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Given the size of SK334 I've been re reading the monthly presentations in light of the impending Production Sharing Contract being done in conjunction with PETROS. Quite a few points come out.

1. They have completed the geological and geophysical work and are focussed on the PSC working with PETROS. Important because delineates what will be targeted first.

2. They are planning how to develop the highest prospects fields in collaboration with PETROS. Important because will influence PSC terms.

3. Resource estimates approach and methodology being completed. Important so that estimates are seen as reliable.

4. Petroleum Economic studies underway. Important because it will quantify risk and reward and enable production consortium to come together.

5. Future exploration plans being agreed beyond early wins. Important since it gives PSC long term definition and scope.

6. Rig selection in progress. Important because once PSC is signed all parties will want to move ahead quickly.

7. There is sustained interest from external parties to collaborate on PSC. Important since it shows oil & gas majors won’t wait to be invited they want to be part of the PSC from the outset.

8. All above work is being done in conjunction with PETROS and likely some input from selected O&G majors.

All in all very exciting. With the PSC in hand UPL will be one of the standout O&G minors.

So UPL are right now in the midst of working through a Production Sharing Contract (PSC). In effect this will determine how UPL and partners will split risk and revenues with the Malaysia/Sarawak government. Note SK334 is for an area of 6,685sq Km and from what I can see the seismic data from 2018 only covers 458sq Km. I.e. they have historical data for a small section of the potential area and are studying anew the most promising additional areas. Given the scale of likely reserves UPL obviously can't be the international oil&gas production company and so they will partner with and an international oil company (Shell is dominant in Brunei) for an appropriate share. The whole purpose of the joint technical study has been to de-risk the next stages of exploration and the better the job they've done of this the more UPL's share will be. I take a lot of comfort from the latest share purchase from the chairman/ceo. Even a small share of the PSC will mean serious multiples of the current mkt cap. If you're interested in PSC contracts an old but good source to look at is https://ora.ox.ac.uk/objects/uuid:3ba0589f-8c3a-43b9-b034-24f7dae7e0c5/download_file?file_format=application%2Fpdf&safe_filename=Production-sharing%2Bagreements%2C%2Ban%2Beconomic%2Banalysis.pdf&type_of_work=Working+paper

Normally, this is done outside of restricted periods so IMO the chairman/CEO increasing his holding by 33% at this time is very significant and can only mean news is incoming.

I hadn't fully realised the size of SK334! Compare its size to Brunei. It's nearly the same size! Then look at this article on the development of oil and gas fields in Brunei in conjunction with Shell over decades. https://alainaqwliu.blogspot.com/2022/07/brunei-oil-fields.html?m=1 . Then consider that UPL is finalising negotiating a production sharing agreement for SK334. Then do the maths .. almost any maths !!!

Https://www.londonstockexchange.com/news-article/BIDS/2023-annual-general-meeting-results/16051493

Sorry - the full last sentence reads "one of the three wells to be drilled this fall (the southern well, on the Cane Creek field) already has infrastructure tied into the pad (that is not dependent on Dominion."

The lack of Dominion reliance is of course important

There's been a lot of chat re gas volumes & sales, crypto and dominion. I messaged Colin directly to get clarification on these points which wasn't totally clear in latest RNS's and video interviews. Next message has questions and CH's answers in caps

Good morning Colin,
Many thanks for the RNS and Proactive interview yesterday. I've a few questions if that's OK. As before if you could answer after each one that would be much appreciated.

1. Could you confirm the ratio of gas to oil production from 16-2 that last years test demonstrated? THERE IS NOT A SIMPLE ANSWER TO THIS QUESTION. DURING A FLOWBACK/PRODUCTION TEST ( WHAT’S CALLED THE “CLEAN-UP” PHASE AFTER HYDRAULIC STIMULATION) ONE WOULD EXPECT TO RECOVER THE FRACKING FLUIDS FIRST, WITH NATURAL GAS AND THEN OIL/LIQUIDS APPEARING AS THE TEST PROGRESSES - AND WHICH IS EXACTLY WHAT WE SAW AT THE STATE 16-2. THE INITIAL DAYS WERE 100% COMPLETION FLUIDS, THEN MIXED WITH GAS, THEN FURTHER MIXED WITH OIL. MOREOVER, AS WE WERE HIGHLY RATE CONSTRAINED, WE WERE STILL IN “CLEANUP” PHASE EVEN AFTER 23 DAYS. THAT SAID, THE FINAL DAYS OF THE TESTING SHOWED OIL VOLUMES ROUGHLY 1/3 OF THE GAS VOLUMES. THE FLUID MIX MAY STILL EVOLVE, WHICH IS WHY WE’D LIKE TO GET TO WELL BACK ON TESTING.
2. Do you expect that to change in the extended production test in H2? IT CERTAINLY COULD - OTHER WELLS IN THE AREA WERE MORE OILY, AND CERTAINLY THE WELL WE PLAN TO DRILL TO THE SOUTH IN THE CANE CREEK FIELD WILL HAVE MUCH MORE OIL AS A % OF THE MIX. ALL OF THE CPR VOLUMES, HOWEVER, WERE BASED OFF THE CONSERVATIVE 16-2 GAS/OIL MIX, SO AN UPSIDE COULD COME IF THE FLUID MIX TENDS BACK TOWARDS OIL (SIMPLY AS OIL IS WORTH MORE THAN DOMESTIC GAS AT THE MOMENT). THAT SAID, THE OIL CAME IN AS EXPECTED, SO THE ADDITIONAL GAS VOLUMES ARE A CHERRY ON TOP, ESPECIALLY AS GAS PRICES ARE TRENDING HIGHER IN THE US.
3. What will be done with the residual gas that is not used at the crypto facility? THE INITIAL TEST USING CRYPTO IS ENVISIONED TO BE HIGHLY CONTAINED - WE WON’T PRODUCE MORE THAN NEEDED (IE WE WON’T FLARE OTHER VOLUMES). IF A CRYPTO FACILITY PROVES SUCCESSFUL, THEN WE MAY ADD ADDITIONAL MODULES TO OPEN UP THE WELL FURTHER, ALTHOUGH MY PRIMARY FOCUS IS TO MAKE SURE THAT WE CAN SELL INTO THE DOMINION PIPELINE AS SOON AS POSSIBLE. BY FAR THE MOST CASH FLOW IMPACT WILL COME WHEN WE CAN OPEN THE WELL UP FULLY AND SELL AT CURRENT MARKET RATES. CRYPTO IS MERELY A BETA TEST IN THE INTERIM, NOT A MAIN FOCUS.
4. Since you can't control what Dominion does and in what time-frame they will connect to you, what plans and time windows are there to lay your own gathering lines so that production output can ramp up quickly? PLANNING TO ACCELERATE GAS SALES IS IN EVERYONE’S INTEREST, AND WE ARE PUSHING FORWARD TO ENSURE WE HAVE PLENTY OF OPTIONS. FWIW, ONE OF THE THREE WELLS TO BE DRILLED THIS FALL (THE SOUTHERN WELL, ON THE CANE CREEK FIELD) ALREADY HAS INFRASTRUCTURE TIED INTO THE PAD (THAT IS NOT DEPE

11. Pipelines required for water as well as for O&G. Since we are fracking water supply and efficient use and re-use if key - PIPELINES FOR WATER ARE NOT REQUIRED, BUT AS WE DO WELL PLANNING AND SEEK TO OPTIMIZE COSTS WE ARE CONSIDERING ALTERNATIVE WATER MAGEMENT OPTIONS (VERSUS PRIVATE PURCHASE AND TRUCKING). IF MAY OFFER STRONGER ECONOMIC UPSIDE.

12. ZPHR optimising entire supply chain as testing continues. CORRECT

13. Will be a steady flow of RNS’s from now on since each stage of infrastructure completion or drilling will require it. IT’S HELPFUL TO LOOK BACK AT PRIOR DRILLING CAMPAIGNS TO SEE OUR GENERAL FLOW OF NEWS – CORRECT

14. If next 3 wells as hoped for cashflow projections support 10 more drills at least in 2023 - CORRECT, BUT ALWAYS DEPENDING ON PRICING

15. Intention is to have pads with up to 6-8 verticals fairly spread apart . Each vertical supporting one or more laterals into specific reservoirs. CONCEPTUALLY CORRECT BUT WE HAVE NOT OFFICIALLY SELECTED SITES FOR THE NEXT SET OF WELLS. IT’S IMPORTANT TO LEARN FROM EACH PHASE OF DRILLING.

16. CH frustrated with SP and is focused on proving resource base so that Enterprise Value can grow. ABSOLUTELY CORRECT

17. New firm Auctus hired to assist generate II interest CORRECT

18. IMO the problem to date has been very very low trading volume. Some days 10m or so vs 1500m traded shares. On the positive side that means sticky hands but on the negative side small trades make large SP movements. To me the key is to increase traded volume. Aside from Auctus appointment, and of course the above notes, what ideas do you have in this regard?? I CAN JUST REITERATE THAT THIS ISSUE IS FRONT AND CENTER AT THE MOMENT, BEGINNING BUT NOT ENDING WITH THE APPOINTMENT OF AUCTUS.

Many thanks

Colin, good morning.

Great presentation last night. Below are the brief notes I made of strong points for the company. Are they correct and have I missed anything?

1. WB wells generated $11.5m in last quarter representing $10m net to ZPHR – i.e. very profitable. CORRECT

2. Next 16 wells will only required $3-4m of CAPEX, will come on line in next 6 months and given cash flows need no financing CORRECT

3. 16-2 oil already being sold, trucked out to Salt Lake city refineries. Rail option being investigated. CORRECT - THESE ARE VOLUMES THAT HAVE BEEN STORED ON SITE FROM THE EARLIER PRODUCTION TEST.

4. Crypto facility, 1st modules, will be ready to start using gas in near term – clarified as within the month in Q&A. WE WILL HAVE NEWS ON THE CRYPTO PLAN WITHIN THE MONTH AND WILL BEGIN SITE PREP AND DEPLOYMENT SHORTLY THEREAFTER. EXACT PRODUCTION TIMING DEPENDS ON HOW QUICKLY EQUIPMENT ARRIVES, AS SOON ITEMS ARE TAKING LONGER THAN USUAL AT THE MOMENT.

5. Dominion, one of US larger energy companies, has bought nearby gas pipeline, 16” pipe, and expects it to be able to service ZPHR leasehold sites by early 2023. 16-2 currently 5 miles from it, new wells 36-2 & 36-3 (co-located on same pad) 1 mile away. CORRECT

6. Dominion pipeline more than enough for ZPHR 16-2 and 3 new wells CORRECT
7. Dominion pipeline connects to even larger Williams pipeline CORRECT

8. If necessary ZPHR will lay own pipeline, CAPEX estimated at $1.5-2m. CORRECT - IT WOULD BE 5.5” OR 6” GATHERING LINES.

9. Drill and completion and production testing contractors close to being finalised since started RFP process months ago. CORRECT

10. All 2023 wells likely to be in region between 16-2 and 36-2/3 to use infrastructure efficiently CORRECT

After last weeks webinar CH closed by inviting questions on email if required. I did so last Friday morning and CH answered in detail by mid-afternoon. I asked for consent to share his responses which he was pleased to give. The next post is long but are his responses to my questions. His responses are in CAPS. It's good to have direct confirmation from CH on a wide number of points. I see a clear upward trajectory for SP on basis of responses.

Evans3020. Sounds like you're Benny4 or a clone from telegram group. Give it a rest. Think more clearly about what's involved in a major new find.

Here’s my notes of strong points made, roughly in order presented

1. WB wells generated $11.5m in last quarter representing $10m net to ZPHR – i.e. very profitable
2. Next 16 wells will only required $3-4m of CAPEX, will come on line in next 6 months and given cash flows need no financing
3. 16-2 oil already being sold, trucked out to Salt Lake city refineries. Rail option being investigated
4. Crypto facility, 1st modules, will be ready to start using gas in near term – clarified as within the month in Q&A.
5. Dominion, one of US larger energy companies, has bought nearby gas pipeline, 16” pipe, and expects it to be able to service ZPHR leasehold sites by early 2023. 16-2 currently 5 miles from it, new wells 36-2 & 36-3 (co-located on same pad) 1 mile away.
6. Dominion pipeline more than enough for ZPHR 16-2 and 3 new wells
7. Dominion pipeline connects to even larger Williams pipeline
8. If necessary ZPHR will lay own pipeline, CAPEX estimated at $1.5-2m.
9. Drill and completion and production testing contractors close to being finalised since started RFP process months ago
10. All 2023 wells likely to be in region between 16-2 and 36-2/3 to use infrastructure efficiently
11. Pipelines required for water as well as for O&G. Since we are fracking water supply and efficient use and re-use if key
12. ZPHR optimising entire supply chain as testing continues
13. Will be a steady flow of RNS’s from now on since each stage of infrastructure completion or drilling will require it.
14. If next 3 wells as hoped for cashflow projections support 10 more drills at least in 2023
15. Intention is to have pads with up to 6-8 verticals fairly spread apart . Each vertical supporting one or more laterals into specific reservoirs.
16. CH frustrated with SP and is focused on proving resource base so that Enterprise Value can grow.

All in all good presentation and good Q&A which fills in a lot of blanks and allows us to have a pretty clear picture going forwards.

https://youtu.be/eI6mXQr44NE

Great interview. Takeaways for me. 16-2 to come on stream soon as finalise infrastructure. Additional 3 wells not exploratory - they know already oil is there - but to move U to C to P reserves. Further those 3 wells will produce immediately since infrastructure will then be in place. Likelyhood is 10 well programme in 2023 as a minimum. Willston basin may provide more deal opportunities but is not focus at all - focus entirely on Paradox. Implies to me some form of corporate action in 2023 to accelerate Paradox beyond 10 wells. Probably once have revised CPR post 3 wells of 2022. Sproule won't take as long next time IMO since now know the site. CH and directors own 12% of company and are well aligned with shareholders. All in all, steady well understood SP growth from now on as soon as first Paradox RNS's start - which could be any time now onwards.

Roland would have known about latest GPCB "questions" some while ago and probably has been working it for a while. RNS is to deal with expectations that well would open this week. It can't therefore he needs to manage expectations. We have no idea what is going on in the background and how long its already been worked on. What is certain is that there will be a lot of pressure on all parties to get this going .. thereafter, anyone that's worked in O&G knows how to manage local authorities. There's no surprise here.

https://www.vadodara.live/index.php/news/gujarat-pollution-control-board

Corruption issues certainly.

https://uk.news.yahoo.com/former-cia-director-says-russia-125829603.html?msclkid=4b91460ab04111ec9e6d146ea528e00a

This is very interesting and provides excellent background to why Russia may be unable to continue the war and hence ceasefire negotiations have more basis.

IMO CPR delay is because size of recoverable asset has increased markedly using fracking & horizontal wells. This is making Sproule work very hard to get it right, proven and probable, since Utah analysis has never had to be like that. The oil has always been there - Sproule are confirming that much more than before can be extracted by ZPHR. The undoubted larger asset size means ZPHR needs a JV partner for sure to get it mobilised in an acceptable timeframe.. again making getting CPR right all the more important.

I am reminded of the latest placing which surprised us all. It came some while later than all expected due to COVID reasons. All of that understandable but nonetheless not what we were expecting. Similarly, we were not expecting such a CPR delay - especially from CH who likes to promote news as soon as. It can only be for material reasons beyond there's a lot to do in the CPR. There's a lot to do because something is in the background that we don't yet know about. Certainly the update RNS a few weeks back alludes to a lot of news flow much of which we are aware of already but it also implies other activity. Perhaps V111JAS is right. I certainly agree the risk/reward is heavily skewed to reward in the near term.

Bad news for 88E but good news for ZPHR since they will be one of leading lights very shortly

https://www.moex.com/en/issue.aspx?board=TQBR&code=POLY&utm_source=www.moex.com&utm_term=poly

Currently 920 Rouble @ GBPRUB c.115 - £8 being paid on MOEX