RE: Sanderson wouldnt even dare.........16 May 2021 16:07
I read the comments that the Kimmeridge is not dead because of the mooted HH4 which Sanderson seems is in no hurry to complete.
The evidence that the Kimmeridge is unlikely to be of serious value anymore to UKOG can be found in the amended HH development plan submitted to the authorities on 1st April 2021.
Firstly; there is a maximum daily tanker count of TWO. That means a THEORETICAL maximum of circa 440 barrels a day being exported. That's a long way from Sanderson's planned 2,000 barrels per day planned for year end 2019.
This takes us neatly to the second critical piece of evidence from the amended plans; the on site storage; much reduced to just 49 tonnes.
Because we know that tanker traffic is restricted at the weekends and that production is 24/7 ;it can be extrapolated that UKOG are actually not expecting much over 200 barrels a day at weekends and hence every other day of the week.
There will be a depletion curve which will show barely commercial volumes in the years towards the end of the planned 20 years of production.
Third piece of evidence can be found in the asset impairment that used an "utilised an internally generated depletion curve"
Note this paragraph from the results;
"The Directors have carried out an impairment review as at 30 September 2020. The Directors determined that the net present value of the HH-1 well was £4.78 million and therefore determined that HH-1 should be impaired by £9.35 million. The net present value utilised an internally generated depletion curve that was independently reviewed. "
That's a huge impairment.
In 2018 UKOG bought out others interests paying £300,000 per 1% of HHDL ;therefor then valuing the whole at £30m.
Fourth piece of evidence is to be found in the 16th April 2021 results RNS .
You will find tables with the estimated volumes in UKOG's portfolio from which we know that The Portland 1C is 600,000 barrels and that is what UKOG now believes is the 'likely technically recoverable'.
The shocker is the Kimmeridge; 1C is 300,000 barrels to UKOG .( Source quoted; note 6 ;"RPS Jun 2019.").
The 2c is 1.4million.
Is that really worth throwing more money at after your previous pressure and flow data proved sub-commercial.?
Remember how Sanderson highlighted the higher UK drilling costs in this presentation;
youtube.com/watch?v=rEu4M3nCkWI . He does NOT mention the Kimmeridge.
From all the above numbers and plans published by UKOG ,one can reasonably assume that any future value contribution from the Kimmeridge is likely negligible at best.
One can understand why Sanderson is less than keen on progressing HH4 and has priorities elsewhere.
So its off to Resan where UKOG "- need to establish commercial rates and volumes" (see the slide in the presentation)
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