Roundtable Discussion; The Future of Mineral Sands. Watch the video 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.
Hi Mirasol. Have you got the maths right? Is low case 29577 or 295770? If the latter, makes quite a difference.
The CPR had total production as :-
Low case 295,77 bbl
Mid case 499,902 bbl
High case 907,311 bbl
UKOG only get 83% of that - @$50 a bbl in the Low case that's about $ 12.4 million over 10 years - it costs them more than that to run the company I'm afraid
"I think there is a very real prospect of the HH site being in operation for the full duration of the 25 years that has been consented."
I doubt 25 years - the 2018 CPR (page 40) had 10 years (low) 13 years (mid) and 18 years (high). Given the lack of information on HH2z we have to assume we're looking at something less than the mid case. Fields decline in rate and water increases. How long you can keep them going as what the US calls "stripper wells" is more a function of costs - and we all know UKOG is an expensive outfit to run.
I think there is a very real prospect of the HH site being in operation for the full duration of the 25 years that has been consented.
Even if it is a single production well and water injection well.
Even if it is a very small amount of oil.
200 bopd at $50 / barrel is $70k per week or $3.65 million p.a. If that drops down to just 50 bopd, then it is still over $800k per annum which is a lot more than many of the small onshore producers.
UKOG could go out of business, but the HH asset is showing real potential as a long term producer. Solve that water disposal cost issue through re-injection into HH2z and hey presto; a site with minimal running costs. Security would almost certainly be stood down with basic remote security via CCTV. They will not mind the odd day or two of downtime with campaigners sat on oil tanks.
Still running and pump OIL :-)
Stick that in ya swampy pipes!
Ibug
yes - and so have I since earliest STOIIP review by Xodus (high SW throughout the Portland), reinforced by the inclusion of an injector (though subject to OGA and EA approval maybe Kimmeridge water was expected first?) though many didn't. But it's the nature of delivery that is more concerning. Water from fractures can overwhelm oil production as seems to have happened in HH-2z (though UKOG have given no details so maybe it was just OP vs water disposal cost) and stuffing it back in (technical term) to a fractured reservoir can lead to more problems than it solves. Producing water 'locked into' the matrix is controllable, and water from OWC very predictable.
I'd be certain they are aware of the risks and whether they are worth taking.
They have been expecting water all along imo.
"We are reviewing a number of options for the future use of HH-2z, including stimulation to return it into long-term oil production, sidetracking the well to a different subsurface location and possibly converting it into a future water re-injection well to further reduce future operating costs (as foreseen in the Horse Hill field development plan presented to
the OGA earlier this year)."
Even an amatuer could expect it given the history at Brockham.
Mirasol.
I find the wording about the separation of HH-1 and HH-2z to be equivocal, and equivocal from UKOG means not everything is as it seems.
The wording was:
'UK Oil & Gas PLC (London AIM: UKOG) is pleased to announce that as a result of a successful reservoir pressure "interference" testing campaign, undertaken to assess the degree of communication between Horse Hill-1 ("HH-1") and the new HH-2z horizontal, the Company now intends to accelerate the start of up to 25 years of continuous long-term production'
from which you might assume the pressure test found separation, but whether a baffle or a complete separation - ? But they don't say anything specific.
Then later in the same (28 Jan) RNS: 'and have determined that both HH-1 and HH-2z can be produced from the Portland at the same time, without any detrimental effect to the reservoir's overall performance.'
'not detrimental to the fields overall performance', which could mean they are connected but far enough apart - like any multiple wells on a field.
You're right about the haziness in the description of where the water ingress is from 30 June Interim Results RNS:- 'It is now clear from the image logs recorded in the well, that both the oil and water flow originated from a series of extensive natural fractures, primarily at the toe of the well, although there are also further natural fractures observed higher up in the well.' So further up the well (in terms of MD rather than nearer the surface) could mean anywhere along the horizontal.
Although only mentioned a couple of times over the years about fracturing in the Portland (and just after the HH-1 2016 testing being the first) this also caught my eye on the re-read of that excerpt:- 'both the oil and water flow originated from a series of extensive natural fractures'
Presumably the additional perforating in HH-1 is hoping to intersect more fractures - but how short lived additional production might be becomes a further question, and the possibility of water ingress deduced from the latest OGA figures (let's wait for July's before any conclusion on that) might urge caution in deeper perforating.
What they actually said was:
"It is now clear from the image logs recorded in the well, that both the oil and water flow originated from a series of extensive natural fractures, primarily at the toe of the well, although there are also further natural fractures observed higher up in the well"
"As for HH-2z the water ingress is near the heel so it would require a sidetrack with no certainty it wouldn't encounter the same problem elsewhere away fro HH-1 where there is a suspicion that water has started being produced anyway."
they've never said exactly how far down the horizontal section the water zone is - not at the toe obviously but probably not at the heel either. It's supposedly in a different pressure compartment but so a side track might work - but only if you know where to put it. The reservoir model pre HH2z was clearly wrong .
Presumably after 10 months they now have a new one - but without 3D and only the HH1, 2 and 2z its probably very poorly controlled. Do you take another expensive punt on what is a smaller amount of oil or do you go to Turkey? We know that answer already
As for water production the OGA figures show some water from HH1 - no unexpected TBH - but we need to watch how that develops........
Troll,
I see - investors are the ones that predict future SPs and flow rates without any explanation
whereas 'trolls' investigate what the company has said and compare it to reality and draw conclusions based on evidence, not a random number generator, moving the decimal point every year or so for the SP (2016/2017 £1.0 , 2018/2019 £0.2, 0.08, 2020 £0.01 & £0.0025), for flow rates thousands to hundreds.
Enjoy your other place, I'm sure it's more comforting being amongst like minded 'investors'.
Sorry forgot, Investors aren't allowed on this troll board. See ya trolls..... I'll keep my investor updates on other streams.
Troll,
££££££ - But most into HHDL who probably need it for future work on HH-2z so won't be paying loans back any cash for a while yet.
As for HH-2z the water ingress is near the heel so it would require a sidetrack with no certainty it wouldn't encounter the same problem elsewhere away fro HH-1 where there is a suspicion that water has started being produced anyway.
Conservative 500bopd, lets hope that isn't as wrong as previous guesses:
23/6/20: 'HH-2z will deliver over another 500bopd....could easily hit 1000+bopd after intervention and optimisation.'
23/1019, a year ago: Thanks to trolls and YA for keeping the price down. Just gave me the opportunity to pick up another 132k shares :-) By the way trades are 1.12p are currently buys!
Wont stop that pump though!
It works 24/7 pumping oil and £££££'s into our companies bank account!
TH2
You do realise it is ****ing down at HH so watch out for the water tankers to clear the bund out as well. Not sure the eyes will be keen to get wet today.
Difficult to be so categoric, I would have thought.
Yes, there will be another placing when it's required, but that placing should see Turkey quite well funded and Turkey may be about to proceed quite quickly at the time.
"thanks to all the trolling I can pick up loads of shares cheap :-)"
You're buying shares which will be diluted again by year end - that's no bargain I'm afraid
since 3:00pm yesterday.
Next we see tankers of different configurations as she cleans up. Then it's on to oil tanker counting for the eyes.
Should see an update RNS from the official stream by the weekend but I expect the eyes to be racing to break the news first :-)
HH-2z plan?
I'm guessing they are waiting to see what they can get out of the HH-1 vertical portland section before deciding how to proceed with HH-2z.
After all they could always put it into a similar configuration to HH-1 if the pressure test back that up. It obviously is close to HH-1 but will the oil pool sustain two side by side verticals is the question I guess.
Anyway first things first HH-1 production flow rates will give us a revenue stream to base future Horse Hill development on.
I'll guess conservatively 500bopd.... let's see ???
P.S. Nice top up as 0152p this morning..... thanks to all the trolling I can pick up loads of shares cheap :-)