The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
ngms27,
I agree that well 6 is likely at it's (or near) it's maximum stable flow.
I think we'll 7z is also near it's maximum flow.
Both flows need to be controlled to minimise interferences.
So I also expect a decrease in oil production going forwards.
Slift.
ngms,
The -6 well isn't flat out. The choke on -6 isn't even half open and the ESP is switched off.
Over a year after first oil and it's nowhere near even coming off plateau on total fluids, it can draw these total fluid rates for a very long time to come.
The water cut is rising by 1% a month and is currently at 12%, if it continues rising at this rate it will be another 5 years before it is anywhere near economically marginal.
Whilst the water cut is rising oil production keeps increasing too (could they be connected? haha), but yet you are concerned about an imminent catastrophic decline to some non-commercial level? Lol. OK.
Lots of people knee-jerk panicked about the water and sold out the most productive well in the country, because they feared it might suddenly be worthless. But 6 months later it's still the UK's most productive well (production has actually increased!). And that's with the choke still half closed and the pumps turned off.
Great story for your grandkids that one! ^^
Let the financial accounts be the judge of who is right or wrong here.
The whole situation is just too funny, I sure there is some parable about candy and infants.
Whilst the oil is flowing all kinds of possible scenarios exist.
Lancaster despite a possible downgrade still has plenty to offer. A future well 8 must have many envious beady eyes looking at it with the data and experience /lessons learnt of previous wells it surely will attract finance.
Hopefully self finance.
It’s coming, calm yourself
Was that before water started increasing on well 6?
This contradicts the RNS.
All I will say is that was then, this is now. Do you really think they wouldn't be producing at 20k bopd as they were previously if they could and as per the CPR?
Trice Q and A 2020
Asked if they wanted to work on 7z would they shut in both wells.
Answer - no we would keep guidance of 18k and run 6 above rates already run
That was the jist of the conversation
Really?
It didn't do that on startup of the EPS as per the 11/7/2019 RNS:
The 205/21a-6 well produced dry oil at a maximum natural flow rate of ~16,500 bopd.
Since then it has declined and now has a circa 12% water cut. Every % of water reduces oil production in a more than 1:1 ratio due to fluid dynamics.
I'd think well 6 is just about flat out on natural flow at 12,000 bopd and that's going to decline over the coming months, perhaps materially so.
OGA will not insist on commitment wells if much lower OWC IMOV. See Crystal Amber investor newsletter from late July
Source - https://storage.googleapis.com/crystalamber-com.appspot.com/_downloads/monthly-net-asset-value-2020-07-23.pdf
Hurricane Energy plc ("Hurricane") Over the period, the company's Early Production System ("EPS") experienced an increased water cut. In one of its two wells, the 7z, production became unstable and had to be suspended. As a result, the
company suspended its production guidance for 2020 of 17,000 net barrels per day for the year. Shares sold off as investors contemplated the potential impact on redeeming the $230 million convertible loan
note in July 2022, in the context of capital projects over the next two years that may be required by the regulator.
The EPS's electrical pumps have since been commissioned. Production has restarted on the 7z and combined production from both wells is now at 15,000 barrels per day. Production for the first and second
quarters was at 14,900 and 14,300 barrels per day respectively. A number of remediation options are available to increase the EPS' production to the target 20,000 barrels per day.
Hurricane replaced its Chief Executive in June. The company is now undertaking a reassessment of its reservoir model. This technical work is expected to take three months and conclude in time for the
company's interim results in September. A potential outcome has been flagged: a shallower oil-water contact, which could explain the increased water cut. Whilst this would reduce the size of the reservoir, it would also eliminate the case for the commitment wells. This should reduce capital expenses and allow the company to focus on optimising the EPS.
6 well will pump 18000 on its own , it’s a stonker!
Nice position to be in.
Me and my truck are happy with our load
Long term we will keep pumping at the current rate.
Hurricane are a cash generating Machine
Stu,
That's a very simplistic argument.
Will that level of production fund the work program ordered by the OGA?
Will that level of production be enough to save equity from being swallowed by the Convertibles?
The answer to both is no BTW, but like I said shorter term you may eek out a few pennies if you get lucky. On the other hand...
Yes but it's not switched on...
The devils in the detail
..... commissioning the ESP on well 6 etc.
Done, read the RNS of 8th July
ngms,
These are strawman arguments.
1). If they produce 16,800 bopd you think that’s worthless?
2). Who cares about Lincoln? It’s not in the market cap.
All that really matters is can they produce >9,000bopd.
That looks like a piece of cake.
Think there's more than those 2 issues with that. To name a few more:
- CAPEX not accounted for.
- Finance costs not accounted for
- "profit" when there's gonna be a downgrade in reserves? That's a huge hit to depreciation/Impairments
And 2 issues with yuor statement.
1. You're guessing.
2. OGA have made field determination for Lincoln. HUR and Spirit are now in discussion over how to proceed.
I believe that the F.D on Lincoln will be a disapointment to the company though. Likely ovr a smaller area than we hoped for.
Bt this is opinion only, as that's all any of us have right now.
Two issues with this:
1) Will they be able to pump 17,000 bopd for the next 12 months? In my personal opinion no chance and thats before I discount maintenance works, commissioning the ESP on well 6 etc.
2) The OGA refused permission to tie back Lincoln
News of tying down a rig for next years drilling campaign would seem to be due?
With production at 17000 bbls a day and Brent at $45, we are generating $280 million revenue a year
Profit of around $17 a bbl gives $105 million
With Mcap at around £100 million and shares at 5p
Does this look like fair value
Me and my truck load think not
This doesn’t take account of a Lincoln well all ready for hook up
Brent crude still rising etc etc