Member Info for CaptainSwag

awk - the latest rns said inspection followed by repair - which sounds very different to an annual "service" to me. However I suspect they would take the opportunity to kill 2 birds with one stone. Would the staff doing repairs be able to do the maintenance?

Thinking about it I wonder if the inclusion of reserve downgrade was there to deflect from the fact that they had an issue? again getting september's probable bad news out but at the same time taking the focus away from the breakdown scenario.

gritstone - i had thought of that. however i think that would be another dent in sentiment. which the sp doesnt need.

personally i would like focus on well 8 and halifax - i am not sure if lincoln isnt more distracting than helpful at the moment.

slift - that is not a bad analysis.

personally my guess is that there will be enough reserves for a couple of years - even a 50% decrease would give that. Gives them enough time to sort plans for well 8.

of course they need water cut to stay stabilised, oil price to stay good - which i think is highly possible - and no more disasters (covid/giant squid etc) - who knows?

Assuming spirit want to continue - lincoln will probably be the first plan - good oil prices could generate( some) income needed for well 8.

The thing is that it could be a long slow slog....and that is the best scenario i can see. my worry on the SP would be the reaction if spirit decide not to go ahead .

i think there could easily be a good trade if the plans are good but the reserve downgrade is significant. the market might initially overreact with downgrade but then recover.

to be fair lancaster has been producing a lot of oil for over a year now. The original CPR was independent and showed significant reserves and contingent resources.
I see a huge difference between hur and ukog which is why i was heavily invested in hur and would never touch ukog.

feelinlucky - the rns says existing and new data- remember they are carrying out a new CPR.

my take on trice was that he had faults but dishonesty wasn't one. if the new evidence about owc has been found that is not his fault.
What would be really interesting is to know what went on behind closed doors that led to his parting company.

haggis - There was one new bit of info and that was the word "reserves" . it was that single word that drove me to sell most of my stake.... they had to issue an rns cos the stoppage had leaked out. the question is why mention " reserves" . i agree that there is something very odd in this rns.

if it turns out to not be an issue then there are going to be some seriously urinated off LTH . on the other hand you cant ignore a potential warning like that - you have to consider the implications.

i agree that the likely rns in september will be owc is higher, reserves lower and plans going forward. however at the moment it feels like a gamble.

i agree that a lot of people have sold and easily - so who was buying?

Slift - badly worded rns inmho again. I took it to mean that there is reasonable probability that reserves will go down with current set up. Their upgrades that could possibly increase reserves are not factored in yet. So that is a good sign as could get it back up etc.

The problem is that they already have some of the long lead items for Lincoln already so that was considered more of a priority. Plus they will prob want to get on spirit goodside if they want to progress. Personally I would prefer well 8 but can they afford both? Oil price has recovered but still must be a serious doubt and therefore income.

slift - i took this to mean possible options to increase production such as

1) aggressive attempt to drain (perched) water
2) isolation of (perched ) water zone
3) sidetrack well 7
4) well 8

problem is
1) dont know how large a volume / how long it could take- if it is perched
2) need a rig , cost of $30-40m plus downtime
3) and 4) not until 2022?

Stu -

i looked at 2). if the reserves go down then that will have a detrimental effect on balance sheet.

lt captain - agreed. it has been horrendous. it has been months of people saying the next rns is binary - when there always seemed to be options. so it has been more of a death by a thousand cuts.
however for the first time since last year i agree and feel the next one could be a game changer one way or the other which makes it very risky. what also worries me is that hur has always been very leaky with info. eg maintenance stop being known about.

i think the good news is that the board have got the bad news out in the open - and the SP hasnt suffered too much - which shows it was already on its knees. they will get production back up and if the reserves are not decreased by too much then it stands a chance - as long as covid/oil price doesnt go pear shaped again. who knows the water cut may start decreasing. then there are the forward plans.

for me the main worry is that if the reserves go down what does that do to the chance of a ffd and sell off? yes they can put a plan in for well 8 but that is some way a way. so could be a gamble of wipe out v long period of suffering.

i have been in this share a long time since before lancaster results - sad day

mr nation - i have to say i feared the worst too. i think the share has done well today with that rns.

Slift - agreed which is why I have sold most of mine today. i trusted trice over perched water. i trusted they could get round the interference. i could accept a decrease i contingent resources . corona virus and oil price will sort out at some stage (touch wood) - but when they say downgrade in reserves that raises too many questions for me. why? of course the board could be being super conservative but that is now too big a risk for me.

i was doing research last night and the reality is that any further work on lancaster is prob earmarked to be 2022. I think the focus on anything going forward will be lincoln. so then we are in the hands of spirit . Also lincoln cetainly did not seem as attractive as lancaster in terms of drill results - so huge questions over that as well.

this was a shocker of an RNS. still got a tiny pot ( 120,000 shares) left -

Good luck all...mind you now i have sold there will be a blinder of an rns tomorrow!..lol

fandg2 - i think they had to release the news about the shutdown as it was already out there yesterday on a rumour/ leak.

i was expecting that as an rns today - what kicked me in the balls was the lower reserve figure. i knew contingent resources were going to be lower but reserves......

i like the board approach - get all the bad news out of the way. however i am fed up of the seemingly continual bad news on this share.

slift - trice never mentioned anything about the isolation being temporary and specifically made the point that they would also be able to isolate the poorer fractures. He seemed very bullish on this method.

If the perched water doesn't drain out of well 7 - one of the options they have is to isolate the perched water zone there. the cost was something like $30-40m (from memory) plus obviously downtime on the well(s).

slift - yes they can use the pre drill model for identifying where to drill and then by TD using a combination of GC/GR/LWD they will have been able to identify perched water zones and isolate - so they are expecting to avoid the issues they have encountered with current wells.

slift - using gas chromatography/gas ratios/ LWD data

slift - my understanding is that the pre drill models of the two lancaster wells were robust - showing accurately the fault zones and fractures- however what they couldnt do pre EPS is identify any perched water zones. Of course lucky old HUR hit one.

However with the EPS they now have a method for identifying water zones in any subsequent wells at lancaster - which can then be isolated . They will also be able to isolate any poorer fractures.

Also looking at the difference since late last year.

1)Board replacement - whilst it was trice baby I think he was left wanting in running the company. Errors that have damaged the market cap/ poor communication skills / clearly difficult to deal with. Treating the business like his own personal chemistry set. New board more corporate focused . So far done what they say they will do.

2) market cap 90% lower - more attractive takeover proposition
3) main obstacle to selling company gone

4) lot more oil produced
5) giant squid has behaved and not intent on destruction as previously predicted
6) oga seem more on side again

slift - thats a shame as i suspect many would be interested in your research - i think you make very good contributions and are well balanced. personally i am always happy to see views from the other side to test if i still think i am investing wisely or not...however i understand that this board can be draining. pity as there is so much that everyone could gain if people just were polite and listened etc..

slift -

Uncertainty to production (no guidance) - late last year they were still testing wells individually and there was never any certainty on what production figures would be. Yes there was an goal but it was still very much in testing phase. personally i was more nervous then because we had only just started. We have had continuous production for 7 more months with no stoppage even though there have been issues
- Increasing water cut - yes
- Downgrade of reserves/resources (due to model review and shallower oil-water contact) - as soon as the poor drill results on GW there was always going to be a downgrade on contingent resources as well as relinquished licences - this was known and priced in with the collapse in SP at the time. Trice indicated more oil at lancaster at CMD- which is what really counts in my book
- No solid evidence or confidence to support concept (struggle to find JV partners) - production of a lot of oil has supported concept... even with water cut...we are a producer...we don't know what is going on in regards JV
- Aquifer/perched water that will disturb Lancaster production - this was already known about end of last year but as you say water cut has increased - though latest RNS says well 7 is stabilised so hopefully might improve.
- COVID19/Oil price - still depressed and market is uncertain - agreed real curved ball but it is the same for everyone
- Uncertainty regarding Lancaster FFD, HUR need a partner. - it was uncertain last year on how to move forward but i agree that previously they could have planned to possibly go it alone with income - however covid/ oil price has probably stopped that - for the moment. if the oil price continues upwards it will certainly be interesting
- $230m Covertible Bond maturity in July 2022 - that was already known about last year. though obviously 7 months nearer
- Large CAPEX requirement for 2021 - personally i hope so - would love to see drill well 8 at lancaster
- No forward activity work programme provided. Unclear the direction HUR are willing to take. (Future costs unknown) - this will be announced prior to sep 11th