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MK111,
On the -6 well... In April this year the water cut was 7%, a full 4 months later in August the water cut is 12%. Yes it is creeping up but it is creeping slowly. I think this well will still be economic at ~70% which is probably about 5 years away, without intervention. This might not prove to be accurate but it's a sensible base case.
It's rising about 1% per month. The idea that it could suddenly completely water out at any moment is pretty stupid.
I would bet at even odds that 6 months from now the watercut on -6 is still below 20%.
Why? because that is how fast it is rising. About 1% per month.
But also... it is crucially important to remember that they have also been pulling harder and harder on this well over those past 4 months as production has steadily increased from 10,300 to 12,000 bopd. As they open up the choke more and more they create a bigger pressure differential over the height of the fractures and this pulls water further up the fracture.
So is the rising watercut down to geological limitations or is it down to increasingly aggressive operating parameters?
Answer: Who cares. It's really not at much risk of suddenly watering out at any moment and Hurricane are making tonnes of money in the meantime. It's easy to buy in and sit on it.
The idea it could suddenly water out at any moment is or even within 6 months is a pretty naive and sensational view to take. Which hasn't stopped lots of people adopting that view.
I'm glad lots of people think that. It's depressed the price to this level.
Great post stu, the crux of it is they are making very tidy profits and there is not one penny attributed in the market cap to the assets.
This will absolutely explode upon any positive news.
MaverickD ... I wouldn't use past tense, " has had its issues" It still has, if it didn't, it wouldn't be sitting where it is.
3 mths -56.37%
YTD -84.78%
1 year -87.49%
I’m Interested in the flash crash.
Well the short term oil price looks positive and although Hur has had its issues that's why its not 80p and sitting at above 5p. I still firmly believe this will break out and we will get to late teens as a minimum. Production is there and the oil price supports a higher market valuation. I continue to add and am a firm holder.
"Give it six months and they might well be close to that."
There is a chance that could happen (maybe 5-10%)
I'm interested in how you came to this probability without the September update which will hopefully drag the dreaded WC issue into the spotlight.
The hedge is one factor but not solid evidence imo.
Even with shallower owc this should be priced at 20p+.
"Give it six months and they might well be close to that."
There is a chance that could happen (maybe 5-10%), but in reality it's more likely to take years.
The market has priced it to fail anyway, it's oversold due to the shock of it, that's why the opportunity is available.
Looks very likely to over deliver market expectations over the next three years.
Probably less risky than owning shopping malls in the current economic conditions.
Hurricane are making plenty of profit this year, and that's what counts in the end.
"anyone would think 6&7 wells are both producing 100% water. "
Give it six months and they might well be close to that.
Current SP is priced the fail imo, anyone would think 6&7 wells are both producing 100% water. 100m MCAP! Wow