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"Strange, wouldn't it optimise the process if the the storage facility of the FPSO can be used for storage of both upstream untreated crude and downstream treated crude? The upstream storage being an intermediate storage before it is pumped through the process facility"
Thanks fandg2 and adoubleuk for answering the question.
Strange, wouldn't it optimise the process if the the storage facility of the FPSO can be used for storage of both upstream untreated crude and downstream treated crude? The upstream storage being an intermediate storage before it is pumped through the process facility.
Would allow room for inspections and increase output (in the event of maintenance).
I'm sure there's a reason behind it (whether that's weight, or having to remove water from storage, etc.) but yeah, just find it strange as I've come across intemediate storage in almost every other industry.
"Can i assume that the AM has a storage facility upstream of fluid processing? I.e. a tank to store the crude prior to being processed by the AM processing facility?"
No, not the case.
" Or is it safe to assume that both wells have been shut in?"
The Aoka Mizu had to shut down to repair the flare tip, parts were sent by priority last week to repair. Not sure if back up yet but would expect so.
*HUR share price
Hi Ken it's not the hedge per se, guessing the poo at any given time is like trying to guess the HUR at any given time, so I would'nt now if it was good or not. It's the proactive manner I liked
First read up on hedging and then read the specifics of the agreement. Then move away from all share trading!
Ken. Are you for real!
Why are you happy with a hedge at 35D when oil is 44 D sounds like a pi.. poor deal to me.
Having worked on a top-tier COMAH chemical site, I can comment that from how it reads in the RNS - The inspection was likely a weekly, or a monthly safety critical visual inspection of safety critical equipment. These inspections.
The well has been producing for over a year and they have not put an RNS out before, so I do not think its just an inspection of equipment.
10 mil buy back shares = 2 hundred mill of shares would be a good thing or at least support the share price and bod buying a good quantity of shares and not just a token rubbish buy would at least give us peasants some confidence.
Going to be interesting to see if they get a spike in water cut on restart indicating perched water. Most Likely we will never know (unless some lady has a dream again).
sorry, meant to also add, 'the Hedge' gives me a warm feeling. Not sure why aside from the obvious, but it does. Think it's because since xmas most of the statements out of HUR have been reactionary to other events, taking out the Hedge is proactive for the company, shows it still wants to be a going concern.
"my initial guess was that it was the equivalent of "a rattle" - which they needed to inspect and found the cause which needed a repair."
FWIW That's my assumption as well. Something picked up in the condition monitoring systems that warranted a production shutdown to inspect. Probably a piece of rotating machinery vibrating outside it's limits.
Slift, yes you can assume the wells would have been shut in on the production shutdown. Probably wing and master valves closed on each well
thanks slift. value your input
1) my initial guess was that it was the equivalent of "a rattle" - which they needed to inspect and found the cause which needed a repair.
3) big question mark beforehand with results and silence from spirit since.... things certainly have improved with recent rns
4) $187.5 m for well 8 development and prob not until 2022.
6) agreed and looking at all my holdings - cash may be king for a bit as better opportunities later on etc etc
7) good point on hedge.
8) weather window / timing i think will affect SP next year as AIM is very rns driven. there is still CPR which previously i had thought would lift SP but now?
9) wish i knew what had gone on. i assumed trice went because poor decisions/arrogance / communication and need for sale to progress project. however now i wonder if it was OWC related?
interesting times - i really hope hur turns it around. i have a soft spot for it even though the story has now changed with the departure of trice. interesting comment by doc holliday on his podcast thingy yesterday - good whispers yet news was bad - like or loathe him i think he is always worth listening to.
GLA whatever your decision
10. Can't comment too much here at this stage, but I dislike the way they are going with this. E.g. sacking CEO, then completely disregarding the ex-CEO's ideas, research and also past results so they can put the blame for the performance on ex-CEO and pretending that they're turning the company around (especially when management/directors also had an input to this in the past years). This is politics and happens all the time in the industry. I definitely don't trust the management.
11. Sentiment is at it's lowest yes. But at the same time, a lot of the negatives have been priced in, with a conservative strategy going forwards.
You're not wrong that there could be more downside, but there could also be upside. I still think this is a risky investment - High risk, high reward.
Ofcourse, all in my own opinion.
Good points. Just thought i'd provide my opinions for the issues you've highlighted.
1. Having worked on a top-tier COMAH chemical site, I can comment that from how it reads in the RNS - The inspection was likely a weekly, or a monthly safety critical visual inspection of safety critical equipment. These inspections are there to ensure that hazards or risks to these safety critical equipment are minimised and to also initiate reactive maintenance. The inspection has identified issues that required reactive maintenance - therefore, the company has taken steps in order to prevent the issue becoming bigger and/or requiring a longer period of maintenance (and hence shutdown/disaster). These inspections are usually done in-house with by a competent person and are also checked by HSE and other regulatory bodies (COMAH).
Regarding production - As someone with no experience in offshore O&G, I'm unsure of some things and hopefully someone can clarify the following:
The RNS does not mention that the wells were shut in. Can i assume that the AM has a storage facility upstream of fluid processing? I.e. a tank to store the crude prior to being processed by the AM processing facility? Or is it safe to assume that both wells have been shut in?
2. As mentioned before, uncertainty, no idea of what the impact or how much of a downgrade it will be for the reserves. But for the EPS, from the estimated figures I used regarding production (I.e. 15k 2020, 12-13k 2021, average. 6-8k 2022-2025) - we can expect up to 25% downgrade in 1P reserves. Any more and it won't be pretty.
3. I thought Spirit would have committed to this following farm in, and Hurricane are in discussions on the best route forward with this. We already know that the resources will be downgraded for Lincoln, but again the question stands - How much of a downgrade?
4. No idea.
5. I don't think this is an issue any longer. If what HUR are saying and that it's a shallower OWC, then this would explain the increase in watercut. Reserve downgrade will essentially downgrade the production rate. At the end of the day, it's the rate of production that matters, not water cut. A lot has been priced in already.
6. COVID19 is affecting all stocks.
7. Oil price is affecting all companies in this sector. HUR has mitigated the impact with $35 hedges should help if there is more downside in oil price.
8. Yup, uncertainty, but i'd like to believe HUR have means of funding this (or at least at the current moment) with existing cash, RBL, rights issue etc (or a combination of all).
9. I don't think weather window/time will affect the value of this company. It's the forward strategy (for the future prospects) that's important. This also includes the forward guidance of oil production.
CaptainSwag agree with your first paragraph decks are being cleared, at expense of LTH who are holding from 45p down to where we stand. GLA..stay safe
10) Management. For what it is worth I have liked what they have done so far. I think the last rns may have been a blinder in some ways – as they got 2 lots of potentially damaging news out and probably cleared the decks as much as possible. I think they are obviously more corporate and I see them as much more able and willing to sell the company – if the downgrade doesn’t ruin things. However the fractured basement expert has gone. Are they up to the task for future plans ? do they have the required knowledge?
11) Sentiment has pretty much gone in the share.at the end of the day SP is all that really matters and I have been in oil companies valued at less than there cash before. It wasn’t pretty.
I think the next RNS(s) are much more binary than at any other time. If some of this gets clarified I will potentially get back in. HUR seems to drop pretty drastically and instantaneously however it usually goes up modestly and slowly so there should be time to get back in to take advantage on any good news.
Slift – it’s a very good question. part 1 of my opinion for what it is worth...
It has been pretty much bad news or RNS which left room to be attacked since GWA poor drill results. The market cap is 90% lower However HUR was producing - and there was always the option it could be sold off – this actually increased in my mind with the departure of trice.
The game changer for me was probable downgrade in reserves. Without knowing why? How much? And the long term implications it has put too much risk. there is the possibility in my mind that the stock could be now worthless once debt is taken into account. This is why I sold the bulk of my holding – long term hold and 2 trading pots.
There are a number of issues : short term ,long term issues and macroeconomics.
1) A repair has been needed – what was it? Will there be further issues and will it affect production? (in my opinion it will be fixed and there will be no dramas - but ..). If we don’t get an rns tomorrow there will be room for SP to be attacked. What does imminent mean?
2) Downgrade of reserve figure – i think there will be a drop on this. Although the price has done well this week – it was already pretty much on its knees. I think a good plan forward could easily recover this drop though – but will we get it?
3) Lincoln – I question whether spirit will still want to go ahead. They are up for sale and have their own issues. I see it more distracting than helpful in light of last RNS. Furthermore Lincoln clearly is not as good a prospect as Lancaster – if Lancaster is to be downgraded then what does that say about Lincoln? If spirit do get out that will have a negative effect on sentiment again
4) I would rather see well 8 than sidetrack but that is going to be expensive and take time– and what risk?
5) water cut – for what it is worth I think it will start going down but if it doesn’t?
6) Covid 19 – there is a serious risk of further wave(s) and damage to the economy.
7) Price of oil – for what it is worth I think this will be supported at these levels but again a question mark
8) Bonds – with good long term production I never saw this as an issue but with decrease in reserves? The price they are now trading at does not seem to instil confidence.
9) Weather window / time. If there is a good plan going forward which guarantees the future of the company I see nothing to increase the SP for a long time. Yes a good plan could recover some of the most recent drops but then what? I see a long hard slog as there will be a long time to wait for new drills – price will prob go down in between. Yes we could be producing oil but that has done little for SP and there is always some of these risks in the background especially macroeconomics. Covid second wave in flu season has to be a big worry.
Slift thank you for your feedback. Have a good day:-)
I wouldn't say all negative news is out. There are still uncertainties regarding how much of a reserve downgrade etc.
The CFO post has been filled.
The CEO and COO are still vacant, with no details of whether the company is recruiting.
Interim CEO and Acting COO may be promoted, but not been confirmed.
There is a (higher) chance of a takeover until at least the CEO position is filled.
Slift agree all negative news out and assume managment reshuffle is needed as we are running on interim mode with interim CEO and should have filled the vacant post of CFO or are they gearing to be sold off..at best it seems it will be Taken Over..IMO
The SNP want to turn the economy green (because they think it is a good political bandwagon to get on), but they also are practical enough to want homegrown income! Hence the public face is green, but reality will win out and they will encourage Hur development privately! IMHO
Lol, I don't understand why so many people (incl. LTHs) sold out after last RNS.
I feel more optimistic about this company with that last RNS than I did prior to it. Not because that the last RNS was good (it was shocking), but rather future updates are now derisked and majority of HUR's mistakes and future prospects are now priced in.
I'd disagree that the current mcap is priced in for chapter 11. Chapter 11 mcap would be when production is no longer viable, HUR's future is questionable, and when HUR cannot fund the 7.5% interest payment.
- Production is ongoing at steady, better than expected rates.
- Future of assets (in terms of reserves and resources) identified by management and possible improvments. Though no details, but it's not quite "game over".
- Enough cash in bank to fund the 7.5% interest payment
- There is still doubts about the $230m bond, but i'd like to believe HUR have options for this going forwards.
I'd give it more than 70% downside before Chapter 11.