Member Info for Mirasol

Nhawan

yes - this still worries me.

People only put words in an RNS because there is something out there that could cause trouble in future and the Feds would come after them later

So we can take it that mentioning "partner approval" WAS necessary - and the obvious implication is that they don't have it ... yet. Not sure what the various approval percentages are on this

Now it could be that the partners don't have the cash to hand or that there is some technical question that has turned up that hasn't been shared with the great unwashed who pay their salaries. My guess (?hope?) is that it's the later and they're having to (re-) design a belt & braces programme to make sure they cover all the bases -.

I'm pretty sure if it was a serious issue that Lucan would have both 'fessed up AND blamed Batman & Robin by now - after all most new brooms get the dirty linen from the previous regime out in the air ASAP so they can't be blamed later......

fingers crossed but I reckon it 'll be month before we're out of the trees here

One of the curses of this BB is the intolerance and level of abuse aimed at people who have differing view as to the
prospects of a stock under discussion

And you know? IT MAKES NO DIFFERENCE

No major investor (ie someone who has say £ 5000, 000 in UKOG, will pay any attention to the ravings on here

We know the BOD don't even bother to answer us and the MM's et c are playing in a bigger league

If Pennydealer thinks the price is and expectations are too high - fine.

If Wizard thinks we're going to be rich by the end of the month - fine.

neither opinion has the slightest affect on the reality and affect what will happen

So lay off the vitriol....................

You're right - Tellurian have a free carry through the original well and the well test - after that they have to cough up - which may be the reason for the delay in hiring rig..... They have a load of cash but Horse Hill isn't even mentioned on their latest Corporate presentation so presumably it's not on the Corporate radar as important. 35% of a few million barrels is nothing when you're building a $20 to $ 40 Billion gas export network in the USA

Maybe that's what UKOG raised the cash for recently ...................

"Petroleum Geologists earn an average salary of around £50,000. Why are we trying to justify high wages. This is not an offshore rig."

It's not trying to justify the salaries - its to EXPLAIN them

For a start those look like starting salaries to me - and they're from Reed - who as faras I know don't hire many oil & gas professionals for clients.

secondly do you REALLY want the cheapest "experts" on this? Think of all the ones who drilled through the Kimmeridge and never recognized the potential over the years....... Sanderson et al took a bucket load of brown stuff for suggesting it would flow at all only 4 years ago.............

Thirdly these guys (and girls) in the Drilling, geology testing and Res Eng disciplines can go anywhere - offshore, onshore, anywhere in the world - especially the experienced ones - and work for just about anyone. It's a competitive market and they'll go to the highest bidder more often than not

Fourthly there aren't a lot of them - it's a ruthless business and you have to be pretty tough to make it

The Licences are held by

Horse Hill Developments 65%
Magellan Petroleum (a subsid of Tellurain) - 35%

HHDL is owned by UKOG plc - 77.9%
Alba Minerals 18.1%
Doriemus 4%

These are 2018 - so 3 exec & non exec directors - Sanderson, Morzaria, Mardon-Taylor maybe

3 others - Cartwright (COO) + 2 - they say 4 Admin + 2 ops - Sanderson & Cartwight look like Ops and Morzaria, M-T +2 as admin

In v small oil companies most of the heavy hitters are on contracts rather than being employees - they're not needed all the time and they are VERY Expensive to employ all year. They come on board once you're on production and there is some certainty in life (and less money) so I'd suspect the +2 are accounts/admin people who ARE needed 365 days a year

Note that there is nothing directly in the accounts for what UKOG /HHDL pay APEX (who seem to do a lot of hi-end geology), XODUS (CPR and reservoir engineering) or Zetland (planning) - plus there are probably other specialists on hire.

Admin expenses were £ 3.2 million but salaries were only £ 496 k of which the Directors took £ 435 - looks like the +2 were paid an average of £30k each. That leaves well over £ 2.5 million on "other Admin" - which is were I think youll find the other consultants and consultancies as well as Legal etc

Upstream oil and gas industry pay (including salary and bonus) reported by SPE (Soc. of Professional Engineers) professional members for 2018 averages at USD 194,874, up from USD 194,649 in 2017.

The mean base pay reported in 2018 is USD 151,003, comparable to last year’s base pay of USD 151,122.

Nearly two thirds of respondents (64.0%) reported an increase in base pay. This continues a steep upward trend from the previous two years (49.7% in 2017 and 35.9% in 2016).

Rigs - if they are so cheap in the USA etc why has no-one imported one into the UK for years?

there answer is there isn't enough demand to keep even one rig busy I'm afraid........................ and I'm sure investors in UKOG would be delighted to discover they owned shares in a drilling contractor rather than an exploration company............

Remember this isn't a load of Minimum Wage guys out of school - most of them are 20+ year professional engineers, geologists & finance people

You have to pay these guys around £ 100- £150 k a year in salary plus pension , and then the office rent (in SE England that's not cheap), IT, travel, legal (how much do you think those injunctions cost - top CIty law firms charge £800 - 1000 AN HOUR for top advice

Consultants - - unlikely to get a reservoir engineer for less than £ 900 a day - maybe £ 1500 for a top man. geologists a bit less. The guys paid least (as always) will be Security on site. Then you have all the guys turning out 40++++ planning documents, the HSE guys,................. and God Help you if you bring in Schlumberger

And if you think you can do better then best send your CV To Sanderson - I'm sure he looks to cut costs

Kit - crane hire is around £ 800 for a 9 hour day -but HHDL run 24/7 so more, Well test equipment, - someone has to make a dollar, trucks shifting kit to/from Nottingham, Bridlington or Aberdeen - £ 400- £ 500 each way..................

And this is dirt cheap compared to Offshore

Re West Newton delays I seem to remember someone mentioning a while back that the W Newton published timetable looked optimistic - so no change there then!

I just wish these companies would try and be honest about this sort of thing instead of always RNS-ing the most optimistic schedules

Wayne

At 220 barrels a day that probably equals around $ 50 a day clear after transport and treatment so $ 11000 a day = £ 8800 a day . they have 4 people on site plus maybe 8 in the office (?) - and they'll be around £ 1000 -£ 1500 a day each (including overheads like rent, wages, pension etc etc) - so I actually doubt they have any net free cash flow right now. All they are doing is reducing the COST of the Well test & the cash burn. I 'd guess they need 400 barrels a day to be cash neutral TBH

Buy a drilling rig? From Investopdeia:-

"The price of oil rigs for land drilling in the U.S. typically starts at around $18 million to $20 million and rises to around $25 million, but it can be nearly twice that amount depending on the specific rig purchased. The least-expensive rigs are those classified as U.S. small footprint land rigs. U.S. shale-ready rigs tend to cost about $3 million to $5 million more than small footprint rigs. International land rigs, designed to meet a wider range of specifications that vary from one country to another, generally range from $25 million to $40 million."

plus you have to ship it in , pay VAT and then train and maintain a 20 man crew....

that would be some dilution..................

Another issue that has always worried me is the practice of "averaging down" on AIM stocks

I understand the theory although its always smelt of doubling your next bet after a loss at roulette to me but to work it requires the stock to come back sometime .

Unfortunately too many AIM stocks only head one way (and it's not up) so buying more as they fall can only be justified if you believe they will recover, and recover fast, otherwise you're just pouring more cash into a loser

Penguins

Good points

I think fractured reservoirs always produce water EVENTUALLY but that can be a long time away if you get it right

I suspect that's what has got Sanderson, as a geologist, so fired up

You have to be careful about log based water saturation - or any electric log measurements - most of the time they're fine but occasionally they're off - remember Desire in the Falklands?

All in all I think this is very complex but UKOG are moving carefully forward to try and understand it

Looking at the various presentations and published stuff the re is world of difference in the Geology at Hurricane and Horse Hill.

the West of Shetlands play is in very old rocks - granite's with large fractures. Horse Hill is much younger rocks and the fractures are in the Kimmeridge Limestones and maybe the shales - the Portland may have a few fractures but is generally "conventional" I think.

Still fractured rocks can be very very good - because the fractures are more open than the spaces in sandstone you can get very high rates of flow and they also can connect both horizontally and vertically to a lot of rock. The things to watch out for are water - if you produce too hard you pull water up from below and the well waters out (I wonder about Brockham...). Secondly does the unfractured rock flow into the fractures? If they are very tight all you get is the oil in the fractures and the other stuff never arrives. Thirdly they are apparently a beast to predict - every one is different.

hence the need for these long term tests at Horse Hill - and TBH the current Hurricane work is really only a very long-term (and very expensive) long term test.

I think UKOG/HHDL are being very careful here to get a very good look at these oil pools before investing a shed load of cash- but if they get it right it will be a really good field

Jason

if you page down the Planning website you'll see they also have the BDF28 listed

29/04/2019 ZG-UKOG-L1-PA-17 Section Through BDF Rig 28 500 Scale A3 dated March 2019

TBH, given how long it takes to get planning permission there is no way they can start Dunsfold this year - and I doubt they have the people to be able to supervise two operations at once right now. Their planning people have clearly put in a RANGE of rigs to cover all eventualities as it may be a lot longer than 6 months before they go to Dunsfold

Sorry - absolutely NO evidence they will use the BDF 51

you've just gone onto the BDF website where they list half a dozen rigs and chosen one at random

Almost all these rigs are stacked, and have been stacked for several years. The 28 is the only medium sized rig working in the UK

Only a lunatic would dig one out the yard in Nottingham, scrape the rust off it and then try and train a crew to take to Horse Hill or Dunsfold which are ABSOLUTELY critical operations for UKOG/HHDL

My current worry is that without a contract someone else may take the rig after West Newton.... BDF will hire it to whoever puts their money where their mouth is - maybe the Alba raise for to cover the rig costs at Horse HILL (hope hope)

Wizard "What charges do UKOG levy against the partners for being the operators?"

Officially its a Joint Venture - NOT a partnership (although everyone talks about "the partners"). The Joint Operating Agreement normally says that the Operator should neither gain nor lose for doing the job. There is an attached accounting document that sets out exactly what can and can't be charged.

Direct costs such as the rig , helicopters, security etc etc are easy - just costs split. Normally things like salaries, pensions, overheads etc are calculated for the company for the year and then divided out as a day or monthly rate. Costs are time written to an agreed budget and everyone pays their share

However most companies believe there is a serious benefit to Operating as not only do you control things but you can lump costs into the day rate (office move for example) and get someone else to pay part of it.

Many outfits will want to limit the risk in any operation by staying at say 25% - or maybe 40% and Operate. If you own 100% you save on whining partners but have to pay all the cost and take all the risk & reward.

"failure not priced in- ARE U FRACKING BLIND - its dropped from over 12p "

I suspect Wolfie is saying that failure at Brockham would leave us with Lidsey (wow!!), and two assets that need MORE money to even test properly - Saltfleetby & Balcomb

And who would believe that Balcombe would be a success if we've been led up the garden path at Brockham?

I still have hopes they can get this right - but the inability of any Weld Oiler to achieve the forecast dates they put out in RNS after RNS is really getting to me. No-one seems to be able to say - "look guys this is a timeline we'd like to achieve but honestly it's likely to be a lot longer and more complicated" which would be a big step forward

Thanks Ocelot

so that post by nb140 was a secret promise from David Cameron?

Wow!! Now that is a bankable asset..............................

Well it could be worse - they could have just walked away from it I guess. But clearly they are concerned about something - and the partners are involved in the discussions (I can't remember Vonk/JTP ever mentioning them) - so we assume that they still think it can be done but maybe not on the same time frame.

As Alan said a while back they have never said what "new information" they got when they sealed off the water zones that has led to this shuffling about and "re-interpretation" - again we have no assume they DID get something new that caused Lucan & the partners to slow things down.

I wonder if they are looking very very carefully as to exactly what they should do when they open up the well - they mention "best possible communication between the well and the fracture system in the formation". Now we know that UKOG used tons of Nitrogen at Broadford Bridge and acid -an agressive intervention programme - and have admitted it wasn't a great idea.

Thhey seem to have used almost no acid or nitrogen at Horse Hill this time round and only pumped it slowly. Maybe that is the secret - very slow, very steady, very careful (not the JTP school of drilling ...)

Not much point in commenting further here until they publish some hard facts