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AWK - i meant november 2019 - i cant remember exact date - anyway November isn't winter(*wink*)
this is what some of us have been saying / alluding to for awhile. hur said they would be announcing plans in december 2020....the delay in decision was a huge red flag for me at that time and it was quite clear that there were finance issues to then delay by another 2 months this year
Capt Swag,
"awk - lincoln was finished by November 19 - if my memory is correct - i cant be bothered to trawl through rns. it looked timed to be completed before the weather got worse .I dont remember when halifax was drilled.."
Can't be bothered to go back. But you sure it wasn't 29th November? Plus then there was a two-week hiatus 'waiting on weather' before the tow up to Halifax. Then there was a 'false start' on Halifax, which required another slight rigmove (never properly explained) before restart.
Either way, they were both drilled in winter.
Sure, there's no escaping the fact that WoS, summertime is best. And there's no escaping the fact that the number of rigs capable of working WoS during the winter is decreasing, because the older ones are falling into disrepair, or at least, not being upgraded.
But this is something which I find odd about today's RNS, and its timing. Were any drilling going to take place this year, a 'firm' drilling contract with the contractor would have had to have been already signed. Cause for an RNS. I think there was a tentative one for around now, involving the PBLJ. So what I read into the news is that that contract has been shelved. Which in itself will cost the company 'cancellation costs'.
For me it is pretty obvious and clear why they had to issue todays RNS.
From the December 18th RNS –
While no firm decisions have been taken, the Company has focused 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.
As per above 2021 work program was subject to sanction decision early in the first quarter of 2021. Result of stakeholder engagement has resulted in this not being sanctioned due to unacceptable operational and cost risk. If anything I would have expected the RNS to land earlier as we are well past the early part of Q1, but regardless they had a duty to issue this RNS to confirm 2021 work program.
My personnel view is that this is a good move and should lead to reasonable cash accumulation if Oil price stays at current levels or even better continues with its recent gains.
awk - lincoln was finished by November 19 - if my memory is correct - i cant be bothered to trawl through rns. it looked timed to be completed before the weather got worse
I dont remember when halifax was drilled..
the company have talked about the weather window on several occasions.
Cap'tSwag,
"The weather window dictates when the rig and plans have to be made by."
No it doesn't. You're forgetting that both Lincoln and Halifax were drilled during the winter. Today's RNS is pure prevarication. I suspect it was published because some of the big stakeholders have petitioned the BoD for news. And what has been published is 'non-news', anyway. A sidetrack of 7z is going to be expensive and tricky. If it's designed to incorporate an 'intelligent completion' (I won't go into the technicalities) it'll be yet more expensive. And the water-injector is an utterly daft idea.
Despite on or two failings, the main one being that he wouldn't admit to mistakes when they were made, at least Dr Trice had courage and optimism. The current BoD lacks three 'mainstays' of the original team. Trice, Stobie, and the late Neil Platt. In short, they're a bunch of ditherers. The operation is ticking-over, just about paying its way, but only just. They are collecting their directors' salaries. But technically the thing has now become a shambles.
Another of Dr Trice's failings is now obvious. The original sidetrack of well 7 (the now existent 7z) was shoddy. He allowed Petrofac and Schlumberger too much leeway. With the result we see. This company will continue trundling on for a while, the 'fractured basement' concept has been proved correct (thumbs-up to Dr Trice for that, at least !) , but it will take a huge cash input to turn Lancaster into the 'Hurricane Hub' that was being proposed a few years ago.
Plus people like BP, Shell, et al (with money) seem now to be more interested in windfarms and stuff like that, instead of oil.
fevertree - i agree it was a badly worded rns and the things left out ask more questions than answers given. my only worry was that it was a damage limitation rns - in as much as more detail would have only been more detrimental. anyway the market likes the rns better than i expected so wtfdik??!!!
And to put out an announcement to confirm what we already knew that stakeholders included bondholders is frankly ridiculous, and then add no more information was infantile and unnecessary. The main point was that operationally this business is in a bind.
Don't dispute your reasoning but I would have advised a more comprehensive comprehensible announcement rather than this piecemeal nonsense that flags yet more questions about direction of travel, competence, vision, and strategy
It was one of my roles to advise on these sorts of announcements. First, I do not understand why there was any pressing need to announce this now, given that they had not committed to a sidetrack to a second well but as the RNS says 'contemplated' it as an option. Second, they should have been fully aware of the damage this would cause to the sp ahead of the CPR; was their hand being forced or did they decide to put it out themselves. Either way, the effect has been to further damage the credentials of the Board now, unfortunately, including Maris the great white hope. And actually it raises yet the further question about whether they even have a strategy - it seems not. This is now hit and hope that the POO stays above $60 or so. The level of news management incompetence here is utterly mind-blowing
fevertree - they had to release that there was to be no drilling this year. The weather window dictates when the rig and plans have to be made by. the deadline obviously passed. tbh the delay in announcing has been pretty ominous in recent weeks .
The CPR should be due by the end of the month - though delays are always possible.
regardless i think they did the best thing to issue them separately as this type of rns was always going to drop SP and the CPR raise sp. i am sure i am not the only one surprised by the relatively small drop today. the CPR will hopefully give a boost to SP so it was always good to have in reserve.
the interesting rns will be an operational update giving production and water cut figures - all eyes will be on this now
The RNS from the company have always been very disappointing. It can be to build a picture of accurate fact reporting and fairness so that in case there are no surprises or it can be a cohort with bondholders to flush out smaller PI's. Either way the RNS have always been a let down.
It would have been drafted by the PR advisers with input from the financial advisers (possibly -if deemed price sensitive) and the CEO. So yes another diastrous update
What baffles me is why they even put the bloody RNS out in the first place. What on earth is going on in that company/? Why put out another value-destroying RNS without any redeeming news or commentary. IT utterly beggars belief - why did they put this out now when there was no expectation? Why not combine the CPR announcement? Who is runnig the show there? What was d'ancona advising them to say? it is utterly baffling
The RNS is not even signed off by any member of the BOD, it could have been written by the tea boy for all we know.
Current price you have to consider predators.. A lot of factors at play here, especially now oil price is highly supportive. I didnt read the RNS as that bad.. They are still pumping a lot of oil, they are cashflow positive and they are carefully considering options.. This is a critical decision not a what colour shall i paint the walls type touch!
Possibly the worst RNS I have ever read, it was all about the negative, what is not going to happen, rather than the positive what is happening and is going to happen.
The only thing that baffles me is why we are not below 2p.
It seems inconceivable that they did not give updated data on the water cut and projections to the bubble point.
we need update on production