Member Info for Penguins

Yawn,

'Thank you for confirming HH1 was shut in for two weeks in September. I didn't know that.'

you didn't know that??? UKOG put it in a RNS ('UK Oil & Gas PLC (London AIM: UKOG) is pleased to announce that it has completed a planned two-week production facility upgrade') so I don't need to kow the days or waste my time watching the site like some - and finally I don't have friends on this board - probably unlike you - you mistake the purpose of this board - it's to discuss UKOG, not make friends.

Losing the plot? Hmm maybe you're the one that doesn't understand why UKOG are shutting the well in intermittently.

Theres a difference between the average water cut across a month - which probably represents approximately what UKOG are trying to achieve vs what happened in detail during the month and the hours/days when the well was producing.

During periods of production the intermittent shut-ins occur because the water cut is getting high, and the reservoir pressure getting too low and needs time to recover - with injection full replacement of fluids would be required to stop this happening.

Looking at ibug's estimate of income from the produced oil and what UKOG got in revenue (which includes Horndean) I'd say only 10% discount is generous.

erm - is 27.3% not more than 26.3% - and FOTH keeps insisting that August and September 2021 OGA figures are not representative of full months production.

Average bopd in August 2020 128bopd
Average bopd in September 2021 45 bopd

Maintaining water cut during 2021 appears to be managed at a cost to oil production - but it is unlikely that the average oil and water production across the month of September 2021 is repesentative. Because the well was shut in for about 2 weeks in early September 2021 reservoir pressure may have recovered more than during the intermittent periods of shut ins during 'normal' production meaning relatively less water was produced for the remainder of September.

Thanks for pointing that September 2021 was an anomaly.

Water cut increased after the 2020 intervention as oil production reduced - so if water quantity reduced it was because of lower oil production not achieving a reduced water cut. Seems like they messed something up with that intervention.

2020
Aug 26.3%
Sept 25.2%
Oct 0.0% - workover
Nov 28.0%
Dec 29.5%
2021
Jan 34.6%
Feb 30.8%
Mar 32.5%
Apr 31.6%
May 28.5%
Jun 28.8%
Jul 29.0%
Aug 28.5%
Sep 27.2%

Let's not forget that as some posters believe they are making massive amounts of cash from each barrel produced why did they allow the average production (from official figures) to generally fall since late 2020 even excluding August and September's figures (October's next week)?

Apparently the restriction is not the cost of water diisposal as even pessimistic calculations suggest that the cost of disposal plus OPEX does not exceed the value of the oil. What we don't know from the averages is how the water cut varies following the intermittent shut-ins - how fast does it increase with longer producing periods?

A possible scenatio is that water cut increases during producing periods between shut-ins from a relatively low level - but there may be a point where it becomes an exponential increase as the reservoir pressure decreases locally around the well, whilst the pressure in the fractures fed water maintains its pressure. It may be there isn't much scope for increasing production even with minimal water disposal costs.

One interesting thing from the average daily production figures is that production levels dropped from 128bopd in the August before the September/October 2020 intervention to 101bopd in November, and has generally dropped since, when the intervention was to 'further optimise oil flow via reperforating the full Portland oil producing section, insertion of a new simplified production tubing string and by setting the downhole pump at a deeper level to increase pumping efficiency.'

So far any RNS suggestions of improved production have been somewhat hollow.

Ibug,

Looks like total cost of sales per barrel then was $33 and revenue suggests an approx 10% discount to Brent.

So assuming something like $77 revenue per barrel and a total cost of selling each barrel of $33 that's $44 left. Meaning each tanker is worth about £7,000 not $20,000.

In 4 months at an average of 90bopd that's £360,000 of which well over £100,000 goes to the dear leader's employment cost.

With all the other day to day running costs required it's unlikely that there's any 'profit' left to fund any activities - which will thus have to be funded out of placings.

Whether there's enough left out of previous fund raising to convert HH-2z is unknown but the well irequires a complete workover removing the current completion and installation of whatever is required for injection.

Perhaps someone could ask ocelot what the prospective production levels are for Basur, if it's successful, as UKOG has avoided any mention despite the operator, AME, being the operator of the E Sadak field which is along strike of the anticlinal feature and that field being described by UKOG as a geological and producing lookalike to Resan / Basur.

Perhaps because UKOG's share of initial production rates if similar to the E Sadak wells would be similar to their share of HH-1 initial rates, with similar decline rates.

Perhaps also why they didn't mention the risk involved in proceeding with the drilling prior to acquiring more seismic, something AME had also established from wells drilled in 2019 and 2020 on E Sadak that required sidetracking.

and why ocelot claimed that the seismic acquired recently was being interpreted in Octobet?

RNS 25/9/2017 - purchase of equity in Holmwood / A24 PEDL 143 - since relinquished by UKOG:-

'For a Purchase Price of £750,000, the Company will receive Warwick's 10% working interest in the Licence. The total Purchase Price is payable via the issue to Warwick of 9,382,271 new ordinary shares in UKOG'

Maybe they kept hold of their UKOG shares? £750,000 to less than £10,000 but there are quite a few 'Warwick' companies. This purchase wasn't from the company being struck off (Warwick Energy Exploration Ltd.) it was Warwick Energy Exploration and Production Limited

Anybody mentioned to FOTH his phone has a camera, and can do video as well?

As for his as usual misleading calculation of SS salary. In the December RNS it was stated as 7% of net salary. So after tax and NI and anything else he chooses to pay out (pension contributions?) that's about £171,000 per annum. Without knowing the full details that suggests his annual salary pre tax etc is at least £300,000.

Nomlungu,

That assumes many look at the accounts and delve into the detail - which the interims covering end September 2020 to March 2021 don't have. The last annual report which covered September 2019 to Septemner 2020 to has more detail but covered both production (during its initial higher flow no water phase) and testing of both layers with shut in periods etc.

UKOG, despite owning up to the water problem in HH-2z at the end of June in the interims failed to mention that HH-1 was producing water in June, and it wasn't until October's OGA release did it become public - this was UKOG's first mention in a RNS (5/11/20) of water in HH-1, presumably hoping not everyone had seen the OGA figures:-

'this can be the result of various factors including the break-out of solution gas and increased water cut'

Hardly helpful.

They also tried to trash the figures they did publish:-

'The HH-1 intervention and other related activities are part of normal oil well optimisation. By their very nature, these operations and the continual need to optimise pump performance, can result in considerable down time i.e. periods of no production as such monthly or annual production figures may not fully reflect the long term flow rates of the well. During 6-month period to the end September 2020, approximately 28,060 bbls of oil were produced over approximately 135 operating days.'

Which averaged just over 200 bopd on producing days. Certainly didn't reflect the long term flow rates, but not in the way they inferred.

Dribbler might not be alliterative but it sure conveys better than gusher what HH-1 is producing.

Maybe rather than repeating gusher UKOG should have explained better at the time how unrepresentative those first flow rates were likely to be from fractured reservoirs.

But the only reason we know for certain that it's a dribbler is because UKOG have to supply production data to the OGA.

Why haven't UKOG released more information and an explanation of HH-1 production, is it because if they don't RNS detailed and current production figures new punters can more easily be drawn in to buying as no one can quote accurate current figures.

Please don't say we would know because of the tanker count - how many times has it proved totally unreliable in understanding what UKOG are producing?

Looking to every other current project they are equally silent on the most important result in terms of economics - possible flow rates and what they are based on. Whilst it stops the absurd predictions made about HH (no wonder Rodders is bitter) it would enable pi to assess how UKOG's assessment of the projects compare to the actual results - which to be honest has been woeful and lacking in explanations as to why they got it so wrong so far.

Something is definitely up.

Lots of biggish trades and spread manipulation.

Maybe we'll hear about a SS buy today as yesterday was the third Thursday.......but will anyone else buy?

A tanker - hopefully not waste.

Great, fantastic, all UKOG's problems are over, all it needs is zero OPEX, no other operations once the last raise is spent, expenses, salaries, consultants, etc and in about 3 years time according to your figure, if the OP holds up, they could afford to drill a well at Loxley that might, or might not be successful, without a placing.

PS where's the whole board's buys you thought would happen - also overdue?

Ian,

Something is going on I agree - but the individual 57,000,000+ sell at 0.1p (did you not notice a £57,000 sell?) plus a couple more modest £5,000 sells more than matches the buys unfortunately.

Positive or negative?

I haven't reported you but do carry on with your self pitying BS. Coming on here demonstrating why you can't be trusted again and again and again.

Predicting poor performance by UKOG is not the same as wanting it to happen - conversely wanting good things to happen isn't the same as them happening.

Maybe one day you'll realise this simple truth.

PS how many £6mm wells are going to be drilled by what's left of your £2mm after all the other costs UKOG has - and they can't necessarily get their hands on HHDL cash very easily to spend on Loxley.

Adrian,

ha ha - indeed

Don't you realise you're the one being played - 3 posts on the trot including an invite to comment about one of your obsessions. Subtlety not your strongest suit eh?

btw you've lied several times on twitter - I have never made any comments about the August and September production averages being representative of a full months production.

What I have pointed out is the decline up to July 2021 (91 bopd from more than 300bopd in March 2020) and the inconsistencies in what you have said on twitter about when the HH site work was performed - I also pointed out when you were trying to infer that the work was to do with HH-2z conversion that it was the site work mentioned in the interim report - not work on the well.

and btw ocelot wasn't right - it would have been very difficult to interpret the seismic in October when they've only just finished acquiring some of it, ready for processing, even if it is key lines over Basur - but there's reasons why all the data should be interpreted before doing any further drilling.

Amazing the seismic acquisition is only just ready for processing ('key' lines only?) when in October ocelot posted it should be being interpreted, that's what comes of believing UKOG when they said at the beginning of August it was scheduled to start.......... in August:-

'ocelot
Posts: 16,752 Price: 0.1475
Buy
upcoming 16 Oct '21
The application is due to be decided at a meeting on Tuesday 19 October 2021 at 4pm in the council chamber, County Hall, Newport, Isle of Wight. The meeting will be videoed and broadcast live.
We will see but I shan't be following this live, have not enjoyed my previous experience of similar council meetings.
Basur-3 seismic should be the subject of interpretation at the present time.
Loxley appeal decision awaited any time.
Permissions re conversion of HH-2z into a water injector awaited any time.'

Well the Arreton meeting happened as scheduled (are UKOG going to appeal the refusal?) - the rest I suppose 'awaited any time' is still correct, although UKOG now say probably not Q1 for the Loxley decision.

As has been pointed out it hasn't been tested whether or not fraccing the Bowland shale for gas will work, nor the Kimmeridge for oil. It's up to the government to allow fraccing, perhaps there will be less support for protesting now enabling a change? As for UKOG - Loxley, if successful, and HH are insignificant in terms of UK consumption, though perhaps critical to UKOG.

But it's a global problem with global pricing. The UK would save on balance of payments, make some tax but unless the government took control of pricing and stopped exports of oil world pricing would dictate domestic pricing. Not sure UK onshore production would ever be significant enough to impact world pricing.

But no company is voluntarily going to sell it's gas or oil cheaply in the UK if the global price is high, the shareholders would be up in arms - btw there's already oil and gas produced in the UK in fairly large quantities, haven't noticed the producers being noble and selling it cheaply to consumers.

Of course the BPs and Shells etc., best placed to fund exploration and new developments, may be very happy that oil and gas they are currently producing, with no risky and costly exploration with delay to revenue if successful, is reaping good rewards - helping fund their move to a supposed greener future. Domestically I would expect permissions for large projects, if put forward, will be easier to get approved in the UK while prices remain high.

Ocelot,

Assuming permission is granted for the Loxley appraisal well then the difference would be that Saltfleetby has multiple successful wells and production data and is expected to deliver gas to the grid in July, rather than an appraisal of a discovery in another licence that already has dry appraisal wells that 'missed' it because of problems mapping the structure.

But there are still uncertainties even with Saltfleetby so it will be an interesting 'watch' as to what happens, but for a variety of reasons it will have little relevance to Loxley unless commercial gas is proved in UKOG's acreage and when that will happen is uncertain and currrently unfunded.

Ocelot,

There should be multiple 'ifs' in your post, but then you don't seem to acknowledge the risks in any of UKOG's projects despite having the high risk of failure ably demonstrated by UKOG with every venture - even in Turkey - so far.

Perhaps this would better represent the risks that Basur needs to surmount before that great margin being available to a similar (or worse) average bopd than HH-1:-

If the oil price remains high, if the operating cost remains as previously claimed by UKOG, if Basur is successful - but even if it produced at a similar rate to wells in E Sadak the likelihood is UKOG 's share of production won't initially even be as much as the more than 300bopd claimed for HH initial production and then rates are likely to decline rapidly, just like HH.

UKOG claimed E Sadak is a geological and producing lookalike to Basur / Resan but then never gave any details of field or per well production (althiugh they did quote an unrepresentative initial test rate). However many reports from scout meetings in Turkey (where companies swap information about their activities) 'available' which included E Sadak monthly production figures.. From these it's possible to get a good indication of production rates as wells are put initially on stream, and the decline that follows. UKOG of course would only receive 50% of any oil produced at Resan / Basur.

For example September 2021 E Sadak production was 15,739bbls following 2 more wells being put on production in May and August 2021. That's an average of 524bopd (100%) from many more than the 2 'new' production wells.

Wizard,

The 'early stage water injection well' as you describe it is the HH-2z horizontal well drilled for Portland production. The plan is to repurpose it as a water disposal well which will require a workover, but as you say UKOG are waiting for permissions to do so.

Mirasol,

Fracking an already fractured reservoir is unlikely to work, which I believe was why the Weald operators said they wouldn't ever do it. It appears most of the oil quoted as in place is unreachable - in fact it looks like only the easily produced oil in fractures representing a tiny fraction of the OIP is producible, and only a small percentage of that recoverable with no water drive to maintain pressure..

UKOG in the June 2021 annual report included for the first time contingent resources from an RPS report produced in June 2019. It would be easy for UKOG to publish that report so that speculation as to why the Kimmeridge riches seem to be secondary to the Portland where fracturing appeared to also have a role in high initial rates but complications in production.

At the end of the 2016 ewt, where the reservoirs flowed at remarkable rates, UKOG mentioned that both Portland and Kimmeridge were fractured - perhaps the Portland fracturing wasn't mentioned by UKOG until after HH-2z was drilled as it is almost certainly explains the higher than normal Portland test rates - followed by 'issues' in production including fractures acting as water conduits.

It is almost certain that all the problems at HH were predictable and anticipated internally yet UKOG failed to communicate that success wasn't the only outcome possible, though it was noticeable that as HH-2z progressed the expectations became less and less bullish.