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Ibug,
We all know that the 2018 CPR is out of date, or have you not been reading the RNS's?
e.g.:
23rd Dec RNS "Downhole pressure gauges also confirmed that HH-2z penetrated a near virgin pressure section of the Portland oil pool. This finding has likely positive implications for the magnitude of connected oil in place and recoverable reserves seen by the field's two wells. Determining the oil volume connected to HH-2z remains a key EWT objective."
1st Aug RNS "Preliminary Company analysis of the final Portland pressure build-up test, indicates that the Portland connected oil volume accessed by HH-1 has significantly increased from 7-11 million bbl to 11-14 million bbl, a robustly commercial volume."
My figures were for example and to aide conversation about company valuation and how a large increase would see a re-rate.
If an updated CPR is forthcoming for HH Portland, then I am expecting a 2P of significant increase over the 2C in the 2018 CPR.
All opinion of course when it comes to the CPR and 2P for the Portland. But I'll stick to my guns on valuation being a question of P's and C's rather than cornershop cashflow.
VistaMan,
They are figures for the sake of example. But my point remains, if you're going to discuss market valuation of a small cap oiler, then you really need to be talking P's and C's. There is no value in cashflow based valuations; its about assets, and most notably about Proven, Probable and Contingent.
I'll state again, this is not a cornershop business where it is 99% about cashflow and basic profit margins. This is a small cap oiler, and it is about assets for valuation. Cashflow is really only a mechanism to exploit the assets. Poor cashflow = slow recovery with potential placings. Good cashflow = opportunity for optimum recovery without placings.
Enough said?
Correct me if I am wrong, but Seadoc is just an ordinary guy, and not running a fund for a large multi-national. If you think that a retail PI community has the same capabilities as the big players, then you need to re-think.
Seadoc stated "But I can tell you that there is absolutely no borrow, it is not possible to short this stock."
That's clearly a lie. It is possible to short every stock. The instruments and capabilities are there.
I think what he means is that there is no declared short position at this time.
As for company valuation, only a fool would calculate a value based on EWT recovery levels rather than calculating based on actual assets. If an updated CPR drops for the Portland that shows 2P reserves of 45MMbbl, and a further (NEW) CPR issued for the Kimmeridge that shows 2C resources of 100MMbbl then the NAV and company valuation would re-rate.
This is an oiler, not a cornershop. Whilst cashflow is important, reserves/resources are king.
Get to know your P's and C's.
???
If the EWT on HH2z is ongoing then folks need to appreciate that the goal of an EWT is not to produce as much oil as possible to appease some jibber/jabber on a forum like this. The purpose of the EWT is to establish the dynamics of the reservoir and gather sufficient data to build a business case. UKOG do not need to issue an updated CPR, there are no regulatory requirements that mandate a CPR. They could take the data and use that to determine whether the well is commercial and worth sustaining. But based on the fact that they have already said that the well needs further interventions, and that we have not seen any since the RNS on 9th March, then I very much doubt that the well is in EWT and due to finish soon.
My own view is that they have gathered some data, but that the well has been shut in for over 2 months whilst they await the kit to perform the further interventions. It would be nice for UKOG to actually list the interventions that they plan, not doing so could be considered as hiding the real truth.
Time will tell.
I share your enthusiasm, but I do not share your target prices.
40p is a possibility in 2020,45p is a stretch target
50p by end of 2021 is not impossible, but I just dont see it happening.
My more conservative opinion is for 45p by end of 2021, which is still a very decent return from a sub 33p SP over the course of 18 months.
Just my opinion, and I'm not currently holding any LLOY stock.
I've been waiting patiently for the design freeze RNS, but it's not landed. Some folks will lose patience and bail. I have a timescale; no design freeze RNS by 2nd July, then I am out.
I've been looking at the history of selling, and each day there is a large trade at close or just after close.
My opinion is that this is Tellurian selling their UKOG stock.
Tellurian sold 184.5m shares between 31st Dec and 31st March, but still had 514m as of 31st March. I have not seen any further holdings statements. I do think that they have been selling, but it would be guesswork on how much. With the lower volumes in the first quarter, they were shifting 60m per month.
Now with higher volumes, I think they are able to shift their holdings much quicker, and if that is the case, then they must be very close to being out.
If it is not Tellurian, then is it PW Well (forward selling) or Canaccord (slim loss)?
One thing is for sure, 514m shares is chicken feed given the volumes we have seen. So if they are selling, its goodnight from them v soon.
I've done enough research. Still waiting on that Canaccord TR1 declaring 10% holding, and still waiting for that long awaited operational RNS and details on HH2z. Have gone in with my first chunk, staged purchase. So many positives here and signs of serious sentiment. No longer willing to sit on the sidelines and watch.
Ocelot, please check, but I do not see any UKOG well testing during the period of the AGM in 2018. I do not believe that they had started the EWT at Horse Hill, and they had shutdown the campaign at Broadford Bridge. So unless they had a chemistry lab and were doing some simulations, then there would be nothing to update on would there?
Penguins,
The Isle of Wight really interests me. I've a few notes on the asset and some company remarks about the play there being "many times" that of Horse Hill.
I dont have much knowledge of any historic drills there, but it is in near proximity (65 kms as the crow flies) to a very well known and long standing asset in the shape of Wytch Farm. Wytch Farm has 3 major oil plays; Bridport, Sherwood and From which are between 25000 and 5200 ft deep. If UKOG are targeting the Portland, then this would be shallower by comparison.
I understand the Wytch Farm plays to be largely outreach wells that reach out into the channel. So despite being classed as on-shore, the production is largely from plays out under the English channel. There are some chunky areas south of the Isle of Wight that may offer up something similar, but I've no knowledge of the geology or the PEDL licenses for that area. Do you have any insight on that location south of the Isle of Wight?
Ibug,
Like I said, I am not a planning expert. However, the O&GA are not Surrey County Council and have no authority to grant traffic plans.
So the O&GA have granted approval for production, and HH-1 Portland is in Production from an O&GA perspective. But from a SCC perspective, the Transport condition has not yet been approved. So can they move vehicles in/out as per EWT approved plans or as per the 25 year plans?
Answers on a postcard.
Scallywag, no, that resolution is for the issuance of new ordinary shares.
If passed, they can issue upto £300,000 of ordinary shares at nominal value. The nominal value is 0.01p. SO £300,000 at 0.01p would equate to 3 billion new ordinary shares.
3 billion shares at 0.19p would allow them to raise £5.7million through placings. But that would not stop them from raising a further request in the period between this AGM and the next, they could hold a EGM or a GM and raise a further resolution for authority to issue further shares.
If this is voted through, then I expect UKOG to take full advantage of this, leading to 30% dilution by this time next year (assuming an AGM in June 2021). It does make that Canaccord 10% holding TR-1 even more important.
Longtermholder, if the company are to be held to account then a CPR is a MUST. If you let them continue the game that they are playing, then you have no means of knowing whether they are holding "pocket aces" or a "7 and 2". There is one huge warning signal for any potential investor like myself; a company that promises RBL in an RNS, then runs to the market for cash instead. I could understand it if it were just 1 time and if they needed more time and data to produce a CPR, but how long has this been going on? The issues and delays with HH2z appear to provide a reasonable justification for not issuing an updated CPR, and maybe they are looking at a bigger play or a more complicated play than previous which then requires the EWT of HH2z to be completed. But, Like I have said already this morning, the company and the CEO/directors needs to be held to account; small cap companies should be made to draw a line in the sand and to show their worth.
Having done a little more research over the weekend, I note that UKOG had the main application for Horse Hill approved back in Sept 2019. However, there were a number of conditions that had to be met.
Condition 8 (Transport and Traffic Management Plan) : https://planning.surreycc.gov.uk/planappdisp.aspx?AppNo=SCC%20Ref%202019/0196
The paperwork for condition 8 has been with SCC since 5th December, yet a full 6 months later and still no decision. That seems very poor for something that is a delegated matter and not needing a full SCC committee review.
I see that all other conditions have been met, maybe with the exception of the revised and supposedly immaterial update on the Construction and Environmental Management Plan (Condition 19).
I'll be keeping a close eye on the SCC planning portal in relation to Condition 8, as without an approved traffic management plan, then UKOG cannot go into production can they? Will they be limited to the traffic allowances as per the permission to undertake EWT? I'm not a planning expert, so if anyone has already researched this and has a definitive answer then please do let me know.
To vote at the AGM, you need to register and send your proxy vote in by 11am today. The details are all on the company website. They have not made the process easy, arguably by design, probably hoping that too many investors get put off by the hassle.
https://www.ukogplc.com/ul/UKOG%20-%20Notice%20of%20AGM%202020.pdf
A further comment on resolution no 4. It has been stated within RNS that the company will look at Resource Based Lending (RBL) for future investment requirements. So Shareholders voting against no 4 and preventing that from being passed will be holding the company to account on RBL. To get RBL, they will have to issue a CPR, something that has been long overdue. If you want to get the story and want some protection, then force their hand, get the CPR, force them into RBL, and force them to protect shareholder value. If you let them off the hook, then there will be several billion more shares in issue this time next year. If you hold them to account, they can no longer hide behind their desks and will have to show some integrity and honesty. There is certainly a strong case for withholding market sensitive data, the CEO needs to provide updates on; HH2z, HH1 dual completion, CPR, strategy, his future bonus measures, and also needs to provide some reasoning for not buying stock. These 5 measures are key to the turnaround of this company, if the CEO does not update on these items, then it doesn't take much imagination to work out what is coming next (and it will not be positive).
AGM is on Wednesday 17th.
My views on the resolutions are below. Please note that I do not currently hold any UKOG shares.
Resolution 1 - Receiving and Considering the Accounts
-- This is ok to pass, trivial matter.
Resolution 2 – Re-Appointment of Director (Nicholas Mardon Taylor)
-- I would say no. No single director has performed to a level that justifies being re-appointed.
Resolution 3 – Reappointment of Auditors
-- This is ok to pass, trivial matter.
Resolution 4 – Directors’ Authority to Allot Shares
-- This is a NO from me. The company has been given ample opportunity to raise cash and to put their most prominent asset into Production. Shareholders need to be protected from any further dilution. Horse Hill should be put into production, and if the proceeds from sales are not sufficient to drill Dunsfold in 2021 and Isle of Wight in 2022, then UKOG should have to wait. They do not need those extra funds in the next 12 months. Make this company and the directors focus on getting the business into production. They should not be given free rule to do what they like with cash raises. It also makes a clear statement to ALBA and DOR that they will not be getting a buy out; I'm not sure how ALBA and DOR have got away with what they have, but it merits legal advice.
Resolution 5 – Disapplication of Pre-emption Rights
-- Absolutely not. The existing shareholders should be given first option to take any new shares that are issued. However, in light of resolution 4, then this one becomes void if no 4 is not passed. But, do not let this company offer those new shares to other players before existing shareholders get first dibs. Its shocking that they continue to get away with this approach. Preventing this resolution will stop UKOG from using YA for any further raises.
All in all, my position is quite clear. UKOG have been given every chance to move into production and to generate positive cash flows to then use for growth. The board of directors need to be prevented from continuing with their "shareholders second" mindset.
Looking forward to seeing how this turns out. But if 4 and 5 are passed then I'd ask to see the voting data.
Sting, I wish I was on the inside, but sadly I'm not. I'm watching from the sidelines with a keen eye. Trying to avoid the jibber jabber on LSE (and other platforms), and sticking to the technicals and RNS's. I see some good feeds on Twitter, but in my view it's supplemental (and not a replacement) to what is provided by way of RNS.
That said, having looked through the Twitter reports earlier this week, there is certainly some room for interpretation of what has been done on HH1. The guys on site were seen removing the Unico pump, the wireline was on the well, and also the storage tanks were moved around, then the pump was put back on. I did not see was any footage of production string being removed (although I may have missed that) and I did not see any perforation gun kit being lowered/removed from the well. I am not sure how much time the guys on Twitter spend outside the fence, so they may have missed some of the key events that would support the motion that UKOG were perforating HH1 Portland. From previous RNS UKOG said that they were going to put HH1 into dual completion and there was also talk of a downhole ESP. It could be one of a number of different things, my short list of options as follows:
(a) Change-over of production from Portland to Kimmeridge.
(b) Dual completion of HH1 to flow Portland and Kimmeridge using existing pump, which I believe is possible.
(c) Perforation of HH1 Portland (BGS data supports that this may have happened, but I dont have enough reference material to make a direct comparison with other activities on site in the past.
(d) Deck chair exercise, which I think is very unlikely.
(e) B and C above.
The work this week was different from past HH1 work, the storage tanks being moved being a key difference, and then there being some extra kit stored behind the tanks. Was that production kit? What was in the blue storage container? Was there an downhole ESP in there?
All of the above being said, does anyone know whether HH1 is already setup with the downhole production string(s) to support dual completion? Has that ever been stated in an RNS, as I cannot find it in the RNS's I've read or text copied from them into my file.