Member Info for Penguins

Water injection is something usually done later in the life of a field, sweeping oil towards producers or into the water leg to aid pressure, in a carefully chosen location.

They were fortunate their previous mapping was so wrong and HH-2z is down dip of HH-1, and dips down to the toe, but this is a complex reservoir, fractured, faulted, compartmentalised and the lions share of production from a limited thickness higher porosity, permeability zone that has a poorer layer within it, and despite being deeper than HH-1 HH-2z is probably not ideally located.

Having identified the possibility of fracturing in 2016 it seems strange that 5 years later, after months of testing and production they still haven't fully characterised the reservoir suggesting it's difficult to production match the model (from 15/1/21 RNS):-

'Technical work is ongoing to further characterise the Portland reservoir's delivery mechanisms and, in particular, the prevalence and role of the natural fracturing within the Portland section.'

Presuming they are given permission they will certainly need to be careful and test to see what happens. At best increase production as water disposal costs are minimal, though pressure support is unlikely to be absolute so they may still need intermittent production, at worst not possible because it increases water cut because of the fracturing providing a route from injector to the well.

Ocelot,

It took 3 months to go from 0.8p to 11p - based on effectively a false promise ....... and anybody who has been positive for those 2 1/2 years is what?

Ocelot,

You posted:-

'Penguins,

That sounds as if you were negative about UKOG as it climbed from 0.80p to 11p.'

Yes I was and it would be quite a put down if it wasn't for the fact that after the rise to 11p (for moments) it dropped eventually to just over 0.1p and is still below 0.8p.

Perhaps you should have read this in an my earlier post:-

'....in terms of the SP as many factors affect it, seemingly least of all the chances of the sort of success SS has craved, and still craves '

so did what UKOG said about Broadford Bridge justify a SP of 11p and a valuation of £300mm if you had knowledge about the issues with producing from carbonate reservoirs - something UKOG seemingly forgot to mention?

Perhaps because UKOG never indicate what the problems might be there were still buyers at 11p, 10p, 9p - I think you get the picture.

Of course it wasn't just what UKOG said, SCDM also held what they'd been given for Celtique's licences and added millions - and then as the SP declined sold - SCDM have in-house expertise, maybe even if my opinion was ignored that should have been a red flag.

I've never said Basur would be a failure - just that the evidence is it could be, and success may not be what many expect. Cheap wells and easier regulation may be benefits that UKOG like repeating, but very little apart from vague arm waving, reserves of fields with different reservoirs, but no detail to back up 100s of millions.

BTW the green blob in that map is E Sadak. I'm surprised that you haven't trawled through the Aladdin web site before, unfortunately it doesn't seem to be updated much

ynderlad

I know, but I'm having an early lunch break and I've been talked about like that since 10p,8p, 6p, 4p, 2p, 1p, 0.8p, 0.6p 0.4p 0.2p - where the SP has recovered, but the success required hasn't arrived - it may, it may not. Be polite, don't get riled by name calling (sticks nd stones) - it's all amateur stuff - at least BDI and FOTH were prepared to put their (wrong) opinions about the company whilst having a go.

TH2,

E Sadak is also on a great big hill and has had 11 wells drilled since the discovery we know the results of - and only 8 out of the total of 12 were producing in November 2020 - after well 12 (a failure, even 11 had to be sidetracked) they stopped drilling and shot some seismic - and presumably based on that they proposed to drill wells 13 at the end of 2020 and 14 in March 2021. As 13 was meant to be completed in January I'm surprised that UKOG hasn't mentioned the results of a recent well on a field described in the Final results as 'the closest producing look alike field to Basur-Resan'.

They may be a simple bumps on the surface but subsurface they can be extremely complex, and the seismic data is usually poor - which is why there's a tendency to drill first - if nothing else to be able to correlate the seismic events or horizons (if there are any) to actual strata.

So it's not shooting fish in a barrel - probably why the well which was originally hoped for in late 2020 has slipped to mid 2021 as not only are the targets not necessarily easy to locate - there seem to be issues with the actual drilling.

Ozzy,

but you don't seem to have an opinion, except about other posters

But I'm pretty sure I have posted I'm not a nimby, or even a N.I.M.B.Y. (as you like capitals and extra punctuation).

Posting an opinion about the company that you and certain others don't seem to agree with is nothing more sinister than being an investor who actually researches beyond the SP and being worried about it to the extent any discussion with the slightest negative implication has to be countered with a bit of name calling - your speciality subject.

You'll note both you and I have 'no opinion' under our names in each post - in my case it's because I am neither positive nor negative about the company in terms of the SP as many factors affect it, seemingly least of all the chances of the sort of success SS has craved, and still craves - and as I said earlier it can go up on the barest of news, and down when there is none.

I see the current ramp (not you Mr no opinion) is to try and engender a FOMO based on pictures of earth still being shifted around and suggestions that before a drop of concrete has been laid the rig will arrive in 2 weeks, or an unspecified 'soon' - I'm sure that UKOG tweeting these pictures wasn't to help in that, after all they have no intention (apparently) of trying to raise funds - which of course would be better at higher SP. Though watch out for the very large trades (in cash terms, even a modest trade runs into millions) late in the day that appear to be buys that have often signaled a fund raise for some reason, as of course forward selling is not allowed.

This of course allows the - look at those huge buys narrative.

'Regurgitating information we’ve already read.'

That's no way to talk about SS, even if it's true.

So what passes as discussion about UKOG, for what appears to be a group, is posting one after the other commenting not about the company, but other posters, preferring, in the absence of a coherent argument to claim that because they don't agree with a post a bit of name calling will do instead.

Is it because all they can do otherwise is regurgitate the company's PR even though it's like a broken record endlessly repeating 'jam tomorrow, jam tomorrow, jam tomorrow', when the only way any pi makes money in UKOG is not because of long term growth but the occasional pump and dumps based not on positive results but activities along the way that are just as likely to result eventually in failure as success.

Anyway just to assure you that I'll continue to research the company and compare what they say with what thay do, and often more importantly what they don't say with the information that's available elsewhere about the activities they're involved in.

SS interviews - hmmm - I have to admit I've stopped listening because it's seems they need a health warning.

These are soundbites from an interview with SS made by Rodders74 in November 2018, long enough ago to know what happened to all the 'expectations':-

'Loads of great positives. Some SS quotes as follows:

1. "Fortunately the wells are not expensive"
2. "Plenty in the piggy bank to not need to tap up the market"
3. "The orientation of the HH well is not optimal to recover the oil at the best rates." So next well they drill will be at a more optimal angle.
4. "The rates we are looking at, the Portland and the Kim.... conservative.... £20million revenue a year.... pretty decent change.... planning further drills and wells at HH"
5. "This is very real, it is not conceptual. people have seen the tankers coming out of site each day"
6. "I mentioned value.... what do we mean by the asset value of an oil and gas field.... how much oil can you get out to the surface and how quickly can you get it out..... these tests at HH give us the metrics, in terms that we know, how much a well can produce, and how much it can sustain..... what volumes of oil can you get out..... Net Present value, we get some very healthy numbers"
7. "£150 to £200 million in the Portland alone"
8. "For each Kim well lokking at £15 to £20 million per well, multiple wells per pad. HH is just one pad, data shows our concept... laterally extensive across the wield. replicate HH at multiple sites."
9. "each site at £100 million" (for the Kim)
10. "IoW.... 127 million barrels of OIP... 4 times that in place at HH (portland), big chunk of value if we get that working"
11. "The train has just left the station, the journey will be in 2019, putting HH into production...
12. "its not like we will be shutting up production now, we will be producing oil and producing money"
13. In asnwer to; Will production be increasingly used to fund exploration? "it doesnt' take you too many wells at £20 million sales that means you can build a piggy bank that means you dont need to tap up the market"'

Seems that cheap wells and projects worth 100s of millions are a thing for UKOG - at least they've stopped claiming no more 'tapping the market'.

I don't think HH-1 with an NPV of less than £5mm is a very healthy number. IOW 127mmbbls oil in place - 2.6mmbbls recoverable in a Turkish presentation at Arreton.

'The train has just left the station' - what happened, broke down and sent to the scrapyard?

So now (apparently) it's all Turkey (someone else operating - and what they want to operate - geothermal (hot HH-1 water?), solar power, natural gas reforming, gas to wire - there's obviously no end to what they want to do because they can't seem to produce oil as an operator.

Yep - jam tomorrow, will tomorrow ever come though- anything changed - I suppose the SP was about 1.5p then.

Mirasol,

'Clean up and flow testing of HH-2z was conducted from December 2019 through to October 2020.'

Testing - ewt - not Production. I'm sure if they were producing under the FDP they would have said so.

Ibug,

where did I say that the OGA figures included any test production from HH-2z - that's exactly my point - they are included in UKOG's figures for total produced oil from HH Portland and Kimmeridge but nowhere else.

This is what I put:-
'From the OGA:- 17592bbls produced in July to December - from HH-1'

If, and it might be an if, HH2z produced any oil under ewt after June ('Clean up and flow testing of HH-2z was conducted from December 2019 through to October 2020.') it will be in UKOG's end Jan/Feb figure for HH total oil produced (over 137,000bbls from Kimmeridge and Portland) but won't be in the OGA figures after June which have to be used to derive the Jan / Feb oil produced.

I also noticed n the FDP RNS:-

'and consented to the start of long-term production ("Production") from the field.'

UKOG use 'Production' with a capital 'P' to signify production under the FDP.

I'll leave it there.

Mirasol - the OGA reports are for HH-1 Portland production under FDP - there is no FDP covering the oil produced under ewt by HH-2z.

Ibug,

UKOG's oil produced figure includes all oil produced (production) oil from the Portland and Kimmeridge during 'production' and ewt or any other testing.

There isn't really another word to use for oil produced except production - next time I'll remember (maybe) to be very specific.

So from the Final Results:-
'By end February 2021, post period, the Horse Hill field had produced and exported over 137,000 bbl of Brent quality crude from its Kimmeridge and Portland oil pools'

From the June 30 Interim Results:-
'As of 29 June 2020, 113,143 bbl in total has been produced from Horse Hill.'

From the OGA:- 17592bbls produced in July to December - from HH-1

Over 137,000 (say 137,000) minus 113,143 minus 17,953 equals 6,264bbls (which divided by 59 - days in Jan and Feb - equals 106 bopd average.

But from the Final Results:-
'Clean up and flow testing of HH-2z was conducted from December 2019 through to October 2020.'

So how much oil was produced by HH-2z after June? It should be taken off the 6264bbls, but there is no way of knowing.

There's also the flippant more than 137,000bbls (too busy to look up the exact figure I suppose) that also adds uncertainty, and why to the end of February - were the results going to be published much earlier and circumstances changed and they wanted a bit of good news (pictures of site prep?) to offset them.

Anyway not a complaint just pointing out the uncertainty, not long until OGA figures for January - if they have 'turned the taps up' will there be an increase in water cut - maybe with the higher OP they can afford more water disposal?

ibug,

Perhaps I should have said I was responding to your post yesterday - luckily I didn't post the question last night.

so where did you get your figure of 106bopd from for Jan / Feb HH-1 production? The total production from HH to end Feb will include production after June from HH-2z - assuming when UKOG say they were still testing to October they were actually flowing the well - but there are only HH-1 production figures for July to December from the OGA, and a figure for total HH production to end June - or have a missed one after September?

This from the final results:- 'Clean up and flow testing of HH-2z was conducted from December 2019 through to October 2020.'

Ocelot,

there's still a lot of intangibles associated with HH to be looked at for impairment next year.

Though as you'll be aware as long as they spend money in the UK and Turkey and keep things ticking over all that expenditure can be added to intangibles next year. Spend money, don't prove assets, but add to the intangible assets anyway - until they have to impair them.

Ocelot,

That's exactly what I was referring to "loss before impairment expense, exploration write-off and taxation"

Presumably adding all those in makes a difference?

Oh - yes it does, loss before (and after taxation which was zero) was £20,937,000.

Ocelot,

Not sure where your number is in the accounts, and it's very selective.

Looking at the consolidated cashflow account cash went down £5,258,000 from the start of the accounting period to the end - but they also raised £7,734,000.

So in simple terms they spent nearly £12,992,000 more than was coming in during the year more than £1mm a month.

That's more than a few hundred barrels - at revenue of £50 a barrel I make that over 700bopd.

In the real world that would have needed, for instance, Resan / Basur to produce (rather than have an initial test) over 1,400bopd, which is more than 3 times E Sadak field production in September 2020 - from 8 producers.

Ibug,

According to the Final results the HH-2z ewt continued to October. I'm assuming your 106bopd HH-1 average for Jan/ Feb was calculated from taking end June figure of total production plus the July to December OGA figures and subtracting it from the total HH production figure in the final results. 106bopd would mean no oil from HH-2z testing after June. Unfortunately UKOG are pretty silent on HH-2z production after the initial testing following the workover to stop the water ingress.

gkb,

It's back to E Sadak for a comparison where the success rate after being put into production seems to be about 63% (7 out of 11), but that's after establishing a commercial flow.

UKOG have said about the same as Loxley and Arreton at about 65% - but I'd like to see the risking they've applied to get to that figure for those two first. Whilst companies have tried over the years to take the subjective element out of risking because it is opinion the best they can do is police it with risking committees or peer review - I don't suppose there's much of that in UKOG.

It also depends on the number of factors. I'll have a subjective go at four factors.

source presence - 100%, it's there - some risking might include migration path
migration path maybe 90% as they are drilling away from Basur-3 (but it won't be migrating from Iraq - a note for Wizard)
structure maybe 60% - includes top seal - structurally very complex area - if E Sadak can miss the reservoir 37% of the time then that has to be a problem, seal, not sure how much of an issue top seal is - obviously Basur-3 tested oil
Reservoir presence - 80% - again as it's expected to be naturally fractured carbonate to deliver oil there may be less or zones without fractures..

On a four factor risk that's 43% COS. Then there's commercial success - but as they might have to put the well into production regardless if it tests I'll leave it at 43%.

Gingerhippo,

the whole point of ramping is to raise the price temporarily, sell, and buy back in when the price inevitably drops. The few desperate ones left don't really have the clout for it to work so they are left floundering , but they do like to double their output when the herd arrives. So there is money to be made but their hopes of 5p in a month, burning shorts etc. is based on zero knowledge of the company except what Zak Mir says, the ticker and it's popularity so P&Ds work - oh and anybody they don't agree with is a troll etc.

BTW - I have repeatedly stated that I also trade on spikes, like ninetails who more recently realised if you can't beat them..... - at the moment I'm at a minimum of shares after the rise to over 0.4p, my previous sells were during the Loxley rampathon - but I don't encourage them. Obviously my long term view is not positive - if UKOG put some information about Turkey that suggests Resan / Basur won't be like E Sadak then that view may change.

As for the UK are these projects in a holding pattern waiting for the Basur well results - if Basur fails maybe those 10s of millions projects will be progressed, and maybe Arreton will be returned to 16+mmbbls rather than 2.6mmbbls in the Turkish presentation.

There was a post about NAV earlier and I was mentioned. It got me thinking while busy in the garden about the gulf between HH-1 NPV and the sort of valuations posters put on HH based on comments by SS.

Some lunchtime thoughts.

There are 48 months of the production data from 82 months of production at E Sadak up to September 2020 if you know where to look. E Sadak is described in the Final results as 'the closest producing look alike field to Basur-Resan' - so a reasonable choice for a calculation. This data covers various periods up to and including September 2020 from start of production in December 2013.

Total production from those 48 months is 499,528bbls, an average of 10,406bbls per month.

Up to September 2020 12 development / appraisal wells had been drilled on E Sadak plus some sidetracks and some drilling issues meaning the wells took a long time (perhaps why they are taking their time planning Basur-3). There were 8 producers in November 2020.

Lets make some assumptions based on E Sadak for Basur/Resan.

Double the 48 months production, not take into account the time value of money (ie not a NPV calculation), assume OPEX of $15 per barrel, $3mm per well cost, 12.5% royalty and a $64 OP (as used by UKOG for HH NPV)

1mmbbls opex = $15mm.(operator has to lift all the oil)
After royalty oil 875,000bbls @ $64 = $56,000,000
Revenue less OPEX = $41,000,000 (sounds great)
12 wells at $3mm = $36,000,000 (not so great)
Field Profit from nearly 7 years of production = $5,000,000 (not so good)

UKOG's share less than £2mm.

Of course we don’t know what will happen at Basur (or Resan) – but 1mmbbls over 82 months averages 12,195bbls per month, so 20% higher than the average of data we do have for E Sadak.

Very rough and ready but a simple illustration that even probable reserves (28mmbbls at E Sadak) are only part of a value calculation – how quickly you can get it out, and how many wells it takes to do it is also important. There will be other costs (seimic, operator studies etc) and OP is an uncertainty as will be production - this isn't a valuation despite the thread title.

Oofy,

To busy now to go back through years of placings etc to work out what shares were from which authority - but it looks like the 1.5 billion figure is wrong - it looks like it will be between 1 and 1.3 billion depending on how much of the £1mm share payment to Tellurian in April came out of the February 2020 authority.

So apologies the 1.5billion shares is wrong and should be between 1 and 1.3billion, as the next PW payment of £550,000 can be issued under the next AGM allocation as it isn't due until July.

There is a misconception that the PW payments in shares are out of last years AGM authority.

In every UKOG AGM or GM notice there is this paragraph:-

Resolution 5: That, pursuant to section 551 of the Act the Directors be and are hereby generally and unconditionally authorised to exercise all powers of the Company to allot equity securities (as defined by section 560 of the Act) up to the maximum aggregate nominal amount of £300,000 PROVIDED that the authority granted under this resolution shall lapse at the end of the next annual general meeting of the Company to be held after the date of the passing of this resolution save that the Company shall be entitled to make offers or agreements before the expiry of this authority which would or might require shares to be allotted or equity securities to be granted after such expiry and the Directors shall be entitled to allot shares and grant equity securities pursuant to such offers or agreements as if this authority had not expired; and all unexercised authorities previously granted to the Directors to allot shares and grant equity securities be and are hereby revoked.'

I know it's a lot of words and they don't all say the SP will be higher today, tomorrow etc.

So here's the relevant bit:- 'save that the Company shall be entitled to make offers or agreements before the expiry of this authority which would or might require shares to be allotted or equity securities to be granted after such expiry and the Directors shall be entitled to allot shares and grant equity securities pursuant to such offers or agreements as if this authority had not expired;'

This means any deals made before the AGM (or GM) on a previous authority don't come out of this authority.

Last years AGM was 17 June, the PW purchase was agreed on or, more likely, before 4 June when the purchase of equipment was announced by RNS so the allocation of shares, whenever they are issued for this purchase will be out of the GM allocation made in February 2020 unless the 3,000,000,000 limit is exceeded.

Therefore only the £2.2mm placing (and warrants given to WH Ireland) have so far been used out of last year's AGM authority, so about 1,500,000,000 shares still remain to be issued (or agreed to be issued) before 12 May and last year's authority lapses.

So maybe expect a placing (hopefully not a CLN) before 12 May, and then they can start again. Last year's was late because of Covid, in previous years they have been in April.

ogm4,

as Basur-1 tested oil (though the test was stopped after 6 hours because of water production) there is a good chance of oil shows, and even a good test, though the well planning continues according to the Final Results - the question is what's likely in production as the hope is a self funding drill programme.

The only field producing from the Mardin carbonate is E Sadak and whilst it isn't intentionally public some field production scout group data (48 months since start of production in 2014) is available for E Sadak, and some information about the drilling success there.

The latest data, coupled with information presented in a meeting in November showing producing wells in E Sadak, had field production averaging 410bopd from 8 wells in September 2020, an average per well of even less than HH-1 Portland - and in Rasan/Basur it will be split 50/50.

The production figures also clearly show rapid decline, and even a recent well drilled in 2019 was unsuccessful, and the other drilled that year was sidetracked for success.

Look beyond initial flows - although unless you're prepared to look elsewhere UKOG doesn't mention anything about the production performance of E Sadak, which is in itself telling for the field they describe as a geological lookalike in previous RNS and 'the closest producing look alike field to Basur-Resan' in the Final results.

based on scribbles on a chart with a target(?) of 0.9p - so why did everyone bail at less than 0.5p, although that's about right for most P&D.

We're just left with a few tail end Charlie's who should look at twitter #UKOG and see the only ramping is of other stocks.

Did it have lots of rockets though? That would have been more believable.

They seemed to have forgotten to mention in their tweet about the final results that they've written down £14.6mm of Assets. Ocelot was pleased with that because it cleared the decks - but they are still retaining a lot of expenditure on HH in the 'assets' that seems unjustified when the only producing well has an NPV of less than £5mm - and even that isn't supported by a recent CPR, or any CPR with reserves - it seems that's an internal figure and mere investors aren't privy to any justification, even for that disappointing valuation.

As for the 'increased' resources there seems to be a mismatch between what they put in a presentation about Turkey for the resources at Arreton (2.6mmbbls) - and what they put in the Final Results (16.3mmbbls) - is that because it wouldn't have made Resan/Basur look so much better? Or is it that the significant increase in resources in these results due to Turkey and Loxley would be significantly reduced if the Arreton resources weren't quoted in full. There is also an issue of quoting 2C resources for Turkey without publishing the full details of the reporting behind the calculation - like maps and anticipated flow rates, and their attempt to make the Loxley study seem more thorough by describing it as a Competant Persons , err, study.

They also no longer list the billions of barrels of Kimmeridge OIP that was in last year's report because RPS produced a report in June 2019 (which was after a lot of Kimmeridge ewt, and significantly before last year's report, yet not mentioned) that had 1.4mmbbls of 2C (contingent resources) for the Kimmeridge at HH (yes millions, not billions)

Unlike the study by Xodus of Loxley which they summarised (again figures without details) we wait nearly 2 years and only find out about it in a footnote. I suppose they wanted to add the extra 2C resources to the total rather than the obviously irrelevant OIP.