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gkb,
It's back to E Sadak for a comparison where the success rate after being put into production seems to be about 63% (7 out of 11), but that's after establishing a commercial flow.
UKOG have said about the same as Loxley and Arreton at about 65% - but I'd like to see the risking they've applied to get to that figure for those two first. Whilst companies have tried over the years to take the subjective element out of risking because it is opinion the best they can do is police it with risking committees or peer review - I don't suppose there's much of that in UKOG.
It also depends on the number of factors. I'll have a subjective go at four factors.
source presence - 100%, it's there - some risking might include migration path
migration path maybe 90% as they are drilling away from Basur-3 (but it won't be migrating from Iraq - a note for Wizard)
structure maybe 60% - includes top seal - structurally very complex area - if E Sadak can miss the reservoir 37% of the time then that has to be a problem, seal, not sure how much of an issue top seal is - obviously Basur-3 tested oil
Reservoir presence - 80% - again as it's expected to be naturally fractured carbonate to deliver oil there may be less or zones without fractures..
On a four factor risk that's 43% COS. Then there's commercial success - but as they might have to put the well into production regardless if it tests I'll leave it at 43%.
Gingerhippo,
the whole point of ramping is to raise the price temporarily, sell, and buy back in when the price inevitably drops. The few desperate ones left don't really have the clout for it to work so they are left floundering , but they do like to double their output when the herd arrives. So there is money to be made but their hopes of 5p in a month, burning shorts etc. is based on zero knowledge of the company except what Zak Mir says, the ticker and it's popularity so P&Ds work - oh and anybody they don't agree with is a troll etc.
BTW - I have repeatedly stated that I also trade on spikes, like ninetails who more recently realised if you can't beat them..... - at the moment I'm at a minimum of shares after the rise to over 0.4p, my previous sells were during the Loxley rampathon - but I don't encourage them. Obviously my long term view is not positive - if UKOG put some information about Turkey that suggests Resan / Basur won't be like E Sadak then that view may change.
As for the UK are these projects in a holding pattern waiting for the Basur well results - if Basur fails maybe those 10s of millions projects will be progressed, and maybe Arreton will be returned to 16+mmbbls rather than 2.6mmbbls in the Turkish presentation.
We are going a little off topic talking about Genel.
Genel have expanded operations in Kurdistan and have HUGE gas assets ( 1.4 BILLION BOE )in their back pocket awaiting KRG's agreeing development terms.
We will never know who AME tried to interest in the Resan opportunity and who passed.
that doesN'T necessarily mean
cyan2,
Suspect that they are pretty occupied with their current exposure in Iraqi Kurdistan.
They do have interests elsewhere, but that does necessarily mean they want to increase their exposure to the immediate neighbourhood of Iraqi Kurdistan.
Ocelot Genel have wider ambitions than just Kurdistan and have previously been involved in Mediterranean drilling too.
If there was a great regional cheap onshore drilling opportunity I think they might have been up for it.
I just wonder how many inspected the Resan opportunity and passed?
"Our pre-production assets are at complementary stages of development, with appraisal at Qara Dagh, material resources at Bina Bawi and Miran, and exploration in Morocco and Somaliland."
https://genelenergy.com/operations/pre-production/
Roll of the dice means just that it is a shot in the dark.
Next year it will be another project which will need placings maybe Isle of White, I’m sure there will be a consolidation at some point in the near future, what was the consolidation ratio that UJO used.
And then further placings.
Meanwhile the vaunted Gatwick Gusher cash cow has been quietly sidelined, and the multiple placings used to increase UKOGs share effectively money burnt, well apart from the vast sums that have been paid to SS in salary and bonuses.
I have lost thousands on UKOG and I do not expected to get it back ever.
I do have a small holding that I put as a punt when they announced the HH side track drill.
cyan2,
You ask why Genel hasn't bought in.
But has Genel ever bought into any field in Turkey?
It may be Anglo-Turkish but the core of its operations is in Iraqi Kurdistan.
Ocelot; you wrote ;
"Turkish Lira has been through a very turbulent time, perhaps it has prompted some of them to rein in their commitments (but I'm just speculating)"
Maybe; but we do know the area was left abandoned for 54 years after that much quoted 2,000 barrel (extrapolated) test.
Why?
I hold GENL; a sizable regional player who has a large cash mountain (going ex-dividend in May).
If the prospects were so good; why hasn't GENL bought in? ; it would be peanuts for them.
Anyway ;Its a well structured deal for AME with UKOG frontloading the risk.
I selected a few paragraphs from the RNS that announced the deal;
"The Basur discovery, made in 1964, whose primary target was the shallow Cretaceous age Garzan reefal limestones, recovered 600 bbl of oil to surface from deeper naturally-fractured and dolomitised Cretaceous Mardin limestones. Core and cuttings contained live oil. Of the oil to surface, 500 bbl were produced over a 6-hour test period, equating to an extrapolated rate of 2,000 barrels of oil per day ("bopd").
Similarly, wells drilled in the 1950s at Resan originally targeted the overlying shallower Garzan but found good oil shows within the Mardin, although short tests were inconclusive. As the Mardin's natural fracture potential was largely unrecognised at the time, it is AME's and the Company's view that the Resan wells were not adequately tested."
"The Company believes the occurrence of moveable oil in Basur and Resan has been reasonably demonstrated by prior wells and, therefore, the greatest remaining technical uncertainty is whether the Mardin reservoir can deliver oil at commercial rates and volumes"
https://uk.advfn.com/stock-market/london/uk-oil-gas-UKOG/share-news/UK-Oil-Gas-PLC-Entry-into-Turkish-oil-project/82908768
ocelot
Sawyers brother at Güney Yildizi Petrol who is partner in 5 other fields with AME out of 7 is one of the absentees. That tells me more than your reluctance to see past the end of your nose. Keep polishing.
cyan2,
Not sure there is anything to conclude from "the absence of AME's normal Turkish partners". Don't forget that the Turkish Lira has been through a very turbulent time, perhaps it has prompted some of them to rein in their commitments (but I'm just speculating).
Good afternoon ocelot
"he believes the dice are loaded in his favour" It appears to me ; from the evidence; the absence of AME's normal Turkish partners; that Sanderson is in a minority who thinks the odds are loaded in favour of significant commercial success.
Time will tell
It means he believes the dice are loaded in his favour but cannot be sure before the well is drilled.
"What's the COS on the Wild Turkey Chase drill? "
Very good question. Usually a company would publish that percentage estimate . I can not see where UKOG has.
The important clues for me come from the fact that AME could not persuade their usual Turkish partners to invest AND Sanderson's remark about " a roll of the dice".
What does that mean : One in six?
Ocelot: I think the interest payment reduction was largely due to the replacement of interest-bearing loans with a Riverfort convertible in August 2019, wasn’t it? Not necessarily good for shareholders, as the company admitted in 2020 when they repaid the outstanding balance.
Incidentally, the Riverfort loan agreement included the following (does it still apply, does anyone know?):
“This Loan agreement also provides for further funding on the same terms of between £3.6 million and £4.5 million dependent on the operational performance of the Horse Hill asset.”
Ocelot: I think the interest payment reduction was due tomthe replacement of inter
With Sando alone taking close to £300k p.a (~£822 per day), then you need ~22 bopd just to cover him.
Was concentrating on the key figure (finance cost down to 286k in 19/20 v 607k in 18/19).
Those trade payables have come down: 1,981k at 30/09/20 v 6,026k at 30/09/19.
But each to his own, the figures are there to be analysed and commented on.
Even if that were the case (which I don't agree with), you're still only looking at the admin costs of £1,755M. You haven't included direct costs or finance costs.
But really you need the cash flow statement because don't forget the company had trade payables of £1.36M to pay (cash out) and almost no trade receivables to get (cash in).
was thinking the income statement provided a figure which it is easier to extrapolate, avoiding the movements in trade receivables/payables of the cash flow statement.
If you want to see the cash position you'd be better of looking at the cash flow statement.
was looking at the consolidated income statement.
Ocelot, are you sure you're looking at the consolidated cash flow statement instead of the company cash flow statement? The consolidated CFS shows net cash outflow from operating activities of £2.8M. (That's down from £5.7M the year before.)
That doesn't include the cash expenditure on capex (exploration, PPE etc). So even if the drilling in Turkey is literally the only capital expense they will have in the next 6 months, they still need the £2.8M I calculated before.
"Admin expenses down to 1,755k in 19/20 from 3,939k in 18/19."
Still too high - thats about 100 bopd going in Admin costs
Admin expenses down to 1,755k in 19/20 from 3,939k in 18/19.
Other operating expenses are non-cash flow items.
Hi Ginger great post. Thanks for doing the maths for our good friend Simple. Maybe even Simple can now work out that a placing is "necessary" . I said over the weekend that I would let the numbers do the talking whilst the rampers said buy 0.5p on open. Utter drivel. The sp is going down in expectation of the promised placing. There will be time to ramp this ...but not yet!