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10'500 bbl/d and declining, from one well, soon below the bubble point. How is the other well doing again?

"Drilling operations on the Ilder exploration well 15/12-26, operated by Chrysaor Norge AS, are now being concluded.

The well is characterised as a dry well and will now be plugged and abandoned."

https://news.cision.com/okea/r/dry-exploration-well-on-the-ilder-prospect--pl973--operated-by-chrysaor,c3343604

adoubleuk,

Downhole pressure data has been revealed by the company on two occasions - the April 2020 CMD slide 19, and the September 2020 technical review slide 13. The pressures are far lower than even the low case communicated in presentations pre-production (2019 CMD slide 74), revealing that the effective reservoir volume was much smaller than previously estimated. No updates on pressure have been provided since September 2020.

Has the water cut and bottom-hole pressure data from Lancaster been in line with pre-production estimates, or has it been miles off?

Why would a consolidation make former pmo creditors sell shares faster? If shares are consolidated 10:1, surely the traded volume would drop comparatively?

The company valuation is what it is because it's a high risk that the current wellstock doesn't even produce enough oil to pay back the investment - hence the company may default on the convertible bonds, which were required to finance the Early Production System. The company has guided that production below bubble point is imminent, which means that the connected volumes are so far away from previous estimates that you might as well disregard previous work. The wells have not delivered anything close to what was expected, and yes, they were of course intended to target the best part of the field - reservoir targets are always high-graded, and the most promising ones are targeted first.
HUR traded at 65p a share, until the reality of the assets could no longer be covered up, and the entire entire top management either quit or were relieved of their responsibilities. Numbers are what they are, better to leave the interpretation up to the reader.

Previous management made sure everything was portrayed as positively as possible, and then some. What would you say the end result of that was?

The September 2020 presentation revealed that the company was unable to match the production from the Lancaster wells using just the basement, with the revised oil-water contact, so the basement must be in contact with and indirectly draining the sandstones already. I understand the CPR numbers to include the estimated combined producible volumes from sandstone and basement with the current well configuration. One has to assume there is a lot of uncertainty in the estimates with such a complex dynamic, further clouded by the fact that production is approaching the bubble point, the effect of which could be either detrimental or beneficial to oil production.

What kind of financer would accept terms that lets the company settle its' debt by issuing shares at a fixed ratio, regardless of share price development? Settling in shares is naturally the privilege of the issuer, and would only apply if the share price was above $0.52/share.

Slift,

I appreciate the 2C resources, but they do not easily become 2P reserves. The PRMS definition of contingent resources is as follows:
"Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations by application of development projects, but which are not currently considered to be commercially recoverable owing to one or more contingencies."

The company has put forward their highest ranked option, the proposed P8 sidetrack. That well has 2C resources of 3.2 mmSTB, and the stakeholders could not be convinced to give it a go. This does not speak well for the remaining 2C resources on Lancaster. For Lincoln and Warwick Crest, all we know is that the exploration wells drilled so far tested at significantly lower rates and/or productivity indexes than the Lancaster wells. This does not inspire confidence in further investment on these fields.

My conclusion remains that it is very understandable how the risk-adjusted best option can be to do nothing.

I see several posters at loss to understand why clear business plan has not been put forward.

If I was diagnosed with terminal cancer, my doctor may recommend palliative treatment, and spending the remaining days in the best way possible. There are "experts" out there who would be able to readily put forward a plan for curing me, likely including cannabis oil and kambo. In that case, the ones with a plan are charlatans, while those who throw their hands up are honest professionals.

When no value is ascribed to what was previous reported to be an oil discovery of hundreds of millions of barrels, it is not because the corrupt current management wants to bring their own company down. It is because the previous interpretation was tragically flawed, and the people who were responsible for it have been fired, enabling a more competent evaluation. The current management cannot make oil resources be where they never have been.

The explanation is simple - an honest look at the company's assets shows that there are no value-adding options that justify the risk. There's a sliver of hope that a higher oil price or improved field performance can change the picture, but don't count on it.

I probably should have put a question after my laundry list: Would these differences result in Harbour trading at materially lower multiples than AkerBP even after a merged balance sheet and dividend is put forward?

Steve,

Thanks for the response. Some factors to consider in this comparison:
-In addition to the market cap, net debt also factors into enterprise value estimates. However, for Harbour and AkerBP, these numbers are quite close.
-Comparing the enterprise value to booked assets, Harbour comes out at about half of AkerBP, indicating it is underpriced. However, the sum of PMO and Chrysaor assets are booked at 60% higher values per boe than AkerBP, which may suggest Harbour's are overvalued
-AkerBP produces ~80% liquids, Harbour 55%. Realized prices of gas is close to 25-30 $/boe, so this works in Harbour's disfavor
-AkerBP's average OPEX/bbl is significantly brought down by their stake in the Johan Sverdrup field - 8-9 $/boe compared to Harbours estimate of <15$/boe for 2021
-Harbour has extensively hedged 2021 and 2022 production, and their loans require a certain hedging to be in place, so the exposure to upside on prices would be relatively less

Stevo12 - towards which peers and based on which parameters do you see a 40p valuation?