWER OWC than the one that HUR assumed for technical review.
ERC have used HUR's data, but they make their own assumptions to HUR.
Regarding Halifax, HUR most probably ommited providing some data to ERC, or provided data and said they were very rough data.
I think prospective resources should have been given for Halifax, even if they were unable to determine 2C resources at Halifax from the drills.
As for sandstones.. oil from sandstones are likely included in the estimates provided by ERC.
As for production data.. HUR are being sneaky.
They are controlling production or should i say.. "reservoir management" and keeping watercut constant at 25% - Easily done by reducing production by simply reducing water coning.
Also, i'm suspecting that the ESP has a maximum/optimal production rate of around 16k barrels/day. If not ESP, more "reservoir management" then. I do wonder what the "well intervention" was for well 6, maybe ESP related?
At current status of well 6 (11.6k bopd @ 28% watercut = 16k barrels/day). 28% watercut is bad news in terms of "reservoir management". Wouldn't be surprised if they reduce production here again and then combine it with well 7. Depending on the length of testing, Q2 watercut could be 30-40%.
I also wonder what they are looking to do with well 7. Watercut in well 7 is surely 70-80%+ now and isn't much use for production. Maybe they are playing around with reservoir pressures?, or trying to hide watercut performance data for well 6? or confirming OWC by comparing the two wells? or possibly even getting more reservoir modelling data for repurposing the well for FWP? Who knows.
"they mis read their first drilling samples"????. WTF...i can understand they drilled and found water they werent expecting..i can understand them missing the sweet spot..i can understand the OWC being higher....but surely that is one massive clock up? really? and we are now to believe they can read it correctly?
what was the last water cut on 7? was over 30% ? it would seem to have reduced if they are averaging at 25%. ?
fandg - my suspicion was that the delay was not down to hur but the crowd producing it. lets be honest it is money for old rope - you take a company's data - pfaff around for a few months - charge £100,000s and have to make it look like they got value for money. delaying it prob looks like it took more than the 5 mins it prob actually took....or maybe i am being cynical about CPRs
hur must have known there was going to be a serious downgrade from their figure? why carry it out? what happemned to the sandstone...maybe i am seeing ghosts when there arent any but it just seems a bit fishy - all the oil has disappeared - yet we can still pump 10k a day? halifax gone!..sandstone gone!
CaptainSwag, I sent them an email a few days ago asking for details of Q1 2021 production to compare against the forecast, and understand how they were running things.
The oil they thought was in Halifax has disappeared completely, because they mis read their first drilling samples. They do not have samples to prove if/what could potentially be out there.
With the WC hovering at 25%, perhaps the decline they expected, will be much slower. They need more technical data to understand this.
End of day all the reserve numbers, etc, are estimates.
Having no RNS for a while may actually benefit us. They would have to notify if there was any 'material' change, so no news is good news, so to speak. Especially if Brent continues to trend upwards.
"I agree that there could be something weird going on in the background ...I don't get the CPR at all..they must have known the results already as it was their data...if there was to be no improvement I don't get it..."
FWIW, I've felt that the PI's have been in a 'game' for a lot longer than last September. Just can't really fathom what the game is yet and doubt I ever will.
With respect to the last CPR, never quite understood the delay from 31st March RNS to the 7th Apr RNS, as you say they must have known the results as it was their data. Whether moving the announcement into a new tax year is significant or not, who knows? Just seemed odd at the time
I wouldn't say dilution makes no sense as the bod have no skin in the game . It won't effect them other than in a positive way _ by keeping the lights on and them in a job..
I agree that there could be something weird going on in the background ...I don't get the CPR at all..they must have known the results already as it was their data...if there was to be no improvement I don't get it...
Also how did the oil in Halifax disappear completely. Severe downgrade yes but nothing ?
What are CA up to ? What do they think they know ? Where is the gardener ?
Why no plan/ funding still ? Lack of opportunity or lack of desire
In the meantime Hur is producing...but even the water cut is weird..now that we'll 7 is added but the water cut hadn't increased ?
Bemused of bromley
I feel something(s) is missing here in this HUR puzzle, and think it may all have started after the September kitchen sink and sudden resignation of the Kerogen board member thereafter which I found strange, CA may well be onto something big here as this whole last 9 months communications don’t represent sound governance.
Ditto, dilution here just doesn’t make any sense, and very strange that the BOD seem to be doing their very best to drive/keep the SP as low as possible when subsequently this now resulting insignificant company market capitalisation here will actually greatly hinder their stated aims, all incredibly strange and suspicious, DYOR.
“I really do not understand why they would finance through dilution and if they did not the upside would be greater...”
Couldn’t agree more, also strongly believe that given today’s situation along with the tailwinds in place, and with a competent HUR CEO, CFO, and Chairman here, there would be absolutely NO need for any dilution, CA likely believes same, now let’s wait and see how events eventually unfold.
Good post Elementary - I would add that its a shame our CEO did not comment - but its surely good news the seconds well is producing again and the water cut has not decreased. I really do not understand why they would finance through dilution and if they did not the upside would be greater...
GL to you too...
Fair statement Jonno, however IMHOO, from these nonsense levels or say this ridiculously lowball MC here, upside potential by far outweighs any downside risks with a bit of additional patience added in, all just in my opinion but your raised point is equally valid, GL.