Member Info for cyan2

The Tethyan case and delayed award figure;

hTTps://www.reuters.com/article/us-****stan-mine-military-idUSKCN1U80GT
July 13th 2019
extract;
"The company said it had invested more than $220 million by the time ****stan’s government, in 2011, unexpectedly refused to grant them the mining lease needed to keep operating.

The World Bank’s International Centre for Settlement of Investment Disputes (ICSID) ruled against ****stan in 2017, but until now had yet to determine the damages owed to Tethyan."

Hi Oilfred.

I do not know whether we will get a positive result AND a figure at the same time.
I just highlighted the huge Tethyan case as an example where there was , from memory, about 18 months between the decision and an announcement of the actual compensation figure. We have to be prepared for all possible outcomes.

hi Marunam2,
High POO does help Harbour to cash it in , at the moment; it needs too with the giant debt they are carrying.
I am not so sure harbour are so keen on SL. Its breakeven is too high, imo. Might look reasonable with todays POO; but what will it be in 4 years time; Harbour needs to be sure.
The FIG are key to this and I think the Royalty is far too high and may have to go to ensure SL's development.
I am not sure the FIG really gets it; they may end up with nothing if they do not move.
I note comments regarding the old PMO team working on a cheaper development option to show to harbour. I can not see how the breakeven of circa $40 can be anything but higher in a smaller development .

"hmm. What if the award is £20 million ? Harbour dont commit anything this year ?"
Hi ralph2010,

You raise important questions. We are not even sure we have won. If we lose there will be serious repercussions. A fund raise will be required next year, even if Harbour announce plans to proceed Sea lion ;we would not have sufficient capital to survive to first oil.

On balance I think we have a strong case and SHOULD win. We will just have to wait and see what's announced in July. I really do hope that they announce a cash award as well as the decision at the same time. Previous Tethyan case; they announced a "win" then took a VERY long time to come up with the figure.

"a company surprising the market with seemingly out of the blue fantastic news."

I agree; it can happen. GKP had/has an enormous volume of oil that justified a measure of excitement.

The problem with UKOG is this; it has no realistic chance of anything like that size of transformational asset.
We know that the Kimmeridge has no value now; UKOG's own documents spelled it out clearly; both BB and HH are sub commercial; Angus proved that too .

You just have to listen to Sanderson in this interview hTTps://www.youtube.com/watch?v=rEu4M3nCkWI to fully appreciate the poor quality of UKOG's prospective assets. Sanderson trashes the value of The Weald and presents a best theoretical case for the Resan opportunity which is a tiny fraction of what GKP has.

The fact that none of AME's regular partners wanted to pony up on this "roll of the dice" is a red flag.
I am sure that any oil shows will offer the nimble trading opportunities ; but , IMO, UKOG is not the next GKP.

Good afternoon Mysteron.
Do you really think anyone would want to takeover UKOG?
Every company is judged on its performance and if the share price slumps; if promises of riches (billions of barrels) are discredited, and if directors take excessive remuneration; do you not think that reasoned criticism will be made of the directors?
Are you arguing that SS has been unfairly criticised?

"This BB reminds me of GKP before its meteoric rise .."

Good old GKP. At least they really did had a gigantic volume of commercially exploitable oil to justify some excitement.

Sad to say it did not end well for those who saw the bondholders take 95% of the company.

I am sure the Russians are up for KRG exports. Plans were well advanced before the ill-judged KRG independence referendum that caused chaos ; longer term holders will remember.
The Russians have lent the KRG billions so they have an interest in the regions prosperity.

I think the spark will come when the KRG agrees acceptable terms to develop Bina Bawi which has 37 million barrels of oil and an absolutely huge 8.2 Tcf of gas.

This development has been in negotiation for a long time.

These remarks were published last year in an RNS dated 3.11.20;

" Bina Bawi (100% working interest and operator)

· Genel continues to seek a response from the KRG to our proposal
submitted in August 2020, which would enable the Company to progress the
next stage of activity at Bina Bawi

· Our proposal highlights the need to engage regional gas buyers on
volume and price discovery and to improve project definition by
undertaking the detailed front-end engineering of both the upstream and
midstream processing facilities

· Until a satisfactory response is received, Genel will maintain capex
discipline, and will only commence investment upon certainty of
alignment with the KRG and a clear path to monetisation "

The gas volume is very impressive indeed.

There have been problems progressing the gas assets ; so much so that GENL wrote down the Miran asset.
That area contains another extraordinary amount of gas; 6.6 Tcf . It also contains circa 93 million barrels oil and condensate.

It is interesting to note the resignations too. Everything operationally looks great. I speculate its some large holders getting impatient with the slow progress to develop the gigantic gas assets.
I support the prudent approach to expenditure on Bina Bawi.
I understand that GENL had submitted plans a very long time ago to the KRG who have not responded.

The results RNS had these lines;
Bina Bawi and Miran (100% working interest, operator)

Bina Bawi and Miran are assets that have the potential to generate significant shareholder value, and efforts have continued to explore a commercial solution to allow the unlocking of the material resources.

Discussions with the KRG are ongoing at the highest levels, which would enable the Company to progress to the next stage of activity.

Genel continues to maintain capex discipline, and will only commence investment upon certainty of alignment with the KRG and a clear path to monetisation."

If we can monetize the gas assets which are truly massive it would put a rocket under the share price. I think the ball is in the KRG's court at the moment.

Good morning Mirasol.
You wrote;

"No doubt they have remodelled the field but there is no new CPR or any discussion of the changes. They have no legal responsibility to publish these new calculations unfortunately"

Actually; the annual results (published 16th April 2021) pretty much give an answer; not a CPR; but the next best thing;
Read the very latest best estimates from UKOG themselves here;

"For guidance purposes only, the Company's qualified persons ("QP") consider that the 1C value of 0.6 mmbbl carried for Horse Hill in Table 3, below, provides a reasonably representative view of HH-1's likely technical recoverable Portland reserves at the end of 2020. "

600,000 barrels 'likely technical recoverable'

Genel has such solid numbers. You just have to look around the sector and the huge debts others carry. Very low costs and careful management of finances are what I like. The other positives being the decent dividend and the massive gas assets ; yet to be developed.
I am hoping the appointment of a new minister will help advance an agreement towards gas development.

Wizard125 wrote;

"The independently confirmed & re confirmed oil in HH1 alone is 7 -10 million barrels oil in place with up to 45% recoverable with water injection..."
Read the very latest best estimates from UKOG themselves in the 16st April 2021 results;

"For guidance purposes only, the Company's qualified persons ("QP") consider that the 1C value of 0.6 mmbbl carried for Horse Hill in Table 3, below, provides a reasonably representative view of HH-1's likely technical recoverable Portland reserves at the end of 2020. "

600,000 barrels 'likely technical recoverable' Not a lot .

Wizard125 also claims that production will last 25 years.
That may have been a past ambition but, the latest plans states its now dropped to 20 years;

See the 1st April 2021 SUBMISSION OF AMENDED PLAN & FORM , page 12

"The proposed activities to be undertaken at the well site are the extraction, storage and export of crude oil. The Applicant proposes the construction of a process and storage area and tanker loading facility to enable the production of hydrocarbons from two (2) wells for a period of twenty (20) years inclusive of well maintenance workovers and sidetrack drilling operations. The activities will consist of the extraction of petroleum from the well formation via the wellbores (HH-1 and HH-2z) to surface where it is processed through a three (3) phase separator."

"Horse Hill is now 86% owned by UKOG not just 20% and it has a 25 year production licence for 6 wells."

Plans have been amended since the early 6 wells , 25 year license Wizard125;

11.9.19 RNS from UKOG

"The planning consent gives permission to produce oil over a period of 25 years at up to 3,500 barrels of oil per day from a total of six wells within the Portland and Kimmeridge oil pools, including the existing Horse Hill-1 ("HH-1") and the forthcoming HH-2/2z horizontal well. Consent also includes permission to drill one water reinjection well to help maximise oil recovery. All existing and future wells will be drilled from within the existing 20 x 15 metre concrete pad. No further drilling sites beyond Horse Hill are required."

Compare that to the 1st April 2021 SUBMISSION OF AMENDED PLAN & FORM , page 12

"The proposed activities to be undertaken at the well site are the extraction, storage and export of crude oil. The Applicant proposes the construction of a process and storage area and tanker loading facility to enable the production of hydrocarbons from two (2) wells for a period of twenty (20) years inclusive of well maintenance workovers and sidetrack drilling operations. The activities will consist of the extraction of petroleum from the well formation via the wellbores (HH-1 and HH-2z) to surface where it is processed through a three (3) phase separator."

Only two wells mentioned and reduced length of production life in years.

Whatever.

A walk down memory lane

hTTps://www.thisismoney.co.uk/money/markets/article-4763920/French-billionaires-buy-Gatwick-Gusher-oil-firm.htmlDaily

Some of many comments after the article are painful to read.

Matters not how the French structured or valued their investment vehicle; the point is ; the French dropped their UKOG investment and it was unlikely it was on a whim.

"Only if we can attract a multi Bn euro cap French investor for 3 weeks................."

Highly unlikely Mirasol. Sanderson has seriously downplayed his hyperbole from many billions of barrels recoverable in The Weald to just 30 or 40 million best case in Turkey.
That's a huge step down in 'potential' value.
The French got inside then quickly realised that ZERO was the more likely value and rushed for the exit.
As for Turkey; AME couldn't get their best mates ; their normal partners to pony up; that says it all about the risk/ value potential, in my opinion.

hTTps://www.ukogplc.com/ul/UKOG_Turkey_Slides%20_FINAL_190121.pdf

I concur Penguins. You just have to read the presentation carefully; with a skeptical eye;

Page 9
"Xodus’ Basur-Resan discovered gross mean recoverable volumes exceed all Weald’s historic production + reserves"

First line suggests certainty; but the second line is:

"• Oil in ground demonstrated by Basur & Resan wells - need to establish commercial rates and volumes"

However this bit really undermines the hype;

'need to establish commercial rates and volumes'

One does have to ask why none of AME's usual partners wanted part of this "detection drilling activity" .

Sanderson did say it was a "roll of the dice".

As regards Turkey; I believe AME have an Xodus report,which the sharing of, is very much in their hands. One is referred to UKOG's RESAN presentation. UKOG have had sight of it.

Not sure there can be a CPR in existence on what AME themselves describe as "detection drilling activity" ;exploration to you and me, although Sanderson likes to describe it as "appraisal".

Good afternoon gkb47.

You make a well evidenced case. However; last years results were particularly bad due to the costs of HH interventions , the down time involved and the disposal of water which Sanderson conceded was "expensive".

My argument is that, going forward, with water re-injection ( not a free from cost practice) the company has a chance to up production. To where is the question?. I guess circa 200 barrels a day.

If UKOG limited its ambitions to spending the time and effort on sorting HH out rather than gambling on new 'get rich quick schemes' ; UKOG could be a tiny solvent producer.

Sanderson's ambitions will require lots more capital for sure . He is grossly overpaid based on any logical fair minded metric.

spot the differences;

11.9.19 RNS from UKOG

"The planning consent gives permission to produce oil over a period of 25 years at up to 3,500 barrels of oil per day from a total of six wells within the Portland and Kimmeridge oil pools, including the existing Horse Hill-1 ("HH-1") and the forthcoming HH-2/2z horizontal well. Consent also includes permission to drill one water reinjection well to help maximise oil recovery. All existing and future wells will be drilled from within the existing 20 x 15 metre concrete pad. No further drilling sites beyond Horse Hill are required."

Compare that to the 1st April 2021 SUBMISSION OF AMENDED PLAN & FORM , page 12

"The proposed activities to be undertaken at the well site are the extraction, storage and export of crude oil. The Applicant proposes the construction of a process and storage area and tanker loading facility to enable the production of hydrocarbons from two (2) wells for a period of twenty (20) years inclusive of well maintenance workovers and sidetrack drilling operations. The activities will consist of the extraction of petroleum from the well formation via the wellbores (HH-1 and HH-2z) to surface where it is processed through a three (3) phase separator."

Only two wells mentioned and I note reduced length of production life in years.

This is what UKOG say is "likely technical recoverable"

"For guidance purposes only, the Company's qualified persons ("QP") consider that the 1C value of 0.6 mmbbl carried for Horse Hill in Table 3, below, provides a reasonably representative view of HH-1's likely technical recoverable Portland reserves at the end of 2020. "
(from annual results RNS)

If only we could view the in house depletion curve that caused the huge write down in HH value.

Think 20 years to end of HH commercial production and 600,000 barrels. The simple mathematics do not suggest a high daily production for any significant length of time.

Pity UKOG do not publish their own self generated depletion curve.