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very good point - you would have thought they would all be piling in to show their conviction to the future, especially as its so cheap and there seems still to be plenty of upside

They have $106m cash and commitments of >$106m to get to water injection. Without water injection, there is no future. So if water injection does not work - which it won't - then they are technically bust.

also - there is now no real news flow as there are no more wells into 2022 - so you only get the CPR and likely reserve downgrades from now till then, if they still exist

Unfortunately, this was always going to be a disaster. Its a shame that Trice spun it so well for so long. There was never a fair presentation on the risks. Its so easy to create false hope in these situations but at some point the chickens come home to roost. I thought Marris was highly disappointing and did not give me the feeling that he will be any better - new job so looking to get a good salary for as long as possible

you would have thought there would be some humble pie given the SP has gone down 95%
Its as if all is fine - just a few technical issues

This has always been an experiment - the little reserves that exist in the shallower sand will be hugely expensive to develop as they are spread out over a large area
What a terrible management presentation. Still desperately hanging on to spin wherever possible

This has always been an experiment - the little reserves that exist in the shallower sand will be hugely expensive to develop as they are spread out over a large area
What a terrible management presentation. Still desperately hanging on to spin wherever possible

Its all opinion as we don't have any real data that you can hang your hat on
A conventional reservoir by now - we would have a good solid range of reserves. Here we have no idea whether its aquifer, perched water, where the OWC is, gas cap etc etc. Shooting in the dark after so much time, money and effort. Says it all really

Its all about location, location, location....
The wells are incredibly expensive and can only be drilled in the weather window. There is no other example in the world where FB has been developed successfully in such harsh conditions. Any revenue will be spent trying to drill more wells, sidetrack, work over etc. FB only works where you can keep drilling cheaply and get more revenue than cost. Its the cost that will kill this IMHO. Water will come up the fractures and each well will not produce enough to justify full field development. Every well is its own pool effectively and so you never know whether you are going to win or lose. Every well is exploration in effect. You have to ask the question - why is the SP where it is and why no serious oil company has made a move. Its difficult to the SP being a turn off for a takeover...
Lets see what the review brings - but I guess there must be more upside than downside at this point. Don't be surprised if this goes to the wall - they will need to keep spending money to keep producing and they don't have a lot of free cash left

I think AM will give an honest perspective - but he can not make something of this that isn't there. Nobody can. The failing of RT was his over optimism and not being level on the risks which were there from the outset. He should have been blunt about the chances of developing FB in the Atlantic which were so incredibly challenging. But then he would not have raised the money. Although AM has FB experience, shallow calm water in Vietnam is no comparison. Although I think he will paint a try picture, I doubt it will be pretty

yep

he can't pull a rabbit out the hat but we will know if there is a rabbit there

The thing about AM is that he is a genuine honest oil man - not a spinner
We will get a true picture now - and he has a very solid technical background
Without having inflated the story - he can now say it as it is
Good appointment

I still think the concept of an OWC is erroneous in a fractured reservoir. OWC is appropriate in a normal sandstone reservoir where you have pressure communication within compartments and even between compartments. When the oil is only in fractures, then maybe over millions of years you get an OWC but when you produce up such permeable zones in a matter of months, there is no way you get pressure equilibration and so every fracture is in effect a separate compartment. Each fracture will behave differently and some will produce water much more quickly - leading to production problems. A horizontal well links many fractures - the one with the highest water ingress will be the one that can kill the whole well.

Hi Slift,
Is the OWC really an applicable concept in a FB reservoir? The oil migrates into the basement fractures over millions of years and so can establish an area wide level due to pressure communication. But when you are pumping out along fractures in a matter of months then you draw up the water quickly into the fractures and therefore its not a conventional OWC as such. These expensive wells can water out very quickly and unless you have a huge water handling capability, then its impossible to develop such wells commercially. I am really pessimistic about this play because its in such harsh environmental conditions - short drilling windows and very expensive wells. You could drill a lot of wells and not really understand the reservoir. Each well taps different fractures and each fracture could be open or closed and have different properties. Can't compare to onshore fractured basement where wells are cheap and need less recovery to be commercial

Current SP reflects the future prospects. Current production can be highly misleading in such an uncertain reservoir. With all this data and time on production, in a normal reservoir there would be a very confident range of reserves. Here we still talk of contingency for good reason. The shorters may turn out to be right - not easy to hear if you've been committed for so long to this one. Would be nice to see the board buy some shares and not just a few £k worth to show their belief in this story. Until we get a proper independent CPR we will be none the wiser. Its difficult to get this across but we are still in the exploration phase and there is no confidence around what we have yet despite all the efforts and money spent so far

Precisely - not sure what they hold but I think the BoD do not invest that much in this

In a conventional reservoir, perched water can be identified and understood - but my concern here is that in fractured reservoir, it is virtually impossible to identify all the fractures and how they behave. If there are many areas of perched water, then high water cuts could be an ongoing feature of the reservoir and would always limit oil production.
After so long, so many wells, so much seismic - we are still debating something so basic as where is the water coming from.....this shows just how uncertain this type of field is. As I have said a few times, if it was onshore you could keep drilling. West of Shetland with its short weather window and expensive wells - it has to work early on or you just keep putting good money after bad. The results could just keep showing there is oil and there is water and we really don't understand what comes from where

If RT is the only expert in fractured basement -I would have more faith. There are plenty of people with expertise in other companies - interesting nobody in the industry believes Trice or the story here. Spirit is part of Centrica - not exactly the biggest and best player in the sector. You can always present this sort of thing in many ways and pick your own. We really need an truly independent expert opinion - but don't hold your breath

The acquirer has massive pressure and gives the pressure to the oil column. If a fracture taps into or close to the acquirer front, the acquirer will come streaming in and kill the well. You can't really get too scientific as we do not have the data over a long enough period of time. Fractured basement will also be highly heterogeneous and so really difficult (impossible) to map / predict. If the water was an isolated cell - perched - then it has no pressure support other than from the oil around it. Therefore it should decrease over time as it gets flushed out. So far we have been seeing increasing water cut. It would have been in the BoD interest to sell this is as perched becuase if the first well gets watered out its going to be really difficult to justify drilling another.

Fractures can penetrate deeply into the aquifer in certain places and water will find its way up and into the wells. The only real risk here is the connection of fractures to aquifer and water management. The issue is that it can take some time to know and its really very difficult to predict whether there are issues or not. Its virtually impossible at this stage to really know what's going on. It is good that Trice has left as he was too personally involved in this to give an honest perspective. We really need a truly independent status report but I have warned before, developing a fractured basement in some of the harshest conditions in the world is massively risky. It has never been done - all fractured basement plays are onshore or shallow water where you can drill continuously and cheaply. If you have to handle a lot of water you need very large platforms with huge pumps, seperators etc. The fact that there is a lot of oil in place is meaningless unless you can produce an amount commercially and for that you need the fractures to be working in your favour and not tapping the acquifer and be connected over a large area drained by a very expensive well. There is still a long way to go in proving this up as commercial. The well productivity index is going to be very high in a fracture - but only for a short period of time whilst you drain the fracture. All the production data is meaningless unless you know how connected the fracture system is. You could have 30k bold today and nothing tomorrow - these are not your normal conventional sandstone reservoirs that comply to normal petroleum reserves analysis. Its a totally different ballgame and the increase in water cut we are seeing is alarming. This is all exploration and speculative on the basis that the wells are tapping a sufficient connected volume to be commercial. Its a binary outcome - the SP will go to zero or be a multiple in the next 12 months