Member Info for Penguins

Ocelot,

'Nobody can know in advance what the results will be, so we are all in the same boat and will have to wait and see'

I would imagine at the very least UKOG and AME have hazarded a guess otherwise they wouldn't be drilling it - well maybe AME have a different view as they are not paying. 'Nobody knows' is true - but there is information available that will give a pretty good idea.

Yet you seem to be all over Bloomberg 'reports' about the oil market, which is also something where we don't know what will happen, but seem disinterested about information about a field adjacent to the soon to be drilled Basur-3 well described as a production lookalike to Resan/Basur - and with multiple wells on the Resan/Basur feature are you not surprised that UKOG haven't given guidance on possible production rates.

Presumably not, despite it being far more important to UKOG's future value than today's OP, or even SP.

But you did after all offer an estimate of revenue based on 420bopd production because of a previous post had a calculation of 42bopd, but failed to take into account the extremely likely decline.

I gave a figure of revenue, based on 420bopd but with decline and similarly based on $70 oil, of £6mm (£3mm to UKOG) that didn't take into account the OPEX. I had forgotten about the 12.5% royalty oil that the government takes - and there are also taxes. So net to UKOG probably less than £2mm in the first year even with a relatively good initial flow rate.

Troll,

'Bad Pingu spinning the truth as usual.'

Hmmm - I think it's you doing the 'spinning'.

'about 160km West of Siirt, close to where UKOG are drilling.'

Yes Siirt is very close to Resan/Basur (about 10km) where AME are drilling, but Diyarbakir is as you say 160 km to the west of Siirt, so these wells are 150km away

'Diyarbakir is on the same level'

That report also doesn't say what 'level' the oil is at, and Diyarbakir is a region.

Ocelot,

Oil companies use analogues to help predict what will happen with a new well. As UKOG has quoted E Sadak as a geological and producing lookalike to Resan/Basur (and there are multiple wells on Resan/Basur to help with that conclusion) it's reasonable to suppose that Basur-3 might, if successful, flow at a rate similar to E Sadak wells in production initially which varies considerably between 60bopd and 470bopd in the available data, but then declines rapidly to half in a year.

UKOG have previously quoted initial, presumably test, rates for unspecified E Sadak wells, of up to 1,300bopd, presumably because it is relevant to Resan/Basur, and the 6 hour flow on test of Basur-1 as having a 'rate' of 2000bopd. It's quite clear that for E Sadak none of the wells flowed at that sort of rate in production in the data available even the month following being put on stream, and certainly none of the wells were flowing at that sort of rate in 2019 / 2020 or any of the time periods covered by the available scout reports as total field production was far less than 1300bopd from multiple wells in any of the months.

Although HH is not an analogue UKOG shareholders have found out to their cost (although UKOG didn't mention it) that initial rates are meaningless in terms of predicting production rates in fractured reservoirs.

Of course if the sort of rates quoted aren't good enough so you'd prefer to ignore the information available it's perhaps also a reason UKOG have remained silent about production rates at the geological and producing lookalike, did they hope nobody would find any data about them as AME does not have to reveal production data.

UKOG by quoting just initial rates without any further comment or explanation as to the relevance are in my view misleading the investors that happily predict a golden future whilst proclaiming they are not an oil expert - but.......

Troll,

Production rates from the field next door, 20km, not 150km, away, are not 2800 and 3000bopd. Your post is probably why UKOG haven't mentioned them and stick to initial rates.

Ocelot,

420 bopd is in line with the highest flows that the 5 E sadak wells that there's field data from before and after being put on production. The starting rates assumed to be the increase in production from before to after being put on production were:- about 470bopd, 410bopd (E Sadak-2 & 3), 180bopd (E Sadak-11S) and 60 bopd (E Sadak-1), but the data also shows that E Sadak wells decline rapidly, with field production down about 50% in a year. E Sadak-12 was plugged and abandoned dry.

Thus from the information available about E Sadak wells (the producing lookalike to Resan/Basur) your example may be near the maximum likely, but with declining production so generating revenue of less than £6mm (100%) at $70 oil in a year, less OPEX. Won't exactly be shedding cash to the UK.

But even production flows at that level will need luck - will the first well be lucky?

Supply and demand determines the OP so a rise encourages production but discourages use. Where that eventually balances no one really knows but like $0 oil $100+ oil is unsustainable long term. Presumably Saudi doesn't want to crash the world economy which depends on oil, and has an interest in not encouraging US fracked production which depends on a high OP. Not sure if it happened this time but the owner of a small US oilco I met said that during OP lows rig costs were low and the wells were drilled but only fracked when the OP made it worthwhile. As long as the OP continues to rise I would expect an increase in US production which may ultimately put a brake on the rise. Whether Saudi will then up production to drop the price to shut off that production is one uncertainty in the merry go round but OP forecasting is rarely right as the levers are not in the control of any one producer and their drivers often at odds despite all wanting to see a high OP.

Wizard,

The reason posters have anticipated for months that UKOG would need a fund raising was because the original start date of drilling was the end of 2020, and expected UKOG to need to fund raise to pay for the drilling when it happened. When the original target date was missed then the question has been when, not if.

Contrary to many who claimed no fund raise was needed for drilling Basur-3 it seems UKOG do. How much is now the question.

As for HH tomorrow February's production figures will be published by the OGA. There shouldn't be much surprise about oil production as UKOG gave a combined volume obliquely for January and February, but water and gas UKOG have hardly mentioned let alone give production figures for.

Ozzy,

Yesterday's post by you:-

'RE: Naysayers action group29 May 2021 11:49
Penguin, just as how can you know the outcome of your negative predictions based on your biased agenda.'

Not today's.

So you don't dispute the facts, but the way they are presented.

Well, present them differently.

HH1AN2,

I'm not sure that warning that things might not turn out as other posters predict is predicting failure. Even the company loosely applied a risk factor (COS - chance of success) which is essentially saying failure was likely 1 in 3 attempts in Turkey (similar to Loxley and Arreton which were quoted as arround 65%).

What most posters disagree about is if successful what that success might be, some by illustrating what production is likely, others by just claiming a specific SP will occur in an undefined timescale future.

Despite SS claiming transformational success UKOG has failed to illustrate what that really means in terms of production from Basur / Resan and undefined leads in acreage yet to be awarded.

Ozzy complains that I quote information ('history', OGA data, past RNS, analogue field production) that is negative - it isn't negative, it's what has happened - often a reliable indication of the future, but it may not be what ozzy and many others want to hear hence the daft accusations that anyone they don't agree with is a nimby, swampy or even xr even when quoting data rather than predictions of SP based presumably on 'visions' as rarely is there any demonstration of research behind the figures.

If there's relevant information out there that shows, for instance, that E Sadak is not the best field to quote as an example of what's likely at Basur / Resan (being adjacent, producing from the same reservoir as targeted by Basur-3, and described as a geological and producing lookalike by UKOG) or somehow the OGA figures don't represent the production from HH, then instead of making sweeping statements about other posters, why not put up an argument that demonstrates the golden future rather than a rather mundane one with multiple wells needed to produce oil at low but profitable rates - but not necessarily supporting a valuation in the multi hundreds of millions of pounds that SS has suggested with no justification beyond - look at all these blobs on a satellite image.

Obviously this is more a medium to long term view, not whether there will be SP fluctuations based on 'news' rather then results - that's the traders game, their posts constantly predicting news soon, or moment by moment SP or OP movements (only when they go up), seizing on 'positive' news from any source, but never saying anything but positives for years about a company that has meanwhile serially failed to execute plans on time nor got anywhere near predicted production levels.

Ocelot,

You expressed an opinion but how can you know the SP today is the result of all possible future 'conceivable' bad news, is the SP not going to ultimately go lower if UKOG's luck continues (ie King Midas in reverse).

There are those desperately trying to prop the SP up claiming all the bad news has happened, are you wasting your time or is that also having an effect.

Though I would argue this board has no effect, but probably reflects many shareholders opinions - much like a poll sample.

Oops

.....result in a lower SP just by looking at the E Sadak field and the OGA figures.

UKOG really need some luck now.

A result at Basur-3 like some E Sadak wells (failure or very low rates) that can't even be blamed on 1960's technology and realising that at HH injection for water flood or pressure support isn't a guaranteed solution to low well rates and to the water production that appeared to be creeping up in HH-1 - with further drilling apparently justified yet the reservoirs are subject to ongoing work to be understood.

ocelot,

all conceivable bad news?

I can conceive of bad news that would

The BOD has been brought to these actions only because shareholders rejected the BOD requesting further authority for share issuance, which also seems to have resulted in the formation of an action group.

Perhaps it wouldn't be seen as cynical if the open offer hadn't been made after resolution 6 was rejected, and the share scheme after the peasants started arriving at the gates with pitchforks.

But is it in the case of share purchase too little too late, and have they mis read the mood by allowing shareholders access to a placing price but then increasing the authority to issue shares by 166%.

Despite this new found inclusiveness UKOG remain silent on Horse Hill production, and no real information about the expected outcome of the Basur-3 appraisal well, though the GM notice did give more clarity on what the Basur-3 cost 'cap' didn't include - expect it to be mentioned again when the level of placing is announced.

But Ocelot,

1 placing and open offer don't have to be for the same amount
2 why not just equal the 3 billion they needed authority for at the time of the AGM recently and the price will be so favourable that they will be snapped up
3 it might not even be the favoured outcome for the majority of shareholders. It is conceivable that you and UKOG have come to the wrong conclusion that authority to issue up to 8 billion shares is the alternative wanted as long as half might go to shareholders in an open offer.

Ocelot,

It matters not that there is a 'cap' of $5mm, they cannot risk not being able to pay their share of coring, post well analyses, seismic processing and drill and seismic related contingencies which are additional to the $5mm estimate for the drill and seismic.

But the latest wording in the GM notice doesn't include the word 'cap', just UKOG's 100% payment is restricted to $5mm.

'The Company agreed to wholly fund the first $5 million of the Resan Licence’s commitment work programme, currently 4 wells and 100 km of seismic'

Sounds more likely than there being any cap.

Ocelot,

It is speculation that 100% of shareholders who voted against the resolution wanted UKOG to come back with a proposal to issue up to (note - up to) 8 billion shares with 4 billion at least initially reserved for SH. Maybe a lot wanted less than 3 billion, or saw it as a protest vote, and of course maybe the vote for the resolution was only just less than the pass mark.

So those for the 3 billion resolution, and a lot of those against, could be unhappy with the new proposal and see it as negative.

The company (and you) may have misread the mood.

Ocelot,

But their committment isn't actually limited to $5mm. That appears to be the cap on 100% costs of just the preparation and drilling of the planned well and seismic.

Excluded from that are contingencies which might include sidetrack/s and mechanical issues extending the drilling time, and weather for the seismic, coring post well analyses, seismic processing. Lucki.y UKOG will only pay 50%.

Oddly testing wasn't on the list that UKOG quoted in the GM notice.

Was the choice of paying now because it was realised that the 5 day vwap was as high as it was likely to be for a while, leaving it longer would mean more shares issued. Who says SS doesn't think of the shareholders,, apart from almost everyone.

Cynderlad,

It introduces unnecessary disruption at a critical time. Better the devil you know.

I suppose in my case I have seem through the BS and looked elsewhere for information about the projects which has made me unpopular but has served me well.

Too busy today to say any more.

Rodders Jones posts can be viewed as rodders74 on this site.

He was banned, but not for showing xr sympathies. Though maybe his unswerving loyalty to SS and positivity about everything UKOG planned and did was a cunning plan to bring the ccompany to its knees?

But replacing the person Lenigas put in place with Lenigas is absurd. If anything Lenigas taught SS his craft. It was Lenigas that started the Kimmeridge myth.

To replace SS at this stage is daft - it couldn't change what's about to unfold even though I think that UKOG are not conveying the risks entailed, even dafter with DL, and refusing permission to raise more money is probably self harm even though I don't agree with the level of authority asked for as it may result in (more) poor decisions being made, continuing to fund failed causes rather than pursuing those that work.

Ocelot,

Is there anything in the wording that would stop UKOG just doing a placing for the 4 billion shares?

Being able to do something, as you have pointed out with regard to the 8 billion shares, such as the open offer, doesn't mean it will necessarily happen.

I'm not suggesting UKOG would break faith with their shareholders. But I believe there is no compulsion to match the open offer share amount to any placing share amount.

Capdevila,

Surprises in exploration are usually because little is known about an area / play.

Adjacent to a field producing from the target reservoir, drilled multiple times already on the Basur and Resan feature there isn't much scope for surprises, but UKOG won't even report their expectations of flow rates.

The same is true for the Kimmeridge.

Yes troll, the Kimmeridge is a huge resource, known about for decades - but even with modern drilling incapable of being exploited commercially unless it's paid for by cash from Turkey apparently. Even you are implying the cashflow from the Weald is incapable of supporting further work in the Weald- though it is pretty obvious.

Should be:-

'And although the cost of Basur-3 and seismic in the licence is capped at $5mm the list of exclusions means there's plenty of scope to spend a lot more, even at 50%, on Basur-3 and the seismic

From the GM notice:- 'excluding coring, post well analyses, seismic processing and drill and seismic related contingencies.'