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Someone asked a question about whether flowlines being displaced to water would affect the reported watercut when produced. The answer is no, at least not when I've dewatered, as that is subtracted from the relevant reported data. It is possible a mistake has been made, but I must admit I didn't even consider it as being a possible explanation.
Aduk asked whether I was for hire, history, etc. My current day job is somewhere else in the energy sector and probably doesn't leave me time to be for hire (I control my own job, so as always it does depend). However (comma) surely I'm allowed to take the **** occasionally about the lack of analysis I often see in the public-domain debate, whether from brokerages or individuals. If a rate-dependent watercut is occurring it is very important. If it is not occurring that too is very important, in fact it is one of the big Qs the EPS is designed to answer. We are only looking carefully at the issue because Carcosa dropped a package of data in front of me and scratched his head, figuratively speaking. Otherwise I too would have ignored it. Now it isn't causing me to panic and sell, but is sure as heck has caused me to sit up and pay attention to detail (and note that more study is required). Unfortunately there simply isn't enough detail data in our hands yet (as opposed to HUR's) to conclusively answer the question. As to my views on investing & general market matters there are plenty of them all over TLF if you want to read, though I don't suppose it will do you much good.
good luck all, regards, dspp
Been invested here since 2014 as longer term holder.
Haven't trade the stock / sold a single share until now.
However I am now out (all be it on a modest, profit).
Felt melancholy when I pressed the sell button.
Have emotional attachment to this company - however something has spooked me.
1) DSPP analysis of the water-cut is a concern (though it might be panic on limited info).
2) Last 2x RNS have been deliberately vague / contained little positive information.
3) Warwick Deep and Warwick Crestal both raise more questions that answers. Makes me questions the models / geology.
4) Little positive news on horizon for a little while means share price may drift lower.
Ultimately success here is very much dependent on volume. For take over a major will want enough oil to make full field development WoS economical. Right now all bets are very much on Lancaster EPS. *IF* it did have any issues then the share price would get hammered by at least 50% overnight (plus there will be questions over Lincoln).
FWIW : I still believe in the company and their integrity. Excellent board of directories and technical vision. However it seems to me the potential risks (however small) currently outweigh the short-medium term upside. Basically I need to protect capital and would be back under water if price drops <30p.
FWIW : Once the concerns above I answered I may very likely buy back in the future.
Time will tell (it may even be that I need to buy back in at higher price to mitigate the risk.... )
Just wait for the planned Dec RNS 6 mths after first oil Jun19. Environmental and other regulations are very strict on correctly analysing produced water so quite correctly hurricane won't be rushed
I keep thinking, if someone was going for an operation in a hospital, would you prefer someone who is informed, with lots of xrays, test results and so on, think Godalming, .... or someone on a BB who has only snippets of information.
We also know, even with mri data, xrays, test results and so on, which I'd call the "technicals" .... with the best will in the world, things can, will and do go wrong.
Albi has made a good move , if he gets an answer, we'll all better informed.... and we can all have our ears pinned back....
...ohh h...one other thing, if you were talking about the sp over the past 12 months...not much growth through, spring, summer, autumn and winter...
ADUK.... It really depends upon where you are in the globe, plenty of plants grow throughout the winter months in Austrailan and S.Africa... Here in the south of England, I can't speak for Scotland, throughout the winter months....Clematis, any nr of shrubs. vegetables like...broccoli, cabbages, kale, leeks all grow through the winter . Ohhh I nearly forgot, and Brussels Sprouts !
MTV,
"So that could be four months of waiting and little growth in the SP, hardly inspiring."
Maybe not. But nevertheless, since when does anything grow in the winter months? Dunno what your problems are, but they ain't mine, and I don't care about them anyway. Have fun in Mauritius.
MTV,
First, to answer some personal questions:
"Wondering too about your lifestyle and waitresses 1/3 your age! Do you have royal connections?"
Continue wondering. None of your business. Jealous? Or do you prefer chasing the underage ones in Mauritius? And yes, I do have very vague. Or rather used to, once. Knew someone who was 13th in line to the Throne at the time, he played keyboards in a rock band with which I had close connections. No contact for decades, though.
"Amusing that you are now trying to discredit DSPP "
Yup, I find it amusing, and even more amusing that you should come back in such short order in his defense, which I think he could surely do by himself without your help if I've got completely the wrong end of the stick. But the fact you've barged in so quickly makes me suspect I haven't.
A further excerpt from one of dspp's posts, thelemon, 10:59 yesterday:
"HUR is at a stage and level of risk where there are still some total failure pathways that could cause an investor to lose all of his/her money. Some of the bumps could very well be fatal.
2. In the success case Rona Ridge (which is HUR for now) will have $-bn capex bills coming their way for about a decade or more. Perhaps $20-bn would be a quite reasonable funding requirement. On that basis, even in the success case, it would be unlikely that HUR should contemplate paying a dividend for a decade.
.....
A lot of people who are investing here seem to be taking on a lot of risk on the basis that others are too, without a great deal of personal understanding. That sounds like a shoe-shine boy. I have seen these sorts of fields go very badly wrong despite the best efforts of very many clever people."
This is not 'dispassionate stuff', even though I agree with bits of it. Like Hurricane has never proposed a dividend, and may never do so. And yes, I too have seen some fields go wildly haywire. Thought they were usually being promoted by scammers.
No, sorry, I've suddenly ceased to sympathise with the 'dspp fanclub'. If he'd kept his stuff to 'tech', with maybe the occasional grump about how the SP affected himself, or an occasional back-paqt when things went well, OK. But it's no longer that.
Trust gone, completely.
MTV,
My, you work long hours as well.
Does BP or someone like them have an officefull of people like you, just trolling the BB's?
Or are you on the beach in Mauritius?
dspp,
A quote from you here at 20:36:
"As we all know "however comma" and "more studied required" are feared phrases in any funders' ears. I think we all know the implications and therefore await the necessarily much-anticipated clarifications. I shall go back to my day job until then."
Now a quote from you at 14:39 on the lemon, just a tiny part of a lengthy post including graphs and all sorts of things the limited wordcount on this BB can't encompass:
"Now it could just be coincidence of the way they have managed both wells during each month, and month-by-month, but that is one heck of a coincidence ! I have yet to see anyone out there in the investment community do even this trivial analysis (I am available for hire by the big boys ....)"
Or another bit, further down your very lengthy post.
"I am by the way very worried at what I see out there on the various bulletin boards as it shows that there are too many folk with too much at risk, who really have no idea of the level of risk at play here."
Really?
Maybe it's uncharitable of me, but unless it involves people I have personally met who've taken some sort of stock-exchange 'hit', or some other misfortune, I couldn't give a monkey's about anyone else's 'risk factors' holding the same shares that I do. Their problem, not mine.
In fact, your post seems full of such 'concerns'. And similar references to 'PI holders', trading, and so on.
Who are you? Mother Theresa? And how come, with all your technical knowhow (which you obviously have) you're not already working for one of the 'big boys'? Or is that a fib? Or simply not a 'big boy' oil company, but as a tech consultant to some relatively big financial trading house?
Sorry, you've blown your cover through over-enthusiasm. I don't know who it is you work for, don't want to guess, and I don't suppose you'll tell us little guys (and gals) here, but all the stuff you're feeding isn't impartial, is it?
wellwell & aduk,
As we all know "however comma" and "more studied required" are feared phrases in any funders' ears. I think we all know the implications and therefore await the necessarily much-anticipated clarifications. I shall go back to my day job until then.
regards,
dspp
*I am not suggesting that the OGA data should not be ignored. *
Delete the second 'not', pls. Typo.
dspp,
" May I suggest you look at the watercut vs monthly flow rate SCATTER plot I posted on TLF along with the accompanying notes in various posts. Not the month-to-month calendar trend, but the x-y scatter plot. Then you will probably understand the concern, and the (so far) three hypotheses that I have been able to propose. "
I have been following your posts on TLF, and thank you for all the work you've obviously been putting in. However (yup, you were waiting for that word, weren't you? ;-) ), although I can't disagree with your 'scatter chart', I still contend that it contains just too few data-points (5 in all) to justify any 'concerns' relating to oil/water ratio. Also, the data upon which you base it (that from the OGA), doesn't justify drawing any particular conclusions whatsoever. Because your 'base graph' (OGA) is drawn showing average bbl/day on a monthly basis. And a calendar month is purely a man-made and convenient reference point, nothing more nor less. How about if the OGA graph had been based on time intervals mid-month to mid-month, instead. I'll bet my shirt that the figures on which it was based would be different. Or how about 45-day intervals, instead. Different again.
Furthermore, the most recent data point indicating 8% 'cut' is the last one based on the September figures, gathered just two and a half weeks after getting both flowlines active again.
Allow me to run a completely (maybe) ridiculous idea past you. An imaginary scenario, hope it makes you laugh. What if in the process of getting both flowlines online, one had had to be displaced to water? On opening that flowline back up, the water would have gone through the production train's metering systems, and by rough reckoning, 2.5 km of 5" flowline contains about 150 bbl fluid. Subtract that from the water produced that month, and we're back to 7%! OK, I know it sounds daft, but on what are the figures provided for total 'fluids through the system' based? The figures recorded on the meters, or 'doctored' figures? Surely not the latter.
Also, compare the positions of the September and July data-points on your chart, relative to the 'mean' straight line you've drawn. The July water percentage is further below the line than the September one is above it! What does that mean? That we should choke back and run the wells at the rate they were flowing at in July, just to get a lower watercut ratio? Of course not, because it'd mean less oil going to market and making money, and anyway, 8% is still way withing 'guidance', and can be easily coped with by the AM.
I am not suggesting that the OGA data should not be ignored. I was very glad to see it, myself. But other than the Oil / water /gas figures it tells us, it cannot be used as a method for trying to gauge whether the EPS is going according to plan, or a reason to class it a 'failed experiment' kept secret from us (dishonestly) by the company, throw our arms in the air, and sell all our shares...
We have gone to great lengths to explain why we do not expect to see coned aquifer water during the lifetime
of the EPS, under our base case. This is our continuing expectation. The perched, or stranded, water we have
experienced is consistent with our reservoir model and since our capital markets day presentation this
interpretation has been reinforced by the Company’s technical work. Notwithstanding the increase in
aggregate perched water production to a sustained rate of approximately 7.5%, water cut remains within
expected ranges and is not impacting oil production levels or the cost of production.
I'm not arguing against your 3 hypotheses for clarity. I'm just pushing the fourth possibility that only 7z was flowing for the whole of September which you think is unlikely. So let's hope whomever is correct that the outcome is yet positive.
WW.
RNS 2nd Sept "Operations have now recommenced with two flowlines. As operations move into the next phase of commissioning over the coming months, production and availability are likely to be constrained as certain planned works and delayed data gathering activities will require periods of production shut-in."
RNS 2nd Dec "carrying out periods of production from the 205/21a-6 and 205/21a-7Z wells separately, to assess fluid dynamics and measure reservoir performance without the impact of interference from the other well"
dspp
if you look at the prrsentation 7/10/19 it says eps results at or above expectations.
best case water saturation 5-10% from CPR
well 6 = nil
well 7z = 8%
there is a big tick at the side
All your data is just repeating what they have already released and have said is better than expected.
wellwell, you are indeed misunderstanding. May I suggest you look at the watercut vs monthly flow rate SCATTER plot I posted on TLF along with the accompanying notes in various posts. Not the month-to-month calendar trend, but the x-y scatter plot. Then you will probably understand the concern, and the (so far) three hypotheses that I have been able to propose.
yasirasmi, thank you. HUR will have far more data than we do, so I hope they are seeing things very differently. HUR have been very straight with the data that they have shared, but have not shared all the data. That is their prerogative but it does create issues at times like these. They are also somewhat casual at seeing things from the other side of the fence. We live in hope.
regards, dspp
DSPP I don’t follow. I thought the Sept 17k 8% WC was the contentious info and this comes after resumption of the two flowline capability as per RNS 2nd Sept (a Monday)? August was less than 8% and could be commingled. I fully appreciate the same could/might be the case for Septembers figures but they did state they would be flowing each well separately in the same RNS!
I’m not saying this is the case, but it remains a possibility unless I’m missing something. I’ll caveat all the above by stating I’m typing this whilst babysitting.....my own kids....anted they’re quite distracting!
DSPP,
I can see where you are coming from with the evidence on OGA charts, but is it not possible that HUR's interpretation of the same data is different to yours.
In July presentation HUR mentioned that as there is very little draw down, it is not possible for the aquifer water to come up against gravity. There was also Bach Ho graph in the July presentation showing the water cut, which even though is not a high percentages but shows a rapid increase during 87-88 and then a linear increase against production from 88-89, but then suddenly drops down significantly in 89-90.
Also on slide 11 of Oct roadshow the EPS start up results show water cut for 6 well as nil and for 7z at 8%. Do we expect them to include Sept data there? I believe they should have!
I know the RNS was ambigous with little technical details and an unexpected Lancaster update on its way, but that may as well be to give something positive to hang onto until Q1 2020, as it is likely to be otherwise. I don't know where WW result and no further update on Lancaster till Q1 would have left us.
You are a very respected poster and your opinion (which most value and respect) matters and has consequences. Usually we find answers with you but seems this time you yourself are left with a lot of unknowns and fears.
We must be having around 7p+/share in cash by year end. I want to ask your worst case scenario but please don't tell me as it seems everyone will believe that to be the only scenario.
Dr.Trice argued and presented the water issue with a lot of certainty in each one of his presentations and roadshows from July till now. I believe he even said once that this issue has been put to rest with all the evidence thus far. Hope he was right all along and he does not have to eat his own words and a lot more.
Nerve wrecking time to say the least. Hope it works out well for holders!
Wellwell
"I can't recall when that was rectified"
See operational update 2nd September:
"Operations have now recommenced with two flowlines. As operations move into the next phase of commissioning over the coming months, production and availability are likely to be constrained as certain planned works and delayed data gathering activities will require periods of production shut-in."
=======
That dual flowline resumption date falls slap into the middle of the required Aug+Sep single well flow period, therefore it makes hypothesis #3 less likely. regards, dspp
Thanks Albi1
Wellwell
"I can't recall when that was rectified"
See operational update 2nd September:
"Operations have now recommenced with two flowlines. As operations move into the next phase of commissioning over the coming months, production and availability are likely to be constrained as certain planned works and delayed data gathering activities will require periods of production shut-in."
DSPP I can only point to the comments in the RNS a few days ago when exactly what is being discussed was postulated ie one well shut in and the other flowing exclusively. Such testing was potentially not possible before due to the flowline availability issue although I can’t recall when that was rectified and may blow my defence out of the water.
So you don’t know but there’s clearly something going on? Or they flowed 7 on its own for the month of September at 17k and got 8% WC? You may not be wishing to influence the SP DSPP but I fear you’ve done exactly that.
---
If the % watercuts are unchanged, they would have had to have flowed the 7z well on its own for pretty much all of Aug+Sep; and the 6 well on its own for pretty much all of May; and roughly 50/50 splits for all June+July. On the public data given, that is about the only way to achieve the outcome shown by the OGA numbers. As I have pointed out this is entirely possible, but is it plausible ? Is it more plausible than either of the other two hypotheses ? Is there a fourth (+) hypotheses and if so what ?
- dspp
SG2
"A discussion that should not be necessary."
Completely agree, have email Hurricane Comms for an update. Will post or perhaps we'll get a clarifying RNS at some point before the December 'Update'.