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Steptoes as you seem to insist on repeating your 'valuation' here's a repeat of one of my replies:-
I had to laugh - known value of Portland + Kimmeridge at HH (or 'complete guess') - '£250m. Could be a bit less, could be a bit more but who knows)' + 8 sites {48 Kimmeridge horizontals when current UKOG tally is none) in HH licences (let's forget Brockham sits adjacent to the northern part of the licence area) for the Kimmeridge, which seems to be in trouble even at HH - so just the £1 Billion there.
Then why not triple that - for the rest of the areas - so £3B - but because it might take a while to get the sites and drill the 144 wells (24sites x 6 wells each) you apply a 25% COS - so just the £750mm - can't see any problems at all with that kind of detailed examination of future value - or garbage in, garbage out.
The issue isn't what the value might be if everything goes well, it's details like Brockham might have 'proved' the northern part of HH is non prospective for the Kimmeridge, Broadford Bridge a significant southern part of PEDL 234.
Details like all the numbers for Portland are from prior to HH-2Z, when the model was based on production from the whole section not just the sweet spot, with the well in the sweet spot this may limit the connected oil and recovery thereof with intra-formational seals and mostly poor (ie not very permeable) reservoir.
Details like your £250mm just for HH based on recoverable oil of about 14mmbbls, but the 10mmbbls quoted by SS (30% of 11mmbbls connected oil, 3 producers 2 injectors) for the Portland was based on the 'old' concept of where the production was coming from - and the 1mmbbls per Kimmeridge horizontal needs to be CPR'd after being 'estimated' a long time ago - ie prior to HH-1z ewt.
The application for FDP approval is just for HH-1 and HH-2z so for the foreseeable future assuming a CPR emerges for the Portland the limit of 2P reserves could be just HH-2z without an injector. The recovery rate in those circumstances could be as low as 10% of connected oil, but even if the 11 to 14mmbbls connected oil remains correct a 30% recovery gives (according to SS) a NPV of about £72mm.
But until there's a CPR it is all just guessing, not fact and assuming anything about the Kimmeridge even at HH, let alone elsewhere, is very risky - the reason the company gave for HH1z delay was the need for more data - it's a pity they don't release a bit more of the data they do have so pi can have a view.
A lot has happened since November 2018 that needs to be input by the company into forecasts - it just isn't good enough after 18 months of testing and a new well to have had only limited (and sometimes conflicting) reveals of the current forward programme such that it's plainly obvious the November 2018 plan no longer applies. Even prior to the water problem it was unclear what well would be drilled next - and when.
IBUg - I agree - I was just pointing out that in his post at 9:50 tadoay Steptoes said"The Horse Hill license areas total 143 square kilometres; on company estimates (see slide 16 here -https://www.ukogplc.com/ul/UKOG%20Corporate%20Presentation%20Nov%202018..pdf) there's room for 6-12 sites in that area, with 6 wells at each site. Let's call it 9 sites, existing plus 8. "Target recovery 1 MMbbl/well" (slide 15). So 8 more sites each worth around £100m NPV - IF the Kimmeridge concept can be proven (bring on the Balcombe EWT)."
I'd love to think they could get 9 sites in the HH licence area but I think SS is correct - they are limited to HH
Where is applegarth when we need him ?
Let’s not forget the potential on the IOW. If we could farm out on that I would be happy though don’t think that’s the current plan.
What we need is new brokers and advisers ones who can raise the price instead off hampering its
I'm not a great believer in ramping or deramping. I am much more of a conservative / realist nature. If you are going to listen to posts on this and any other board, it is important that you understand what is being said.
So thank you Seadoc for posting the mechanics of how you get to the numbers you have posted in the past. People may not like them, they may adjust some of the input data but they can now see that it isn't just an unfounded finger in the air job. My main concern, if I was that bothered, would be those posters who don't understand the formulae.
PS. How standards have fallen. The word "formulae", the plural of formula is now being highlighted as a misspelling. I refuse to use the modern day "formulas".
Mirasol
You need to listen to SS Interviews more. He has said on a number of occasions that the only drilling done in PEDL 137 will be done from HH. I'm not going to go back to try and find it but it was also stated in in one of the FAQ or Q&A pdf's on the well laid out UKOG website. It even stated that "Any additional wells, if permitted, will be on the same
existing well pad. It does not require extra space or land."
They would need to carry out the requirements of the RA clauses for PEDL 246 or lose that licence imo.
"PEDL246
Horse Hill Development
RA
acquire 25 km of new 2D seismic by 30 June 2020 and acquire 10 km2 of 3D seismic by 30 June 2021, and drill a well to test the Kimmeridge limestones by 30 June 2021."
Seadoc's £30m vs Steptoes £1bn, somewhere in the middle i reckon :)
Steptoes
Your valuation was specifically based on the HH licence area of 143 sq. kms- not the "huge acreage" elsewhere. I honestly think they'll be lucky to find more than another couple of sites in the area.
What is worrying me is that there seems to be a serious collapse in belief in the last week - we're now at 0.7p - down from 0.875 just before Christmas - when we were hoping to see maybe 2p in short order..................
Seadoc, If you use a more reasonable multiplier as you suggest, say 5, your calcs confirm that value of the single horizontal well = current market cap? Sounds good to me. What about HH1 which is already flowing = another £5m. What about the other planned wells = number of wells x current MCAP. What about all of the other assets....
"The Horse Hill license areas total 143 square kilometres; on company estimates (see slide 16 here -https://www.ukogplc.com/ul/UKOG%20Corporate%20Presentation%20Nov%202018..pdf) there's room for 6-12 sites in that area,"
I have real problems believing they 'll be able to get anything like that number of sites in the HH area. Have you ever been there? It's big houses, NIMBIES with deep, deep pockets and a real dislike of any development on their doorstep