Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.
I think we all know that the last 6 months commodity prices mean very little to UFO (currently an explorer). We are 6 months away from digging up iron ore so now is the time we are penning contracts and offtakes. Iron ore is the only price I'm interested in right now and it seems to be holding $100 quite well for now. If we can hedge $100 for say 3mt over next 3 years then that's $300m revenue guaranteed with around $60m PAT. That's just for the current JoRC at Han****.
Inside 12 months from now it is likely that we increase Han**** to 20mt and possibly get a maiden Jorc on Brockman for 20mt. It's amazing how much quicker you can drill when you have £300m revenue flowing in and no longer dependant on placings.
Inside 18 months from now we may have Silver coming out of the ground. Possibly others. Therefore it doesn't matter right now what Silver is doing, Platinum, Palladium. What matters is what the future looks like in 12-24 months time. No one knows for sure but given the global green push then I'm optimistic as things stand.
Part 2
Again we go into this armed with previous operators’ experience and indeed a full audit of our programme by an Aberdeen based but internationally renowned engineering and drilling consultancy as well as the Lender’s own Technical Committee, manned by experts from a variety of backgrounds. We also have fully reprocessed seismic to guide us past any localised faulting.
Nothing in drilling is without risk – but in terms of basics such as where to drill (finding the most productive layer) & how to drill (and avoid sticking or hole collapse), most seasoned operators would see this as much lower risk, in fact, than would be the case on any relatively newly addressed reservoir.
Excellent informed answer which I felt worth copying on here.
Part 1
The drilling over the last 20 years at Saltfleetby, once the early exploration was past, was not especially difficult or unsuccessful. Nor is it true that the reservoir presents greater hazards than any other gas reservoir. It should be noted that the drilling strategy of the previous operators in the early years was to drill a pilot hole first and then side track horizontally it to increase the chances of hitting a productive layer. Very often the pilot well itself was deliberately “hockey-sticked” to verify productivity of a previously encountered layer.
SF01, actually originally spudded back in 1986, was a pilot well. This was sidetracked no less than six times between 1996 and 1998 when the field was poorly understood and just being explored. The final side track SF01U was actually the most productive well on the field.
Thereafter the record was excellent until previous operators attempted to address the southern lobe of the reservoir. SF02 did not require a side track at all and was a good producer. SF03 required one sidetrack and was a good producer. SF04 likewise a good producer, no side track required. SF05 again no side track but a less impressive but reasonable producer.
Later drilling on the field, in particular exploratory drilling aimed at the southern satellite structure (via SF06 and SF08) did encounter both less productive zones and these boreholes did require no less than five side tracks betwen them (much as the original SF01 had) and had limited but not negligible success. However with our side track we are actually addressing the better understood main reservoir again and not that southern lobe; we are also aiming at an area within the main reservoir which we know with exceedingly high levels of confidence to have been both greatly productive and not exhausted by previous boreholes.
SF07, something of a special case, was originally drilled in 2003 and had four side tracks: the first two encountered low permeability whilst the latter two, SF07X and SF07W were drilled in 2016 and were beset with operational difficulties which may be the source of the rumour that side-tracking in this field was particularly difficult.
The problems involved loss of part of the downhole assembly due, inter alia, to differential sticking (note we are taking great care to avoid sticking and are supported by specialist and respected managed pressure drilling consultants as appropriate for a partially depleted reservoir) whilst the other issue involved hole collapse in a coal rich seam (prone to instability) just above the target Westphalian layer: we are aware of this and we have adjusted the angle of approach accordingly. It should be noted that the drilling manager at the time proceeded against the explicit advice of the drilling company and indeed the company’s own consultant engineer.
Agree with everything you said Howey. We can all reveal our negative traits when greeted with a barrage of abuse and defamatory statements from several users but hopefully it's water under the bridge now. I am long and want the company to succeed I also just like to keep things balanced.
From what I've read on here over the last month, the only time posters have mentioned not meeting the hedge (and I'm one of them) is in direct response to the claim that 5-5.5 would be more than enough, which is incorrect as there is still a £9m liability to settle (as per Howey post). Other than that everyone has agreed that with a 2nd compressor we'll easily exceed the hedge producing enough cash to pay back the £9m liability.
I don't see anything fabricated with the above and by repeatedly bringing it up I sense you are trying to reignite the argument, possibly for your own amusement.
If we expect delivery of the 2nd compressor in early Dec. 2 questions for any engineers on here:
1. The sidetrack should be complete before 9th December. Can we install and commission the 2nd compressor whilst the final works are been completed on the sidetrack.
2. How long does it take to install and commission the 2nd compressor.
BF, I understand your conservatism but GL has just specified 'up to 12mscf by January 2023' so that is now what the market should be expecting. Q1 could be 31st March which is 3 months further out.
I can concur that the 2nd compressor and Booster compressor are different items.
HITS, not sure which method to use but sticking with Angs have stated using a c10800t/mscf then Q4 average hedge is c5.24. GL is pushing for the top end of the capacity in October, so 6. Not saying we'll average 6 but if we can keep above 5.5 then that extra 0.26 could bag us in excess of £1m unhedged revenue by Dec 31st. All helps towards the H2 liabilities that need to be settled.
Great news on the SIMOPS for the sidetrack. It's not a make or break development the sidetrack but if it works it will certainly bump the SP up a penny or 2.
I don't know the difference but on here it is now 380p. Up 50% today
https://tradingeconomics.com/commodities
The hot news is
The side track is expected to be spudded around 20th October with drilling operations expected to have a duration of no more than 35 days excluding well clean up and completion work. Simultaneous operations are permitted but we have allowed for two twelve-hour shut-in periods during this period to undertake critical works and enable certain equipment to be moved on site.
24 hours combined shut in required as precautionary. Not 2 months. Big difference and huge news.
Obviously the 'up to 12mscf' comment refers to the sidetrack being successful but it does look like it's more of a case of when and not if for the 2nd compressor so 7-8mscf it's certainly doable in the near future.
Great news. Also looking to crank up to 6 in October which looks like full capacity of the compressor but again great news and this delivers some unhedged receipts.
It's going in the right direction and so is the SP now.
You learn something new every day. India is indeed classed as Asia-Pacific although it does boarder the Middle East.
Not sure on the UK entry Kaeren. We can only go with what they tell us. Maybe we serviced a couple of machines in the UK hence the £1k revenue.