Member Info for foresight

decommissioning costs in this area can be huge - realistic possibility that HUR will not have the cash to fully P&A the assets?

Production can only decline from here without new wells which are not going to be drilled
There is not enough time and the oil price is not going to go high enough to generate the extra $110m cash to pay off the bonds
There is absolutely no other route forward other than the managed wind down and pay back as much of the debt as possible. For sure, the bond holders will also be losers here
This was never going to work and the writing has been on the wall for a very long time

Slift
I think the oil price is somewhat irrelevant as the real issue is the production problems / challenges and they only ever get worse so with time, regardless of the oil price, the cash flow will decrease inexorably (IMO)

oil price and production are irrelevant - short term fixes
Its commercial reserves and that means the ability to get it out the ground long term
wells are too expensive here and production declines due to water cut
It was a non-starter and no amount of quoting cash or production can get this company out of the hole it dug

Captain
The fundamental fact is that you can not develop fractures where the wells are expensive like they are here because you need to keep drilling when the fractures start to tap the water, which the will do otherwise you lose pressure support. The only place FB works is shallow water or onshore. Hence, this was never going to be viable and the early good production is just a red herring. Easy to mislead using large volumes of oil and good production rates as people compare to "normal" reservoirs. This is unconventional - like fracking. You can not fracture offshore either. No amount of what ifs will ever get around the real issue of challenge too far. I hope that some day there will be a sensible technical analysis that shows the geology was against us all the time and the independent smart people knew that

Captain

I agree - IMO the real damage was done at the beginning though because as I have said all along, this was so unlikely ever to work due to the nature of the reservoir + the harsh environment. It has never been achieved before - developing FB in deep water. There was massive risk at the outset - that at the end of the day is a plain fact. But I do not think the company or its advisers (who are paid by the company) ever made the risk clear. Once you set off down a particular track, you keep ploughing the same furrow. CPRs, analysts, journalists etc - they are not independent really and they are certainly not knowledgeable about this kind of risk. These are not normal reservoirs but people here talk as if they are - production, oil in place etc, all irrelevant to FB reservoirs where you are drilling /developing blind.
So the questions is whether the real risk was ever portrayed enough and Trice (who is a salesman) surrounded himself with weak board members.
It is what it is - and if it looks too good to be true, then...

Trice??
He was the shepherd - the rest are sheep

What are we complaining about?
The oil could not be produced in commercial quantities because of the nature of the reservoir. That is the risk investors took and was always likely to be the case, it didn't turn out well.
The real issue is that there was more than a 50% probability that you could not develop this type of reservoir offshore with such expensive wells. That should have been made clear from the start - but if it was, then there would not have been a start

2 Experts will often give you 3 opinions

Unfortunately, we never had enough opposing opinions or of we did the contrary ones got drowned out

Ultimately was this a case of a) you win some and you lose some or b) misrepresentation of the real risks and knowingly so

And regarding the money paid to Trice - that is totally outrageous
He should had a "normal" salary for someone running a small oil company - not the mega bucks more akin to a large company. He should have been paid out of his conviction and through shares / options.
Daylight robbery and the market seems to accept it again and again.
Whilst small shareholders have lost their shirt, he has lost nothing (maybe didn't make as much as he thought) but made more than he should.

Trice was a charismatic and seemingly knowledgeable man. He had discovered something that his former employer (BP) had missed. There is oil in them there hills
There are so many examples of the halo effect - we all want a great story and go along with the ride. I worked at RBS under Fred Goodwin - another such "leader" amongst many sheep. If there is not a balance in the selling of the story, how can small shareholders doing the right thing be able to be treated fairly.

CPRs are like audits - they can give the wrong impression based on what data you use and what the company is looking to put out there. Be careful which companies are used for CPRs - not all are that competent and they want to give a good result to the company so they keep using them for other technical work. Its not in a CPR company interest to give a bad result sometimes

We may have more in common than divides us

The fact that there is oil being offloaded is irrelevant to the long term viability of the project. It was always going to produce oil and could be spectacular in the early phase because fractures are excellent at the beginning. My main thesis is that when wells cost so much and can only be drilled in a weather window - you have no room for error and this is as unconventional as it gets. I really believe there was a minuscule chance of this working becuase of the environment and the FB nature of the reservoir. Very few people really stood up and said so and I think people have lost money here in an unfair and corrupt way. Maybe because my prediction of failure came true I am biassed but this was never anything but an extremely high risk gamble and that has to be factually correct because fractured basement in harsh conditions is near impossible by definition??

I am trying to make a serious point
This prospect has never been portrayed as an extremely high risk venture - it clearly turned out to be the case and it was obvious from the start. We should all be on a level playing field or people will continue to invest their hard earned cash without the knowledge of the risk they are taking. It should not happen - there is a lack of integrity here

The whole Hurricane story was born out of one man's conviction that he could get "commercial oil" out of fractured basement rocks in deep water in a very hostile environment. Without any technical details of the prospect, this would be one of the most challenging projects in the world as anyone who understand the nature of fractured basement will have known that finding oil may be easy, producing in such complex systems is near on impossible. Unfortunately, it is easy to lead people on with the fact that there is a lot of oil, it is easy to drill a well into one or more fractures and get a (sometimes spectacular) flow rate and make it look like there was a huge resource. However, the challenge was always going to be long term productivity and keeping the water from killing wells - coupled with the fact that the wells were so expensive and could only be drilled in the summer. If this was onshore, then it might have worked - keep drilling as they do onshore US. An unconventional reservoir in harsh conditions was doomed to failure from the start. BP with the cash and knowledge would be the obvious partner here - but alas they did not touch it with a bargepole. Small shareholders piled in and only speculated about how big it could be, with no guidance from the company or serious analysts on the insurmountable risks. It was just never going to work - the bondholders will run it down hoping the higher oil price will mitigate the damage.
There is something very wrong when this sort of scam is allowed on major exchange - for those of us who had some technical understanding about FB, it was too good to be true all along but this never really got airtime. I guess we are susceptible to wanting good news over bad so myopia sets in - alongside misrepresentation from the people who should have know better.
Beware small resource companies who can pull the wool over your eyes by confusing oil (or anything) in the ground vs the ability to get it out which is the only time it has value. The CEO will set out his (or her) stall and then have to keep to that line and will angrily shut down anyone that does not agree - including the useless infect NEDs
A sorry situation that exploited naive but honest investors and should be investigated

This is what I said when the SP was 15p:

Fractured basement impossible to develop long term offshore in rough conditions. The wells already showing rapid water cut increase and so will not produce longer term. The OGA do not want to be holding the abandonment of this when HUR goes bust

Good analysis Slift - unfortunately the writing was on the wall a long time back. Developing FB West of Shetland with the geological uncertainty and the cost of the wells was always too much to ask for

Doesn't matter how good you are - you can't overcome the geology
And he doesn't really stand out as a global lead in this area - small company run-of-the-mill guy.

I was optimistic, but Maris seems to want to keep the story going with some thin oil bearing sand above the FB reservoir and so distract from the main issue and will spin this into a different story. As Solan shows - you can't develop small fields here. That lost a fortune for Chrysaor. Luckily, they went onto other things and so all was forgotten. Not sure this BoD has the credibility TBH

I don't see much news flow now so the SP will drift lower