Member Info for GreyPanther

A mate who lives not far from Wressle says the the well is currently producing about 600 to 700 barrels per day. Generally three (and occasionally four) 200 barrel oil tankers (not 220 bbl, it seems)are leaving the site each day. So if you say 3.5 tankers multiplied by 200 bbl, that's about 700 bopd. Mind you, I'm hopeful that the well will do quite a bit better than this once the extended test period is over, and Wressle gets into it's commercial production. phase.

Hi Yanis. Many thanks for that. I thought Europa's older fields would have much higher operating costs per barrel than Wressle, but I also thought their historic capital costs might be largely or entirely written off by now. I'm not completely confident now that the latter is the case. Wressle will obviously be very profitable as it's apparently producing dry oil. The older fields are presumably not nearly as good so late in their lives since they will most likely have a very high water cut, and it costs a lot to dispose of produced water. In any event, I'm happy using a $17.60 break even, all-in cost for Wressle. I suspect the older fields were making very little until the price rise over the course of 2021, which is most welcome. It will be very interesting to compare the half year results, presumably in April 2022.

Hi cloves. I probably haven't described the process very clearly, or at least how I understand it to work. The ultimately recoverable reserves (URR) at Crosby Warren, for example, will have increased over time since there's been a much longer than expected production history. When a company is using the "unit of production" basis for their write offs, the costs will usually be written off in proportion to the annual production divided by the URR. The remaining costs are usually written off in the year in which the field is abandoned. Does this make better sense?

Hi cloves. I don't entirely agree with Selfish 's comment. I'm not an accountant but what he says might not apply if a company is using the "unit of production" basis for their write offs, because the capex costs will be spread over the entire life of the field, and / or it might not apply if more capex was spent after the initial cost had been written down.
Some companies write their costs off as they go, on a year to year basis, and others use the "successful efforts" approach to form a cost pool which they write down as the reserves are produced.

You'll no doubt be pleased to hear that this is (probably) my last word on this vexed subject. There's a fairly significant accounting matter to consider if you want to estimating a company's project profitability. It will differ from company to company, even for Wressle, as it will depend on the costs that each company has "capitalised" so far. This will determine the future "write offs" in each company's Profit & Loss accounts once the field is producing. It's sometimes called DD&A, which stands for "depreciation, depletion and amortisement",and it makes things more a bit more complex. To estimate it properly, we would need to know what percentage of the capital expenditure (this will most likely include the successful well costs and all the development costs) will be written off each year by the company. This is usually done on a "unit of production basis". For example, if the expected recoverable reserves are 5 million barrels and they cost £15 million to find and develop to date, that's a development expenditure (devex) of £3 per barrel. So far so good, I hope. If, in a particular year, 1 million barrels of oil (which is 1/5 of the reserves) are produced, each company will most likely write off its percentage share of 1/5 of the £15 million development costs. This will be 1/5 of whatever costs they have "capitalised" so far. In my example this will be £3 million multiplied by the company's % interest in the project. There may, of course, be further capital expenditure once the field has started to produce commercially. This would have to be added in to the capital cost pool and it will have the effect of increasing the annual write off on a "per barrel" basis unless further reserves are found as a result of the additional expenditure.
Aren't you glad you're not an accountant? And my apologies if you are! GP

Thanks again Yanis, Both Egdon and Union Jack have previously quoted $9 /bbl for Wressle opex at the hoped for 500 bopd production rate. it's in an old RNS, I think.
Europa's $17.6 / bbl seems very high to me for this activity. Could this figure be their historic Wressle exploration cost plus the budgeted development expenditure? This would seem slightly more reasonable, IMO.

Hi yanis2005. Thanks for the further calculations. These seem pretty clear, but I'm still slightly unsure about what you mean by the "cost of extraction" being $25.95 per barrel. I assume it's s the annual operating expenditure (opex) for all EOG's oilfields in 2019, but does it include anything else? If it doesn't, then your figure of $25.95 per barre is a lot higher than the $9 per barrel opex quoted by Egdon for Wressle. Thanks, GP

Thanks Lenin and deemule. Either platinum or gold would be fine for me, but I'm not holding my breath just yet. I've just had a look at the recent Exane / BNP Paribas report on Reabold, which was forwarded by a mate. Has anyone else had a chance to look at all 57 pages of it and, if so, what do you think? Considering it was sponsored research, presumably by RBD, it doesn't read too well on West Newton's potential recovery factors. Let's hope they're being unduly pessimistic

I'm no accountant, but if the "cost of sales" - which I take to be the oil production cost - exceeds the production income, as it seems to have done in the last full year and most recent half year, then I think it is correct to say that our fields weren't contributing anything to our profitability up to now. On top of the "cost of sales" we've also had considerable admin costs. These are presumably the cost of running the company, and include the staff and office costs, but not the licence costs. Please tell me if I've got this wrong. Thanks.

Wow! Not only do I have a (very small) paper profit at the current 0.21p SP, but I now find that I own a few more shares than one of RBD's non-execs. Can it last, I wonder?

Hi Yanis2005. Thanks for the interesting calculations. Can you estimate (or find from earlier EOG annual accounts) what our "historic" production costs are per barrel for our older onshore UK fields like Crosby Warren? I suspect it's a lot more than for Wressle's post-squeeze production. Most UK small onshore fields have very high opex per barrel, and don't make much of a profit, even though their exploration and development costs were probably paid back or written off years ago. Thanks, GP

I'm sorry to harp on about Wessle but the rumour - and it's only that - is that three oil tankers are leaving the site every day. If these are the usual 200 barrel tankers, it suggests the average production rate is currently around 600 bopd. I'd agree that the well can do much more than that, but a site upgrade from the 500 bopd scenario is unlikely to happen without significant down time. If you'll allow me to say so, my background is in the oil industry. I hope I'm wrong, and that Wressle is indeed flowing at 950 boepd. But I don't think it is, and we can forget about getting any value for the gas, at least for the time being. Sorry!

Hi Tovoc. I like the sound of $700k per month but, IMO, it wouldn't be wise to assume that Wressle has been producing at 950 boepd throughout September, or even since then. It was reported in one RNS to be an "instantaneous" flow rate and this means that it was probably quite a short-lived test, maybe only for a matter of a few hours on a particularly good day. The reservoir can obviously flow at this rate when it's allowed to, but we've no real idea what the "down-time" has been since the EWT started (to allow Egdon to carry out well interventions). I'll guess at a 90% operational efficiency to be on the safe side.This will also affect the typical monthly revenues.

Hi Ivans. I think we're more likely to see 5p now than Gwynwin's miserable 1p guess. Wressle seems to be regularly producing about 600 bopd or maybe slightly better based on the reported 3 x 200 bbl tanker loads leaving the well site each day. It would be good to get an RNS from the Operator (Egdon) telling us what's actually happening.

Hi Lenin. I said that Corallian "seems to be going in the right direction" and not that they (nor RBD) had arrived yet, or sold the house as you put it. Still, I believe that RBD's 49.99% holding in Corallian is now a lot more promising, bearing in mind that the Victory project still has quite few hoops to jump through, as mentioned by Barking Crazy at 11.08 today

Selfish. I can confirm that Grey Panther is a shareholder with 10 million shares, but I won't mention the dreadful average price, and I'm a long term holder at that. Just because a holder makes a critical comment from time to time you seem to think ....... Well, what do you know about me either? At least Corallian now seems to be going in the right direction. There, a positive comment from GP!

Get real! The fact that UJO and Bearcat have the same registered office doesn't tell you anything much. The Bath office probably doesn't belong to UJO but is the address of one of their financial advisors.

Egdon's SP is up by more than 12% today. Is it possible that a Wressle update is coming?

One must be due by now, so are we about to get an exciting Wressle update?

Hi Cloves, I'm sorry you are disappointed with my response. If you re-read my post you'll see that I haven't blamed our joint CEO's for the geology at WN or for the test results. They are not technical people and I understand they are reliant on experts in those fields. What I was going on about was their poor decision making and over-optimistic commentaries. By way of ancient example I mention the abortive Deltic bid, more recently their going on about the Cadeby potential when there wasn't any, and generally over-egging the WN pudding up until now. The CEO commentary that accompanied some of our WN press releases was, IMO, completely "over the top". Their comparing it to Wytch Farm was another good example. UJO's comments have, in general, been much more restrained. Perhaps their CEO listens more carefully to what his experts tell him.