Member Info for cyan2

Good afternoon SRBS

Waiting is the name of the game and UKOG missing targets another.

2018 was a great year for POO; averaged $71

This RNS just goes to prove how UKOG should have progressed their 'assets'.

29.6.18 results RNS
Extract
"Whilst the overall flow rates obtained from the well were to date sub-commercial, we are now actively pursuing a possible return to the site to drill and test a BB-1y sidetrack. An 18-month planning consent extension was submitted to West Sussex County Council on 14 June 2018 and, if granted, the extension to 31 March 2020, will provide sufficient time to enable a BB-1y sidetrack to be drilled and tested following completion of the next planned Kimmeridge exploration/Portland gas appraisal well in PEDL234."

Way behind schedule . Whose fault?

Ibug wrote;

"This is how UKOG shot themselves in the foot!!! DATE 19TH APRIL 2019 which is after flow testing at BB and HH has taken place.

"Flow tests and pressure data from the Broadford Bridge and Horse Hill Wells Sites have been sub-commercial ...."

That should have been RNS'd to shareholders. Its actually outrageous that such a share price sensitive determination was not properly disseminated to shareholders.

They eventually had to for BB as everyone could see the site being evacuated but UKOG waited and waited too long before letting people know

29th march 2018 RNS
Extract;
"Future BB-1/1z Plans

Whilst the KL flow rates observed are likely sub-commercial, given the multiple occurrences of mobile oil observed in the well and their correlation with good calculated oil saturations in electric logs and core analyses, we are exploring new methods and technologies that might enable us to achieve higher sustainable oil rates and commercial viability from the 1400 vertical feet of oil-saturated KL reservoir rock interpreted at BB-1z.

With this in mind, serious consideration is being given to a possible future short sidetrack, BB-1y. The sidetrack's objective would include a selective re-test of the main KL units, likely utilising an alternate completion methodology, new completion fluids, the possible use of small-bore radial drilling and other reservoir stimulation techniques. Any future work at BB-1/1z would likely take place after a successful trial of such alternate methods and technologies in the next PEDL234 exploration well."

"Whilst the KL flow rates observed are likely sub-commercial"

" Any future work at BB-1/1z would likely take place after a successful trial of such alternate methods and technologies in the next PEDL234 exploration well."

So it is obvious; Any return to BB was dependant on 'a successful trial' and that was chosen to be at Loxley.

Good morning Ocelot
You wrote;
"It certainly doesn't sound as if the "Kimmeridge dream is over" (your post of 19:30)."
The Kimmeridge dream was that investors in UKOG shares would get rich; potentially retire to the Bahamas ; all those billions of barrels. The evidence to date from drills at two sites has been confirmed as sub-commercial by UKOG themselves .
Sanderson can not let the 'dream' go; its what UKOG has been all about. He HAS to keep offering hope to keep investors interested ; that different methods may improve flows. He may even really believe it .
But the problem of economics remains; just how much do you spend to recover the tight oil.?
Its quite obvious now; there are no easy riches in the Kimmeridge.
Peguins paragraph on commerciality is well put;
"Commerciality is another variable feast. Once an exploration (or appraisal) well is drilled almost any rate from that well will be commercial going forward, but to justify production wells (or even further appraisal wells) requires a more robust commercial analysis"
And i agree with Mirasol's comments entirely;
"And that is the problem Pboo - no update on the Kimm in a year, they didn't deepen the HH2 pilot hole to test the Kimm, there has been no mention of Kimm actual or potential at HH in any recent RNS. You can bet your life if there was good news we'd have heard about it but its more likely that its another UKOG Silence in place as things haven't worked out as hoped."

The only declaration of commercial viability is for The Portland

The results dated 31.3 20 had these lines;

"The HH-1 Portland oil discovery was declared to be commercially viable in October 2018. No formation water has been seen in HH-1. The produced crude has been exported and sold to UK oil refineries via nearly 500 road tankers.

The two Kimmeridge oil pools (KL3 and KL4) in the HH-1 well are now recognised to be one single accumulation 358 ft thick, as evidenced by fluid and pressure data."

The Broadford Bridge extension RNS dated 9.7.20 has these lines;

"In order to confirm the decision to further sidetrack and test BB-1, UKOG will use the extension period to evaluate future Kimmeridge well and test results, which are planned by both the Company and other operators before March 2022.

Stephen Sanderson, UKOG's Chief Executive, commented:

"The Kimmeridge play, where UKOG holds industry leading knowledge and an unrivalled acreage position within the sweet spot, remains of primary Company interest. This extension will enable us to incorporate key future well and test information into our understanding of this new play before any further appraisal of our BB-1 Kimmeridge discovery." "

That reads to me that UKOG needed to test new recovery methods ,which I believe was to be at Loxley , and if they are successful then they could decide to sidetrack BB

The Loxley planning document dated 19th April 2019 is quite clear and had these lines;

"Flow tests and pressure data from the Broadford Bridge and Horse Hill Wells Sites have been sub-commercial which is why the ‘potential means of recovery’ needs to be tested at Loxley in compliance with SMP Policy MC12. This is precisely why the sidetrack well (L-1z) forms part of the development proposal. L-1z will allow alternate completion methodology, new completion fluids and the possible use of small-bore radial drilling to be deployed in the search for higher sustainable recovery rates. Knowledge gained at Loxley would be used elsewhere within the PEDL-234 licence area to benefit hydrocarbon recovery. "

My interpretation is;

The current flows from the Kimmeridge at both HH and BB are sub-commercial ,BUT the hope was to prove commercial flows could be sustained by using new methods at Loxley. IF successful they would go back to re-drill BB.

Good evening gkb47

You wrote "they've been saying for over 18 months that HH is commercial,"

That referred only to The Portland; NOT the Kimmeridge.

Have to say that UKOG have form for keeping 'issues' quiet until forced to declare the truth; ie the BB sidetrack.

If there was good news on the Kimmeridge you can be certain Sanderson would have been bragging about it.
Its just not performing.

I think the Kimmeridge dream is over and Sanderson is looking for a new adventure.

Good evening Sting69
You wrote; "Kimmeridge still under wraps in my opinion"

If you mean UKOG have not officially released the truth by RNS and not kept shareholders properly informed; then yes ; its under wraps.

Trouble is they inadvertently let the truth be known on Page 22 of their 2019 Loxley planning document;

"Flow tests and pressure data from the Broadford Bridge and Horse Hill Wells Sites have been sub-commercial .."

UKOG's own words; quite clear and definitive; what could possibly be clearer than that?

Good morning basil1717

You wrote; "Which poses the question, if you are correct, why did we need to purchase the site equipment for a dud well?"

Answer; The Portland where UKOG should be bending every effort to bring on production.

Step back for a moment and just make logical deductions from the evidences to date.
Why did the partners sell out their HHDL interests to UKOG for peanuts ages ago?
Why hasn't a serious oil company bought in?
Why was the Kimmeridge put on absurdly long "pressure tests"
Why has Sanderson now chosen to gamble , yes, GAMBLE on a Turkish "roll of the dice" (HIS words)?
Why not concentrate all the cash on trying to make the Kimmeridge commercial?
Its another 'get rich quick' scheme

Ask yourself why AME are not going it alone if the Turkish gamble is that good?

Smacks of a desperate gamble on getting some cash flow and its something to excite the base. .

Whether the Kimmeridge is now producing or not is not the important point.

The fact that there were those incredibly long "pressure tests" was the warning that all was not well with the Kimmeridge flows. I had deduced from what information was released that the 'gusher' was performing poorly some time ago.

What shocked me was that UKOG had made the 'sub-commercial' assessment many months ago and if it were not for close inspection of a planning document many would still be none the wiser.

The UKOG 'dream' was all about the riches in the Kimmeridge. The implications are serious; the HH 'gusher' has drastically crashed in its flows to levels we can fairly assume are probably not dissimilar to BB.
The critical point is they are sub-commercial; the early decent flows have declined away and pressure has dropped.

Although there will be howls of protest when I write this; I have to say that professor SMYTHE's explanation for the initial high flows from the Kimmeridge was appears to have been vindicated. UKOG had drilled into a highly fractured zone and that once those specific geological features voids had been drained the flows would quickly decline.
Sandserson clearly did not understand why the flows were so good; he found them unexpected; he admitted that himself. In my opinion ; rather than taking some time to consider others opinions he went off on his great adventure apparently believing similar flows could relatively easily be replicated elsewhere; and hence he went off to Bb where the dreams of easy riches crumbled.
As the result of the sub-commercial finding for HH, UKOG had intended to experiment with different methods at LOXLEY in the hope the tight Kimmeridge could be made to flow commercially as stated in the 2019 planning document.

"Flow tests and pressure data from the Broadford Bridge and Horse Hill Wells Sites have been sub-commercial which is why the ‘potential means of recovery’ needs to be tested at Loxley in compliance with SMP Policy MC12. This is precisely why the sidetrack well (L-1z) forms part of the development proposal. L-1z will allow alternate completion methodology, new completion fluids and the possible use of small-bore radial drilling to be deployed in the search for higher sustainable recovery rates. Knowledge gained at Loxley would be used elsewhere within the PEDL-234 licence area to benefit hydrocarbon recovery. "

Its all very disappointing. We will just have to wait and see; but one thing is obvious now the Gatwick gusher no longer gushes and the commercial prospects for Kimmeridge oil are in doubt.

Commingling makes it difficult to judge just how many barrels the kimmeridge is throwing off NOW. When did we last see any specific numbers for the Kimmeridge production alone.?

The important point to take is ; the stand alone production from a BB and HH Kimmeridge wells are 'sub-commercial'.

Commingling the flows and data effectively conceals how the Kimmeridge is performing.
I think UKOG have been less than frank ..

UKOG should have RNS'd; Kimmeridge flows ALONE are now considered 'sub-commercial'.

Whether new methodology that UKOG had hoped to experiment with at Loxley would improve flows is a big question there may be a long wait to find the answer to.

Good evening ocelot

You wrote; "Why do you say HH is a duster?"

If I may interject and say that the word 'sub-commercial' is more appropriate . The context being the Kimmeridge.

UKOG should have properly informed investors by RNS when they came to that conclusion. It should not have relied on someone spotting it in a planning document.

UKOG's own assessment from the 19th April 2019 Loxley Planning statement;

"Flow tests and pressure data from the Broadford Bridge and Horse Hill Wells Sites have been sub-commercial ..."

Good evening tymers you wrote;

"Ukog's development is going exactly to plan"

The evidence is quite to the contrary. BroadfordBridge was supposed to be another "Gatwick Gusher" which Sanderson intended to quickly put into production; trouble is BB is like the HH kimmeridge ;subcommercial . i could list more failed ambitions.

A smug Sanderson said in this December 2018 interview, here;

" money does not seem to be a problem"

Really; look at the enormous fund raises since.
hTTps://www.youtube.com/watch?v=bLnqyjbokAg

and what happened to his production dreams?

From about 2min 54 secs

"The target really at the end of the year (2019) is that we want to be producing about 2,000 barrels a day"

another failed target.

So Sanderson plans "a roll of the dice" (his words) in Turkey now. All those Weald targets not good enough to gamble on anymore? Just gamble somewhere else it seems.

And there's the other line that Sanderson said;

"its still, you know, a roll of the dice"

its a gamble; not a guaranteed success .

UKOG described their new Turkish partner with these lines;

"Our new partners, AME, are a proven leading Turkish operator, oil producer and successful Turkish explorer. We will undoubtedly benefit greatly from their unrivalled Turkish knowledge and experience."

If they were so successful why couldn't they fund these drills themselves?

To be partnered by UKOG smacks of desperation; the last resort as bigger companies must have turned their noses up at the amazing opportunity.

Noble have given up on the Falklands; Given up their previous SFB interest and the same with Argos in NFB.

https://rockhopperexploration.co.uk/operations/falkland-islands/south-east-falkland-basin/

Good morning ralph2010

You wrote; "This is XEL part 2"

I respectively disagree. XEL tried to force the development pace by borrowing but the being unable to pay what was due and was undone when the bondholders called time.

RKH do not have any such bond issue to worry about. However; as I have stated before; RKH will need to raise funds in a couple of years IF they have not received a significant arbitration award. Otherwise an equity fund raise would be most likely. Other alternative would be to sell more of our SEALION interest; BUT, who would buy it?

A decent arbitration award will , hopefully, give us time to survive to first oil.

We need several things to go just right, imo; POO recovering to a stable price around $55 at least, a decent arbitration award and UKEF support for PMO's development plans. Also NAVITAS needs to be able to raise their share of the costs.

I am afraid anyone looking for a takeover from a new party are going to be disappointed; there has been a singular lack of interest in Falklands oil development. I do not see PMO rushing ti ditch SEALION as it would involve a disastrous write off in their accounts.

Its a pity Henrygroucho failed to comprehend the contents of my prose. I was actually offering a measure of hope for future , and UKEF approval.

Henry joins Citizen in my filter list ; the only two members

Hi again Godders69

I think that my principle point was that the application had not "failed". Circumstances had changed and the UKEF needed to review all the numbers in a new submission.
Of course since then the wheels came off totally with the virus impact and the slump in poo.
POO has recovered somewhat and we can but hope we can get to a stable POO well North of $50.
In the current economic climate one might expect the UKEF to be keen to support oil services companies who signed LOI's.
One might expect there is an opportunity for the partners to apply pressure on contractors needing the contracts ; to cut their bids on works.
PMO's renegotiation of the the BP acquisition costs shows the climate we are in. Much better terms were agreed.
I think the FIG need a bit of leaning on too. Even more competitive terms may help them see their O & G assets exploited.
I do not see any serious interest from others emerging; the FIG NEEDS our partnership .

Good afternoon Godders99.
You wrote; "Don't think we have officially been told that the UKEF application failed."

Comment here from 5th march;

From the PMO conference call 5th March 2020

Here is a transcript I prepared of the relevant Q & A on the UKEF submission ;

Anonymous question to 'Robin'

"....SEALION; you mentioned that you needed to get the senior debt piece in place before you take project sanction decision so could you please paint a picture of exactly what needs to happen from here and your timing expectations."

DURRANT interjects ;

"Yes of course, I'll take that, we submitted the PIMS its called; the project information memorandum in the fourth quarter last year to UK export finance; at that point, of course , we did not have the acquired assets to be acquired. Both of these are material events for PREMIER; $500m of new equity; up to $1 billion of cash flow in the relatively near term from the assets; clearly changes our credit position so UKEF asked us to re-submit the documentation; proforma the acquisition. We will do that as we go through the approval process and continue those discussions"

Since that time PMO has "suspended" SEALION. Although PMO have resolved their differences with ARCM and amended the acquisitions terms ; It appears we have to await a change in market conditions/numbers before any possible resubmition of an application to UKEF. If the numbers are right one would hope UKEF will support.

Good morning Henrygroucho
You wrote ;
"You don’t mention the ombrina mare arbitration. Obviously that is likely to bring money in so would damage your negative vibes."
I wrote;
"..it remains clear; RKH needs to receive a large arbitration award to stand any chance of lasting to first oil without a fund raise within two years."

RKH MUST win and receive a large award from the arbitration. Any equity raise with share price weakness is most undesirable.

I note the good news for UOG.
I read this statement made today on the ADVFN BB;
"Also it was in the T $ C's with our Israeli partners to dump the Egyptian assets"
I do not believe that is correct.
Imo,our management sold the family silver( announced 23.7.19) because they were running out of cash to pay the big bills PMO were presenting .
There is no way, last summer,that RKH could have formed an opinion NAVITAS would partner us.
It was all about our serious cash burn position. Here is the evidence;
RKH's cash positions from results RNS's;
End of 2017 $50.7m
End of 2018 $40.4m
"At 31 December 2019, the Company had cash and term deposits of US$17.2 million "
Final results 8th April 2020 RNS
https://uk.advfn.com/stock-market/london/rockhopper-exploration-RKH/share-news/Rockhopper-Exploration-plc-Final-results-for-the-y/82190755
Extracts
"Following the disposal of Rockhopper Egypt Pty Limited, the Company has cash and term deposits of US$21.9 million as at 1 April 2020 (unaudited)."
"During the first quarter of 2020, the Company paid US$3.9 million of Sea Lion costs related to the period prior to 1 January 2020. Whilst timing remains unclear, further such costs, estimated at up to US$10.0 million and included in the balance sheet under current liabilities, could become payable in the next 12 months"
The sale of the Egyptian assets terms were;
"-- cash of $11.5 million; and -- the issue of 114,503,817 Consideration Shares (at an issue price of 3 pence) representing approximately 18.5% of United's enlarged ordinary share capital."
You can see that without the $11.5m USD cash, RKH's cash position at 1st April 2020 would have been just $10.4m USD .

Remember that RKH were and are expecting to have to possibly pay "up to $10m" which "could become payable in the next 12 months"
This $10m remains an issue as confirmed in the 30th April 2020 RNS on the amended terms;
https://uk.advfn.com/stock-market/london/rockhopper-exploration-RKH/share-news/Rockhopper-Exploration-plc-Sea-Lion-farm-in-update/82343301
"Rockhopper remains responsible for funding its share of costs incurred prior to 1 January 2020."
Its clear RKH were in a financially stressed state; they had to raise cash; the Egyptian sale was forced by their weak finances; not any demands from Navitas.
The Edison report of 23rd April 2020 clearly shows RKH's financial weaknesses and predicts a big drop in cash resources at the end of this year;
www.edisongroup.com/publication/parties-committed-to-complete-sea-lion-deal/26659
The charts helpfully give estimates for RKH cash positions at year end 2020 as just $10.2 m USD and YE 2021 $5.3m
The announced 30% cost cuts will slightly improve those numbers , but, it remains clear; RKH needs to receive a large arbitration award to stand any chance of lasting to first oil without a fund raise within two years, .
Remember its 3.5 years from a FID date to first oil and some revenues.

Good evening Phil164

No-one has to reply to any post. I am just curious .
Is there a "buy" recommendation article out there I have missed?