RE: AGM22 May 2020 00:10
It's been a busy day on here, starting early with noel asking what we might expect at the AGM this year and reminding us of last year, then onward to 30p takeouts and through to the usual pîsstaking posts.
But no-one answered noel.
imo, there will be very little of the bravado shown at the last AGM. The AR this year was a dreary read when compared to jubilant one from last year, when Foil had just been achieved.
The other day there were posts suggesting HUR were victims of poo, covid et al, and while I might have some sympathy with that view, the evidence was already gathering that it was not a slam dunk multi-bag investment. Indeed several have spotted that while HUR may have been a victim of circumstance, there was no need for them to be victims as well, especially with covid shares offering such potential, together with the more general FTSE bounce back.
At the last AGM there was a man, a plan and credibility.
Some of that was misplaced because the new CMD data shows that they had water virtually immediately, but chose not to mention it until the July CMD. The WD drill had also gone awry.
But as the drilling results came in and the water increased, the plan laid out started to unravel. There were not 3 horizontal production ready wells, the only one suspended had a short life granted by OGA.
Then came the Friday 13th Dec RNS with the Licence extensions, with all commitments honoured with first oil, and yet, now with sub-vertical well(s) to determine maximum extent of Lincoln committed in 2020 and similar for Lancaster in 2021.
The plan was trashed, yet the rig had been hired for three more GWA horizontals.
As the oil price tumbled, so did the prospects of #8 at Lancaster. Indeed thoughts moved to solving the water production; and WoSP was parked, when the JV terms were amended to cover the current status.
Without the WoSP off-take for gas, a production increase is unlikely; and although HUR have been coy about the actual licence terms, we learn from RB that oil is 20mb/d max.
We know that the water cut is increasing but is not a problem at the moment. Until the FPSO is upgraded, it has a 35,000b/d fluid capacity and to maintain 20mb/d oil with over 7mbwater/d currently concentrates the mind if the water behaves at all like the bell-curve in the ES, peaking at c.19mb/d. and any #8 well has foil 2022 earliest.
So, production is guided at 18mb/d for the year less any shut downs. And shutdown would occur if #7z were to be reworked to try and arrest water from the current zone.
A higher oil price would allow planning decisions to be made, while protecting future cash demands for the Bonds and the Licence protecting comitment wells.
An OGA decision is awaited in June.
A FPSO contract decision is due in June.
Warwick/West Lincoln licence and Halifax licence both due this autumn.
A new CPR is due next year on Dec20 status.
AGM won't be bullish imo.
joe
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