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which way
the interim presentation shows operating cash flow
2020 base $200m upside $230m
2021 base $230m upside $300m
Obviously it will depend on oil prices
Rev
You wrote:
2. At 20Kbopd we're making £300mill for the next 2 years and then in 2022 with 40kbopd we'll be making nearer $0.5bn, which, suggests 2 things; a) our share price should be substantially higher and b) with around $1bn in the bank by end 2022 (accounting for some moneys spent on tie backs etc.) we could, in the absence of a farm in, start funding a staged FFD out of our own funds and minimal debt. This puts us as masters of our own fates.
If the EPS performs as HUR expects they will certainly be cash generative. But your figures seem far too high. For example, HURs forward guidance for cash flowin 2020 at the interims was $200m not £300m. Similarly their forecasts of CapEx in the interims is up towards $200m total over the 2020-21 period. Slide 17 refers. I appreciate the most recent guidance changes things, but not necessarily in a positive sense and nowhere near the amount you suggest.
GLA
Thanks, also my hope.
from the RNS - Confirmation of the tie-in programme is expected during Q1 2020.
I think they are just covering all bases and giving all possibilities - better that than to assume it will be given and rub OGA up the wrong way
John, it depends how the well has been "suspended".
If they set a suitable reservoir barrier at the time, that complies with the regs, then all that's needed potentially is the well head to be cut and recovered which could be done by an AHTV with suitable cutting spread from a third party on the back deck and a WROV to assist. Less than £1m easily.
If there's OBM in the annulus then this will need circulated out and an environmental plug installed to prevent any remaining OBM leaking out once the wellhead is cut. This will cost >£1m but less than £2m.
If however they have NOT set a suitable reservoir isolation barrier for decommissioning purposes (they don't like to use the phrase abandonment as much these days) then it could need a rig.
Without seeing the length and position of the plugs I can't say one way or the other as to which option is required.
However I think the talk is moot and the OGA will approve the application in good time.
Nice to see a post from the Rev
At the risk of incurring the wrath of certain members of the collective, my office worker take on wc is that
a) DrT explicitly says that from analysis it is perched water so ok with me, I don't believe he could afford to lie on this
b) Additionally, and reinforcing Dr Ts view, If the heels of the wells are so close then I would have thought logically that if one well were drawing non perched water then the other would too. Trapped water in the particular area being drawn by 7Z is the only explanation.
Promise never ever to mention again. Till next time at least.
Like others I am concerned at the talk that the expensively drilled, rather splendidly successful, LC well may be plugged and abandoned if permissions to tie in to AM by the OGA cant be obtained in what seems to be a relatively short time frame. Is there no appeals procedure to extend this? Also, and I reiterate I am a landlubber, how do you plug and abandon a suspended well. You cant just send a bloke down in speedos with a snorkel and a few trowels of concrete, surely its a big operation?
Rev,
I agree in principle with most of what you say.
I agree that the OGA has been a key player here. They want both fields delineated in greater detail.......why were all 3 wells on GWA horizontals? I think Spirit pushed Hur for that plan and now after mixed results the OGA says no more get back to the basics of delineation. Also same applies to GLA now.
Hur have to do a very careful balancing act, going for more production on GLA, satisfy the OGA for more delineation on both fields, show that they can "go it alone" to the market as well as satisfy the OGA licence commitments, whilst also providing sufficient substance (with production and reserves) to entice a buyout or farm in!
I've had a good read of the RNS twice and read a lot of the threads here and on TLF and have decided to post my own 'positives and negatives' resume of where we are from the perspective of a non oil professional, which I'm happy to be challenged on, but thought it made interesting reading.
Firstly the works over the next 3 years so long as the OGA and Spirit play ball;
2020:
Lanc EPS ramps up to 20 kbopd, which by my reckoning gives us somewhere in the reagion of $300mill free cash flow at $60 oil (which interestingly is about the same give or take as both PMO and TLW who also have billions in debt and so substantially higher EVs)
CMD March 25th - we wait to see what lies in that box.
3rd Lanc well
Sub vertical well(s) on Linc delineating the size of the field.
Tie back linc to AM, tie in WOSP and mods to AM
2021:
Lanc 3 tie back to AM with FOIL by end 2021.
Debottlenecking work
Sub vertical well(s) to show the extent of Lanc
2022:
ramp up to 40kbopd
Positives:
1. We're not going bust. Seems a strange one to begin with, but there were some derampers who were suggesting this not so long ago, and RT has clearly shown that it's perched water not coned so, while there are certain concerns about the amount of water, we will still be making money for many years to come.
2. At 20Kbopd we're making £300mill for the next 2 years and then in 2022 with 40kbopd we'll be making nearer $0.5bn, which, suggests 2 things; a) our share price should be substantially higher and b) with around $1bn in the bank by end 2022 (accounting for some moneys spent on tie backs etc.) we could, in the absence of a farm in, start funding a staged FFD out of our own funds and minimal debt. This puts us as masters of our own fates.
Negatives:
1. No mention of Warwick or Halifax, which shows they are either disregarded or at least on the back burner.
2. Additional water cut from 7z while not fatal is an ongoing question mark (this taken from TLF discussion more than my own opinion, but DSPP generally seems to know what he's talking about so it's worth at least voicing his concern).
3. lack of 3 additional wells on the GWA shows the bod have less confidence in that acreage than previously hoped.
That said I quite like the idea of the sub vert wells to delineate the extent of each field, after all, if a farmer wants to sell a field the buyer wants to know 2 things. How big it is and how productive it is. The EPS is showing us how productive it is and the sub verts will show us to a better degree of accuracy how big it is.
Is this being done as a precursor to offering the GWA and then the GLA for sale, or is it to better plan for the FFD of each area? It could be for both.
Rev.