Member Info for Penguins

Insidious,

There's believing, understanding what you're investing in or trading, and making stuff up.

Seems you fall into two of those categories but to help I don't see much in the way of understanding what you are invested in eg:- '2p / 5p here we come'

SRBS

Assets.

Comprising about £30,000,000 of 'costs' - money spent on projects that otherwise have no value - if they had value they would be listed as tangible assets.

You may remember last year there was a massive write down of goodwill on HH because the goodwill 'intangible asset'- was no longer tenable.

Spending money on Exploration and Evaluation Costs is an 'intangible assets' which in my book means it doesn't exist.

Should have been 'one of the ways' - not the only way I could get a NPV(6.3) that low........

From the RNS:-

'The Directors determined that the net present value of the HH-1 well was £3.63 million and therefore determined that HH-1 should be impaired by £1.46 million. The net present value utilised an internally generated depletion curve that was independently reviewed. Costs were based on current costs less any anticipated savings. A long-term Brent oil price of US$91/bbl was used being the spot rate at the time of assessment, with a discount rate of 6.3% used being the weighted average costs of capital of Horse Hill Developments Ltd, the holding company of HH-1.'

Interesting. That's quite a low discount rate and the only way I can get a NPV as low as that is assume:-
$91 flat, OPEX $40 with the following average bopd for 360 days & $1.3 = £1
Year 1 55bopd
Year 2 50bopd
Year 3 40bopd
Year 4 30bopd
Year 5 25bopd
Year 6 to year 17 15 bopd
There's obviously many different declines that could fit the final NPV but the first few years have most effect.

Of course UKOG could clear this up by revealing their decline curve. If the OPEX reduces (anticipated savings - water disposal?) production must be even lower. That decline curve gives about 140,000bbls production.

PS if you want to play yourself spreadsheets have a NPV calculator.

30 June 2020:-

'We continue to actively pursue and evaluate new opportunities, both home and abroad, to add
near term production revenues for the Company and we will be operating prudently and creatively to enable UKOG to perform at an optimum level.'

That was followed by the Turkey announcement on 23 July 2020 promising 'Rapid success case monetisation'

Friday:-

'The Company is reviewing the potential acquisition of further new international producing oil and gas properties which have the potential to deliver potentially significant short term cash flow. These assets also have the potential to become self-funding relatively quickly.'

It went well last time raised £5mm for Turkey - still no monetisation, and no cashflow forecast made public - but be assured they've done one and the business model works.

23 July 2020:-

'In terms of the likelihood of success, the Company believes the Licence's discovered and "missed pay" opportunities are as good as, if not better than its similar Loxley and Arreton appraisal projects in the UK. Basur has brought oil to surface at good rates and Resan oil shows and electric log data are at a comparable level of supporting evidence for the presence of moveable oil as the Company's Arreton discovery data.'

Annual Report Friday:-

'Given the number of new opportunities available to the Company, all of which are considered to offer far greater success case economic impact and higher probabilities of success than the proposed Isle of Wight project'

So in 2020 Loxley, Arreton and Basur had similar COS.

Now Loxley and Basur higher probabilities of success than Arreton

It's amazing how companies will sell you their best prospects and producing properties when they spot desperation.

Then again there's AME.

Lucky UKOG doesn't borrow the millions it so liberally distributes to the industry - starting with the Weald licences and Magellan, Celtique, Tellurian and many others otherwise it would have crippling debt rather than an SP a bit more than 1% of the high in 2017 - but then they might have had to try sorting out HH earlier(which had plenty of permissions) and getting a CPR done rather than rainbow chasing - or at least pi might have found out whether it could be sorted out or not.

Will UKOG find any company to buy what they've been generously buying up in the Weald - the only company buying rather than selling for years except ANGS which last year equalised equities in Brockham and Lidsey.

Ocelot,

Not entirely sure what has happened to 'transformational' Turkey for UKOG to start spending time and presumably money on projects elsewhere - though I see they still like to mention fields far away rather than any details of the adjacent field even they describe as a producing lookalike.

Plans for all these new ventures (scattergun approach rather than a focused plan) seems more like desperation which isn't a good driver for O&G farm-ins at a time when you're likely to pay top dollar and take the risk of oil or gas price collapsing (yeh - I know, it's guaranteed to rise forever like it last time it was going to) or project failure.

Ozzy,

Whilst opening the tap sounds a simple solution to increase oil production that 'tap' controls a complex balance of oil, gas and water flow where the water and the oil, which has gas dissolved in it, may have very different flow and pressure regimes - with the oil being produced from the restricted layer of 'good' reservoir reservoir and the water sourced from fractures but probably entering and thus produced from the same reservoir layer.

The rapid decline started before the water showed up suggesting the reservoir pressure was already liable to drop unless production was reduced - perhaps water breakthrough was a result of that and since then the main effort has been keeping the reservoir pressure high enough to stop an overwhelming flood of water.

We shall see what happens with water injection, I'm not hopeful it will be much more than saving the cost of water disposal (worthwhile of course), with other factors preventing much in the way of 'opening the taps' with reservoir pressure still having to be maintained primarily by restricting production.

Unfortunately where HH is concerned UKOG seem to have taken a vow of silence since the start of production, which with UKOG has never been a good sign.

Wizard,

Have you forgotten that drilling is expensive and not guaranteed to get the results you want (despite UKOG's demonstrating that so well) - even if you have loads of hope and belief and have invested on the basis of hope and belief.

I suppose that you're an adherent to the BDI view that the recoverable resources ( magically converted to contingent resources) quoted by UKOG for Loxley from the Xodus 'study' are magically proven before the bit has turned - much like all the previous calculations of what the SP was going to be at HH and BB before testing began.

News soon - but do remember that rises on 'news' seem to evaporate and only 'results' matter in the long run - hence the SP is a about a hundredth of the giddy heights it reached in 2017 on news (and SCDM who should have thanked SS for his smelling oil etc. and other 'news',prior to testing) that turned to dust by 2018.

But my post was about HH not Loxley, nor Turkey, nor the IOW - where a decision to appeal is still awaited - just in case you change the subject - all of which may fail, and all, apart from Turkey where we are assured the cash is still there, will require money UKOG doesn't have - nor is likely to generate from oil sales in the timeframe needed.

Stockraiser,

I had to check I wasn't looking at a page from 2019 with talk of 'opening the taps' and permission for 20 years production and suggestions the CPR will be interesting - presumably judging from your post meaning you hope it would be good news.

Whilst not a CPR UKOG took it upon themselves in last year's Annual Report to value their unrisked contingent resources at HH at less than £5mm but gave no explanation for that NPV figure in terms of a production profile so we continue to be kept in the dark and unable to compare UKOG's expectations with actual production.

They also quoted a figure for contingent resources in the Kimmeridge at HH from a June 2019 RPS report without any backup information.

Nobody knows, probably including UKOG, how successful water injection will be. The EA application, which should be finalised soon, is for testing the injecting with a further application required for long term use.

Looking at the production figures it's questionable how much turning on the taps is possible as the water cut seems to increase over time when oil production is fairly stable, production being dropped to maintain the water cut. It's quite possible that even returning to 100bopd may not be possible because of an overwhelming increase in water production - and solution gas may also be an issue.

But even without any water production HH-1 declined rapidly immediately after production start in 2020.

I've always thought that a CPR would be very interesting - they must now have the year of productiin data which was the last excuse to not produce one - next excuse - wait for the test of water injection?

Wizard,

You need to realise that everything that has happened at Horse Hill shows that UKOG don't seem to have a clue about the reservoirs there.

Just imagine how wrong their model was - indicated by the huge difference between their predictions and reality, even after months of data gathering during the ewt which lasted about 18 month - Portland 20 months into production down to about 60bopd plaus a high water cut, and no production at all from the Kimmeridge.

Even their original map was wrong and now, based on the same seismic data they now place Collendean Farm in the same fault block as HH-1 and have conjured up a culmination against what is now the bounding fault that they are targeting with the next well in an area of no seismic coverage.

There won't be any continuous drilling, and not just because of no cash - any new well might throw up more questions than answers.

Of course an alternative view might be they knew exactly what might happen, water from fractures and massive decline in the Portland and issues with the Kimmeridge, but decided to keep quiet about it.

news,

not checkinfg for typos, but if you're going to quote something that's inaccurate anyway at least quote it all - btw

'potentially one of the largest in the UK's onshore history'

is not the same as:-

'UKOG speculate it’s the 2nd largest #gas field in U.K. history'

Two things - UKOG didn't say 2nd largest in that quote, and they bothered to include the word 'onshore'.

As for your 'You will note carefully that Secretary of State to "REVIEW". REVIEW WHAT?'

Well if you hadn't missed out the last word in the quote we'd have known it was the 'application'.

It's old news by the way - RNS 6 Jan 2022.

news,

you posted:-

"Ukog speculate it is the 2nd largest gas field in UK history. Sec of State has stepped in to review." - Tweet by poster on Twitter.

you're very careless when quoting things.

This was the original:-

'UKOG speculate it’s the 2nd largest #gas field in U.K. history…Secretary of State has stepped in to review application.'

although the tweeter who got it wrong anyway.

By missing out what the SoS was reviewing was 'the application', which is the planning application, it could be understood as that he was reviewing that it was the second biggest field in UK history.

But '2nd largest #gas field in U.K. history' is r[;ubbish - there are loads of offshore fields that are considerably larger. It may be the second largest onshore field as for reasons of geology gas fields onshore are quite rare, and like the oilfields small - except Wytch Farn. I wouldn't necessarily bank on it even being that even though the bar is quite low.

A few years ago that the Weald, without fracking, was predicted to be producing in a ‘mid’ case a maximum of 170,000bopd.

From the April 2016 ‘Kimmeridge Limestone Oil’ EY Report – based on information given to Ernst & Young by UKOG:-

‘The natural fractures in the two main Kimmeridge limestone reservoirs mean that no massive fracking is required.’

‘The primary stimulation method for wells in limestone rock formations is acidizing. This method of stimulation is distinct from massive hydraulic fracturing, known as “fracking”, which is a technique used in the extraction of gas and oil from ‘shale’ rock formations by injecting large volumes of water at high pressure’

‘Peak oil production in the Mid scenario is around 170,000 barrels per day, and in the High scenario over 330,000 barrels per day, representing approximately 14% and 27% of 2014 UK daily oil demand respectively. It should be noted that results of recent extended flow testing of Kimmeridge Limestone Oil were far above expectations. As such, the production scenarios in this report are conservative’

So how reliable are new claims that fracking of the Kimmeridge shale is going to be productive when the already fractured limestones are obviously incapable of achieving the sort of production predicted after HH-1 was drilled, and even those initial expectations were described as conservative following the early 2016 testing.

news,

the government might be surprised to learn that the BGS Weald study's conclusion was:-

'This study concludes that there is no significant Jurassic shale gas potential in the Weald Basin. Even the deepest Lias shales are unlikely to have attained sufficient maturity to allow for significant gas generation.'

But then they're not very good at even reading things they sign.

Whilst the figures for OIP are large the oil is spread out over a very large area (3266sq kms according to Nutech) and over a very thick interval generally over 800ft (HH about 1500ft).

The BGS reported figures are for all jurassic shales, about half are for the Kimmeridge, Nutech about two thirds - the Kimmeridge is the only interval to have been tested to date.

But the problem is persuading the oil to come out in the Weald as UKOG and other operators have found. Whether fracking will work in the Weald isn't known. Whether anyone will try it depends on the government allowing it, and if any operator is prepared to spend money on finding out if it will work.

News,

It would be great to have a full up to date assessment of the Broadford Bridge well.

Unfortunately the page you have linked is essentially a rehash of statements made in RNS before, during, and shortly after, BB drilling and testing, wkth some of it repeated from the annual report in March 2018.

At that time they were still analysing the data.

For instance the conclusion about no harm to the reservoir due to the drilling and completion has changed, and the reason for the tests being poor has also changed - hence the need to test drilling and completions in the Kimmeridge - although why they were, and are, hell bent on not doing that in a sidetrack at BB, where the site was already there, by submitting an application to do so immediately (in 2018) is odd - perhaps because their expectation of success there was lower even than the undrilled Loxley and/or HH Kimmeridge appraisal.

One final compelling reason to suppose that page (apart from not linking from the Broadford Bridge link on the web site, is that the associated map on that page is out of data as the Baxters Copse licence to the South was allowed to lapse on 30 June 2018.

News,

Both links have very out of date information as any decision about BB will be a long way off if it's dependant on Loxley and/or the Kimmeridge appraisal at Horse Hill as they claim in the planning application.

However I think apart from the first 'quote' on the DoD site, which is about the previous extension, the other quotes are from the planning application although the bit in brackets is indicating its not exactly what's in the application.

news,

You're still quoting the DoD headline.

But it's interesting when I go portfolio > Broadford Bridge it links this page:-

https://ukogplc.com/page.php?pID=128

which is a totally different page.

But nevertheless it's all old news - as my excerpt illustrates the bit about 'considering' BB-1y was current early 2018 - and now they're saying (at least to West Sussex planners) they are waiting for Loxley and/or an HH new well before deciding what to do.

But you posted:-

'This is the OVER-VIEW from the official UKOG website as to their situ at Broadford Bridge. So, not taken from here and there which may not be a complete picture.'

immediately followed by the DoD headline - not from the official UKOG website.

BTW the planning application is available on the West Sussex planning portal.

As for your recollection, not sure who H was and I don't remember those comments, but HH-1 was drilled in 2014 and all the fuss about the Kimmeridge was in April 2015 - nearly 7 years later and several tests of the Kimmeridge later (Brockham, Balcombe, Lidsey, Broadford Bridge and Horse Hill) current production from the Kimmeridge in the Weald is precisely zero.

PS it would be better to keep to the wording used by ukog in the planning application that praphasing it to what you'd like it to say or quote DoD's 'headline'.

'1.3 The Proposal
To enable sufficient time for data retrieval and appraisal from either the Horse Hill and/or the Loxley
Well Sites this application seeks to vary the wording of condition 1 of consent WSCC/079/19, to read:
This permission shall be for a limited period expiring on 31st March 2024, by which date
all operations shall have ceased, all buildings ........' etc etc.

news,

as far as I remeber drill or drop are not UKOG's PR arm. Thats' their opinion and in the article it expands on where the data UKOG are reviewing is coming from - this from the planning application:-

'1.3 The Proposal
To enable sufficient time for data retrieval and appraisal from either the Horse Hill and/or the Loxley
Well Sites this application seeks to vary the wording of condition 1 of consent WSCC/079/19, to read:
This permission shall be for a limited period expiring on 31st March 2024, by which date
all operations shall have ceased, all buildings ........' etc etc.

So not a review of Broadford Bridge -an 'appraisal' of data from HH or Loxley

It's impossible to determine where you are getting your earlier paraphrased quotes (aboutfrom - certainly not the the Portfolio > Broadford Bridge section of UKOG's webbsite.

Perhaps you could provide a link as your 'quotes' are very similar to statements in RNS made at the time BB was being tested.

eg: from RNS 29/3/18:- 'With this in mind, serious consideration is being given to a possible future short sidetrack, BB-1y.'

Your post:-'SIDETRACK BB1-1Y
"Serious consideration is being given to possible short sidetrace BB1-1y.'

If it is recent then it's a rehash of what was being said 4 years ago.