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Can some explain to me why we always get to 6.4 then pull back all the way to 5.8 - 5.9 ? this has happened 5 times in the last 6 weeks, we seem to be the only company thats producing and not going up or at least holding, great chance to top up again
Yes - this board needs more reasoned comment from posters like Slift.
Thank-you. My figners remain crossed.
Slift, let me personally thank you for the high quality of your posts both on HUR and TLW. Keep up the good work. You research intensively , and then put questions out there for debate, which is the way it should be. It really is high quality input. So a genuine thanks from my side.
Slift - i will watch with interest. I am not sure about guidance being a certainty or even going to be treated as one . and whatever it says for there will be still people spouting on about water cut/ giant squid etc etc.
I would like to think you are right in that the market will react positively ... guess i am just a bit fed up of watching the SP get hammered illogically in my view at times. As a word of caution i would point out that if you look at the RNS of 29/1/20 where they stated production was above the previous guidance and that they were aiming for 20k look what happened to the SP. was up about 2p close of play.next day was lower than before the news broke.
Hur seems to be the share that keeps giving...giving me grey hairs!
but my fingers are crossed and
CaptainSwag,
I believe the market will react as Hurricane provides a production guidance for the year (if they do that is).
"the SP today is less than when that news broke - and we have both wells working and 50% ish more production - plus lincoln approval. So i am not sure the market is reacting according to anything at the moment."
Whether Hurricane has 50% more production, or 100% more production is short term. As per my previous post, without a guidance for the year, there is uncertainty regarding production.
And it's the certainties (e.g. production guidance) and uncertainties (e.g. no production guidance) that affect SP.
Slift.
slift - i think the market just saw problem when it was down to one well and priced in the worst. Which is fair enough...it was a shocker...
the SP today is less than when that news broke - and we have both wells working and 50% ish more production - plus lincoln approval. So i am not sure the market is reacting according to anything at the moment.
CaptainSwag,
They also only produced 15.5k average until 15th May. So the shut down of one well isn't the sole reason, imo.
Personally, whilst it's good to have higher production, it comes at a huge risk.
Unless ESPs have reduced the water cut in 7z, I'm against higher production. A stable production at 15k, is better than 10k production on well 6 because they aimed for 20k.
Note: When they shut down the 7z well due to interference, the market was uncertain about even 12k bopd average for the year.
BOD giving us a guidance for the year is confidence from management that they'll be able to achieve that guidance for the year. The market will be reacting accordingly to the guidance going forwards (and hopefully ignoring what happened in H1).
The fact that no production guidance is currently given adds to uncertainty about the operations as well as the management.
Slift.
personally with the issues in h1 that you point out - i wonder if they would bother with giving guidance for the year. i am not sure what is gained as it wont convince anyone who wants to doubt it anyway
slift - I just read it that they were down to one well after the interference and therefore the production was going to have a period of substantially lower volumes- well 6 was at 10300 even though they were planning to increase bit by bit.
As such they had to notify that previous guidance was now in doubt and therefore were suspending it. Nothing more than being transparent and notifying the market in a timely fashion
CaptainSwag,
I'm skeptical about 20k. Mainly because they have suspended production guidance.
Q1 resulted in 14,900 bopd. Q2 resulted in 14,300 bopd.
I want to say that once they have finalised short term production strategy, they'd give an updated production guidance for the year (most likely to be 14-16k).. and if anything, they should really be more conservative about this after H1.
Slift.
slift....in my opinion 15k was just where they were when they had to announce the OGA decision. I am guessing they are still trying to get towards 20k as they advised edison. Of course as you point out they will be watching the water cut
adoubleuk,
I don't think they'll be "playing with things" right now and definitely not the choke size. They are more likely just using variable speed drive to adjust pump rate of ESPs.
Or that's my understanding from the latest RNS when they said "finalising near-term production":
RNS: "continue testing both wells on ESPs for a short period of up to two weeks before finalising its near-term production strategy"
I think the bigger problem that they are (or have been facing) is the water cut (which has limited the production) from 7z.
They are also limited to processing 20k bwpd and 30k bopd and 35k bpd total fluid capabilities.
To me, this makes sense as to why Hurricane has increased production to 15k. This allows the use of the maximum 20k bwpd water processing capability of the Aoka Mizu.
Once they have finalised the near-term production strategy, i'd imagine Hurricane won't be messing around with production. We have seen the water cut to increase, so a 20k bwpd (or 57% water cut margin) would be the "cautious" optimised production, where there are still uncertainties about water cut.
Regarding ESPs - They are centrifugal pumps running on variable speed drive suited for large flows. I think anything around 7-10k barrels/day total flowrate would be good enough for operation. Any lower may cause the motor to trip on overload due to heat produced. Optimum rates are probably like 15k barrels/day for the type and size of pump Hurricane have (all as a best guess).
Slift.
rshah,
"How long can they run the wells on ESP? Is there a time limit?"
As such, no there is no 'time limit'. Many many wells N.Sea and elsewhere are run exclusively on ESP, especially in marginal semi-depleted old fields where bottomhole pressure is no longer enough to sustain 'natural flow' and water-cut may be 85% or more. Neither of which is the case on Lancaster.
The company has set themselves a self-imposed 'limit' of 15 days running both wells on ESP (why ?) before coming to some sort of foreward-looking'decision' which hopefully they will make public via an RNS in short order. Reading between the lines, this means that they'll be 'playing with things' right now, running the ESP's at different speeds, altering choke sizes, and so on, trying to find some sort of 'sweet spot' on which they can base a nice positive RNS, to hopefully generate shareholder interest.
Personally I feel such a timeframe is pushing things a bit, and something of a rush job, but that just my opinion, for what it's worth, of maybe isn't. And although Dr Trice has been retained in an advisory capacity, there's no guarantee that his advice will necessarily be heeded if it goes against the new BoD's obvious desire to increase production while cutting costs.
ESP's can run 'til the cows come home, and there's no actual reason why on or two of them may not remain in use beyond the stated 15 day 'trial'. But if there's one (or two) things those bits of kit really don't like, that's being run outside of their optimum performance envelope (which is dependent on numerous things), and being turned on and off.
Judging by today's once again staggeringly good 'this is going to pop' share performance (where do the chartists go at the end of the day?), I'm personally just waiting for some technical news before even considering buying back in.
How long can they run the wells on ESP? Is there a time limit?