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Https://internationalman.com/articles/the-collapse-of-net-zero-profiting-from-the-implosion-of-the-green-bubble/

Ten years ago BP was the powerful, non-American integrating influence in the energy landscape of Azerbaijan, Abu Dhabi, Iraq, Turkey and Egypt. Apart from its crystal clear upstream strategy created under John Browne’s era, BP”s competitive advantage lay in superlative statecraft and diplomacy which maintained local and regional relationships between the Company and Presidents os each country, including top officials in Washington and Brussels. To a certain extent, BP created the energy policy ‘weather’ adopted at the time and created $billions of value for governments, the company and millions of citizens in the countries involved.

BP’s current strategy abandoned statecraft in favour of a solely technocratic approach which has largely fallen flat on its face. Countries in the region where BP ran its biggest projects may have decided they can’t count on BP other than a contractor. As a result, bilateral pacts have evolved between SOCAR-ADNOC, SOCAR-EGPC, SOCAR-TPAO, TPAO-IRAQ, both upstream, mid-stream and down-stream.

BP is now effectively run by its state oil company partners. All the PR about ‘good relationships’ pumped out by BP is true because BP simply does what its told by state oil companies. Moreover, highly successful ‘localisation’ of BP’s staff means they are understandably more aligned with their home country’s objectives.

These cash-rich state companies are have a greater interest in controlling their own destinies than shareholder ‘activists’, but working in concert behind the scenes they might be more likely to prosper from a takeover and break-up.

Rovshan Najaf and Musabbeh Al Kaabi preparing a bid

If the book about Enron is “The house that McKinsey built” surely the title for the BP book is “The house that McKinsey demolished”

What a shambles - headlines used to be about barrels per day which reached 4 mmbbl per day - now look at this nonsense.

BP forecasts that its 300 company-owned sites will sell 1.6 million drinks and 750,000 baked goods over the three weeks to December 25 as motorists take to the road for the festive period.

Sacra collina di merda

Getagrip

It’s not just shareholders who are questioning how BP’s reputation and value have been trashed by the current leadership and strategy. Now the staff are joining in.

A whistleblower reported from a town hall meeting yesterday where staff were invited to post questions - some anonymously. One question (which wasn’t answered) and leaked outside was;

“Will there be strategic changes to BP Leadership Team based on the failure of BP’s Re-invention; as persons in LT should be held personally accountable for poor performance and planning, lack of foresight and aspirations which did not align with reality. Hence the current situation which befalls the organisation and employees”

Spike, you’re right. There is a Joint Operating Agreement or ‘JOA’ for short, but no JV.

While Shell is the ‘technical operator’ I believe Deltic is still the ‘Administrative Operator’. As such, Deltic prepares the Annual Work Programme and Budget each September and issues Cash Calls on a regular basis. Obviously Shell provides the cost and schedule data.

As usual there are provisions in the JOA if one or more parties can’t pay, which is what happened at Pensacola. Hopefully Deltic has enough money to pay anything in excess of Dana’s carry. Frankly, Deltic might soon become a drag on the project and a quick sale is best for all. On the other hand, if current staff in Deltic want to cling on to their jobs and huge salaries the agony will continue.

rot

back of *** packet analysis;

ukcs proven producing reserves sell for ~ $50/boe

ukcs prospective resources worth $0/boe

ukcs proven undeveloped reserves fetch ~~$20/boe

ukcs contingent reserves $1/boe

assume current deltic volumetric of 300 bcf gross (= 50 mmboe)

25% equity = 12.5 boe which post well might be contingent reserves. value unrisked might be $12.5 million or ~£10 million in old money.

but when/if developed and in production deltic’s 25% might be worth >$500 million.

but, deltic’s lack of money and clumsy diplomacy/statecraft led them to blame the regulator and government for their projects being unworthy of investment - not what governments like to hear. however, oil and gas projects are long term ventures whereas governments only last a few years. shell and dana can cope with this whereas leaders of small companies need skills to maintain the corporate ‘plate spinning’ required to survive.

FD - actually the RNS mentions “field development PLANNING” - which is really desktop work which may or may not demonstrate any hope of commerciality.

FD - according to the JOA Shell will have presented the 2025 Work Programme and Budget to Deltic. This would have included a contingent programme to appraise Selene with a horizontal well, testing and associated costs. With Lappin and Nunn both saying Deltic is out of UKCS it implies the 25% is for sale - probably to Shell who have pre-emption rights.

In simple terms if the 300 bcf is used, 25% is 75bcf - worth maybe £100 million in gross terms as developed reserves, but it’s still contingent resources so maybe £10 million at best with the Milliband discount.

The commercial attraction of Selene is that gas has been discovered already and it is ~10km from Shell’s Barque platform which, in turn, connects to the Clipper system whose ultimate destination is the Bacton Terminal. Ullage is currently available in the Clipper system facilities.

Gas is known to be present from an earlier well and therefore a 100% chance of technical success is reasonable although Deltic chose 70%. The previous operator completed a relinquishment report which concluded that IF depth conversion could be more accurate there was a 30% chance of COMMERCIAL success.

But the catch at Selene is reservoir performance. The Barque Field is associated with some of the earliest gas discoveries in the southern North Sea. In the Sole Pit area the reservoir, the Lower Leman Sandstone, occurs between Carboniferous Coal Measures, which source the gas, and Zechstein evaporites which form the seal. The sandstone has generally very low permeability resulting from deep burial of the Sole Pit Trough.

The deepest burial and hence the maximum diagenetic damage to the reservoir was achieved in the early Late Cretaceous prior to two phases of inversion in Late Cretaceous and Mid-Tertiary. Compaction and diagenesis reduced reservoir permeability to such an extent that parts of the field would be non-productive were it not for the presence of effective natural fracture zones and well stimulation by hydraulic fracturing techniques.

A selected initial area at Barque was developed for first gas in October 1990 and good reservoir performance from horizontal wells led to later development of the whole field. Over the last 20 years industry has developed horizontal drilling and ball-drop, multi-staged fracking to transform productivity of simple vertical wells at ~10 mmscfd into horizontal wells delivering >50 mmscfd.

Selene is covered by several 3D surveys calibrated by several wells which found gas which enable definition of reservoir compartments created by pervasive faulting.

So it really should be like ‘shooting fish in a barrel’ - geologically and commercially. After log and core analysis, the next stage will probably involve re-entering the current well, drilling a long horizontal section followed by a multi-stage fracking job. Obviously not without risk and outside the farm-out arrangements with Shell. But if commercial flow rates are established a subsea tie-back to Barque could recover the costs quite quickly.

In recent years ‘fracking ships’ have gained favour which avoids the need to install equipment and proppant storage on the drilling rig. But, by their own admission, Deltic is leaving UKCS and Shell will likely end up with 100%.

FD - debacle 2 was the Capricorn/Tullow merger which wiped out several Deltic licences in the Carbonerous gas play.

I hope the Swindells/Nunn team doesn’t fumble the results from Selene, but track record isn’t good.

Not Dark

A bullish case for Deltic reached a maximum before Pensacola was drilled. As we know, the result was that the vertical well ‘re-discovered’ several cubic kilometers of gas saturated, low permeability Zechstein dolomite. Celtic didn’t comment on commerciality, despite working with Shell who have developed numerous, similar Zechstein gas fields in Netherlands using advanced drilling and completion technology. This is described in Deltic’s 2015 CPR. Of course Shell is still there and able to plan ahead without Deltic. See diagrams on page 146 of the CPR.

https://www.rns-pdf.londonstockexchange.com/rns/7920H_-2015-12-2.pdf

On Selene, the prospect is surrounded by gas fields commercialized using staged fracs which are essential to commercialized the low permeability reservoir. Has Deltic ever mentioned this? Perhaps they should, because a successful fracked, horizontal producer is within sight of Shell’s Barque platform with pipeline ullage to a shore terminal. This is based on public domain material and I hope Deltic keeps shareholders informed, unlike the PR disaster at Pensacola.

Thanks. FD - I’ve been disappointed by lack of basic technical info from Deltic. FYI here is how ball drop works on multi stage fracs https://drillingcontractor.org/north-sea-wells-prove-efficiency-function-of-multistage-ball-actuated-sleeve-based-stimulation-system-43288

I guess biggest risk on Selene is an intervention by the fanatical energy secretary!

Https://www.researchgate.net/publication/288472033_The_Ensign_enigma_Improving_well_deliverability_in_a_tight_gas_reservoir

Download pdf for whole paper

Dr P - nearby discoveries all started with sub-commercial flow rates. Check out the Ensign field - discovered 1985 and finall commercialised using staged fracs in horizontal wells years later. So expect a vertical well at Selene to ‘calibrate’ the depth conversion, followed by a long horizontal stimulated using the ‘ball drop’ technique to fracture several intervals in the reservoir. This is all public domain stuff but Deltic is completely in Shell’s hands. Timing is good if successful to hook up to Barque platform - assuming twerp Milliband allows it!

it’s bp’s management who doesn’t know elbow from **** -

Gennady Timchenko

Uggy. - you missed Colter and California disasters -