Member Info for Penguins

Mattmoo,

As you will be aware I don't work in absolutes (the SP will be x, will go up, will go down, UOG will produce x bbls) - and nor does UKOG, or anyone sensible - it's couched in if, could, possible etc. - that's because even the most understood reservoirs can throw up unexpected outcomes.

But UKOG did put in the 15 January 2021 despite all the logs, months of testing and production etc.

'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'

UKOG seem to have either a lot of bad luck - or is it that they fail to convey the possible problems that they are likely to encounter. If you think it will be put water down hole and everything will be great - I don't, it may be but fractured reservoirs are not simple entities and just because UKOG don't mention the possible problems doesn't mean they don't exist.

But is saving the cost of water production what was expected from HH-2z. Was a massive decline in Portland production mentioned by UKOG? But there were posters saying that fractured reservoirs were liable to 'gush' and then splutter. Of couse they were called swampies, shorters, nimbys, derampers - all sorts of names just because they had a realistic view.

Wizard,

I think most posters understand that the oil will have migrated from a local source rock, whether or not it's the same as the source rock in Iraq.

It's such a structurally complex zone that migration paths are unlikely to be very long.

Most of the North Sea oil is sourced from the Kimmeridge, but it doesn't migrate from the Weald where it is also the source rock.

You should do your research before, not after, posting.

Mattmoo,

The plan will have to also be agreed by the OGA. They will have to run a test to see what happens and in a fractured reservoir what happens is important.

The well was originally planned as a producer and is fairly close to HH-1, but there was a suggestion that the reservoir is compartmentalised, possibly because fractures can act not only as conduits but also barriers. There is also the suggestion of a fault mapped between HH-1 and HH-2z in the latest mapping.

The production primarily comes from a restricted interval which is where the horizontal is placed so any sweeping will be limited to this more porous zone.

What will happen - I doubt even UKOG know - in January they were still working on their understanding. Most likely it will stop or reduce decline, might increase production by pressure falling during production which necessitated the interrupted production so maybe they will manage continuous production at a lower level (as it won't be total replacement of the volume produced) than the about 170bopd they got on the 15.5 producing days in December - the December average was about 85 bopd.

Would anyone want to provide cash for shares with the likelihood that the SP would be falling following the start of drilling - small oilers usually have a rise into the start of drilling and then fall back until results - that's what they would be lending for. HH has shown what happens if the testing doesn't match the initial results longer term but they wouldn't be in it for that gamble - taking the risk of failure on and a collapse into the SP.

If there's a raise (and only £1.346mm in UKOG's kitty plus £2.2mm raised 6 months ago says it's probable) then it will be before the drilling rig arrives, usually the contractor wants to see the cash for the drill before turning up even if it's put in escrow, especially if a company check turns up accounts like UKOGs.

Wizard,

s you're so keen on the potential of the Kimmeridge did you notice that UKOG had a RPS report (not published or previously mentioned by UKOG) that is stated by UKOG to have 2C Contingent resources for the Kimmeridge at Horse Hill of 1.4mmbbls. Somewhat less than perhaps expected - but absolutely no mention in the text.

The date given for the report was June 2019 - ie prior to the 2018/2019 results but after a lot of Kimmeridge ewt. But in the 2018/2019 final results they continued with the fantasy that the billions of barrels of OIP in the licence meant anything, quoting the Nutech and Schlumberger OIP figures of 9.425 and 10.993 billions of barrels of oil - bear this in mind when reading all the wonderful figures for recoverable oil in Turkey and elsewhere where the figures are all 'pre-drill' and may not even be the latest available.

Yet posters still hang on every (big) number that UKOG come up with that has little or no justification.

I read through the Turkish BS - I didn't notice self funding specifically mentioned, just it has the 'ability' to monetise within a year (I wonder what the 'ability depends on) though it was an asperation in the motherhood and apple pie section. This section also included geothermal (hot water?) and solar for HH - I suppose if they're not going to use it to drill for oil they need to think of something to do with the site for 20 years.

There was also a statement that conflicted with the previous RNS about why the HH-2z horizontal was 'curtailed'.

But did SS actually read his statement critically:- 'I see this move into Turkey as crucial to the Company's continued success and prosperity.' - Continued success and prosperity - really? Perhaps he should have mentioned all these successes - we know about his prosperity.

What was RNS'd, 28/04/2020:-
At a corporate level, the Company has also instigated a number of wide ranging cost savings, many of which were underway before the pandemic struck. These include a significant cut of 20-50% to Directors' remuneration together with a reduction in non-core and non-essential asset related activities.

What we are now told in the final results:- The saving included management and staff electing to take an effective 20% temporary reduction in salary.

At the end of July the Directors agreed to an interim salary cut of between 20% and 50% of their monthly salary.

So which was it, a 20 to 50% cut in April, or just 20%, with an 'interim' cut of 20 to 50% in July? I remember posters being all over the 20 to 50% reduction in April. Pity it doesn't seem to be true.

The tables of reserves (CPR), Contingent Resources (various levels of reports) and Recoverable resources (various levels of reports), in barrels of oil ( or equivalent) net to UKOG have the following 'mid' values:

40,000 2C, Avington
80,000 2C, Horndean
130,000 2P, Horndean
1,300,000 2C, Horse Hill,,Portland
1,400,000 2C, Horse Hill, Kimmeridge
2,600,000 Best Recoverable resources, Arreton North
3,500,000 2C, Arreton - Portland
4,400,000 Best Recoverable resources, Prospect A, Turkey
5,500,000 2C, Loxley (gas)
6,500,000 Best Recoverable resources, Godshill
10,300,000 2C, Arreton - Oolite
15,300,000 2C, Resan/Basur

So as less is known (2C and best recoverable yet to be tested) the numbers get much, much, bigger - the grass is always greener when you know less.

Whilst they showed a figure of gross at Arreton of 2.6 mmbbls in the Turkey new licences presentation to show how much better Turkey was than the UK this table shows a total net at Arreton / Godshill of 22.9mmbbls vs the 19.7mmbbls in Turkey - but UKOG haven't applied for planning permission for Godshill though that was the plan.

As for HH they are still using the 2018 CPR numbers despite the years of testing. But does anybody remember a June 2019 RPS report detailing the 1.4mmbbls 2C resources in the Kimmeridge at HH?

Oil sales from HH testing £2.411mm 2018/2019, £1.755 2019/2020
Sales of production, Horndean and HH £210,000 2018/2019, £910,000 2019/2020.

Total revenue £2.621mm 2018/2019; £2.665mm 2019/2020 - not much change despite the low OP - but HH was producing about 3 times the oil in March 2020 than in September 2020, and there was also HH-2z oil being produced during the period whilst the cost of water disposal is accounted elsewhere.

Apart from the massive amount of BS about the future projects here’s a few things I noticed.

What they say now about stopping HH-2z:- ‘with the length of the horizontal curtailed by the intersection with natural fractures in the reservoir and the onset of drilling mud losses at the toe of the well’

what they said about it in the RNS 12/11/19:- ‘The good, clean horizontal trajectory, together with the continued indications of possible improved reservoir quality and significantly lower pressure-depletion than expected, led the Company to decide that there was little technical or economic benefit in pursuing drilling to the maximum planned c. 3,000 ft horizontal trajectory’

Absolute BS - how can anyone trust what UKOG state in RNS?

For some reason the only figure for HH production is total oil produced up to end February (February?) of over 137,000bbls. Current production, water cut – no mention

‘testing continued but over time HH-2z oil production rates continued to be lower than expectations coinciding with rapidly increasing water cuts, thought to be from natural fractures along the wellbore’

This suggests that horizontal wells won’t be tried again.

The NPV value of HH-1 is £4.78mm (not backed by CPR), makes you wonder why they paid Tellurian £12mm for 35% of the field. Given the high cost of drilling is there an economic case to drill another Portland well.

As expected large write downs on the intangible assets including removing the £17mm of goodwill, now represented by the £4.78mm of HH-1 value. They still retain a high level of Exploration and Evaluation Assets, as most of that is expenditure on HH it’s hard to understand why that also wasn't removed. Next year?

It’s obvious the contingent resources for untested projects is much greater than those for Horse Hill (see first sentence). Probably a case of the less you know about something the greater the freedom to make stuff up.

There was £1.346mm left in the kitty at the end of the period.

Need to spend a bit more time looking at the figures.

R,

Odd how often the new names either have a huge number of posts, or very few.

Shills and their target audience?

Not sure which category the tanker trick is played for. Seem to remember 4 tanker days last year, but never any indication HH was producing anything more than about 300bopd, and in June one time it happened much less.

Latest figures from the OGA, as UKOG chooses to not mention production from HH was an average of 85bopd and 34barrels of water in December, and they were pleased in January they had stabilised the water production, but chose not to mention water production at all and oil production as a total over 3 months.

One waste, one oil tanker.

So what's the net value? Not a lot if the Angus figure is anything to go by.

No one knows what current production is but in January they had achieved stable water production, which seemed an aim, one would assume December's production was a result of that with an average of 85 bopd with 34 barrels of water.

If they have turned the taps up is it just for the final results? Which they say will be out before the end of April?

Ocelot,

'More relaxed about UKOG's prospects than I've been in a long time.'

What are you expecting in terms of production in Turkey if it's going to be funding more wells in Turkey and Horse Hill, or is it just you expect UKOG to just raise more cash based on a SP raised by sentiment before any production, hoping these ventures will work out?

Described by the company in the RNS title as:-

'Funding of initial Turkey operations costs achieved via £2.2 million placing'

and in the RNS ( not someone's IMO) the costs are describes as follows:-

'The Proceeds of the Placing will, therefore, be used primarily to support and fund UKOG's share of initial Turkish Licence operations costs, to include the purchase of long-lead drilling equipment, construction of a drilling pad and necessary preparations for seismic acquisition'

So no mention of paying for the drilling out of the £2.2mm.

Wizard,

Why do you keep pouring over ancient scrolls. The latest information about HH is in recent RNS, OGA published production reports (though all of 3months out of date) and the EA Geological Reservoir Parameters report dated 2021, though just an update to the previous report with a new Portland map, and details of pressures and a number of other changes.

Do you still use the SP from 2017, 2018, 2019 to calculate the value of your shares.

The new map in the EA report is very different to the one published in the CPR, as I have previously pointed out HH-2z instead of being approximately horizontal dips from heel to toe. The Collendean Farm well is now in the same fault block as the Horse Hill wells. These are significant changes UKOG has failed to mention.

Perhaps the biggest take away from the pre-drill HH RNS you linked is don't believe pre-drill estimates of OIP. Horse Hill had an estimated 87mmbbls and 164 BCF prospective resources, far more than Resan / Basur.

as quoted by UKOG in RNS, anything over this will be shared 50/50 - and there will be other licence and operator costs to be recharged as operators don't do charity - it's part of the very good reason to have paying partners. Maybe UKOG will learn a lesson as those cashcalls come in?

So why SS is saying in an interview £2 - £2.5mm (I'm assuming Wizard heard correctly, I really can't stand listening to the man) when the exchange rate is about $1.3 = £1 is inexplicable as I make $5mm = £3.8mm. Assuming the £2.2mm has not been spent on keeping the lights on that's still a shortfall of £1.6mm.

Nice pictures of diggers working on the access road and well site proves expenditure has now begun with the well required to be started before the end of June, and the North Resan seismic was programmed for May/June - though Basur-3 was meant to be completing iin January 2021 according to the graphic shown by AME in November 2020.

Prudent management would say raise enough for as much as possible including the Resan well and maybe the work on HH-2z in case of Basur-3 failure making a further cash raise difficult.

Strange.

R

the quotation marks indicate it's a quote from Wizard.

Interesting point.

Does the risked value of anything exceed the cost of exploration / appraisal drilling, some of which is obligation work programme or needed to realise the value (eg 2 wells and conversion of HH-2z at HH) - if it works.

In effect the risked NPV, and any buyer would see all the information, not just the positive bits (oil or gas in place, up to recoveries, initial flows) that UKOG prefers to feed the market.

But please, please believe the 'FOMO' gang with their 'I read that someone spoke to a bloke', and 'big buyers' BS.

Mirasol,

Forget the 98%, look at the rise over the last week. It's now only 97%, fine for those who have now bought and sold, not so fine for those that bought at 0.4p+ believing the to the moon predictions.

All those posters who have every time in the past couple of years claimed a new low heralded a rise in price (apparently it's something that must happen) can now forget all the times they were wrong and consider themselves master investors and are now able to predict the share price movement for eternity.

It was an interesting conjunction of a load of cash exiting 88e, Zak mir pointing out that the 200dma was not all that far above the SP (actually the case for a while as the pre covif fall in early 2020 wound out of the average) and the chartist BS about 0.9p and finaally an unexpected RNS (anyone know that government permissiin wasn't in place?) about drilling that was spun into a P&D. Where it will unwind to who knows.

Expect the next one on the Planning meeting on IOW (if it happens as forecast) so maybe many will hold on to their 'golden tickets' and hope to cash out then, but that's another couple of weeks nervously waiting for the placing, which of course isn't needed because, well because (that seems to be the reasoning).

wizard,

The last Kimmeridge testing was in January 2020 when they performed the Portland interference test between HH-1 and HH-2z and shut in the Kimmeridge, although the decision to not proceed with the HH-1z sidetrack into the Kimmeridge seems to have been made during summer of 2019, when they bought out Tellurian. But they purchased a whole lot of acreage in the Weald prior to that ('grab as much as possible') - quite a lot of that acreage has since been relinquished. The millions proving it didn't work was referring to the Broadford Bridge well.

The question is what evidence is there that the Kimmeridge is definitely working? Not bothering to deepen HH-2 to get decent logs, no sidetrack or dual completion to HH-1, and the plan to drill another test to determine the lateral extent of the Kimmeridge oil pool (perhaps they meant find a productive Kimmeridge oil pool), will be after another Portland well seems to say otherwise

Kammi,

I've heard it all before, months of BDI, Treeasabird/FOTH, Rodders etc..

I must have been terribly mistaken thinking anything was wrong - while the SP dropped 98%.

Wizard,

'Houthi rebels are laying siege to key Aramco oil facilities…'

It's a troubled part of the world.

But don't worry about Saudi, UKOG aren't involved there - but Kurds in Turkish Kurdistan, south-east Turkey, where Resan/Basur is, might up their efforts for independence - I think that's what gulango (?) has been hinting at.

I'm guessing the Turkish government won't be too keen so there may be trouble ahead.

'but in nearly all of the cases they were investment companies not operators like UKOG'

isn't that the idea of investment companies - to invest in other companies, and not all of them were investment companies anyway - they just wanted out.

UKOG should have done what AME have done to UKOG - get someone else to take the risk, I guess nobody was interested. Instead greed took over, unfortunately trying to grab as much as possible of what appears to be a disappearing Kimmeridge play before it was proved to work - in fact spending millions (that investors paid for in a disappearing SP) to prove it didn't work.

...and UKOG are paying 100% of all the costs at HH, Loxley and Turkey (initially) and nearly that in the IOW.

Not the best way to go about exploring - but maybe nobody else wanted to pay for drilling the wells with the risk involved.

100% of the reward at HH would have taken a long time to pay back what hey've spent finding it - but 'luckily' they destroyed the SP instead.

Wizard,

The SS interview was probably BS then, and is definitely irrelevant now. I think I've reposted rodders post about it fairly recently - I don't think any of it came true

It's just wishful thinking that the actual well results are so encouraging that any plan based on modeling before HH-1 production and water ingress, and HH-2z is still in play.

They've remapped the Portland and no mention of any wells beyond HH-3 and HH-4, and assuming they deepen and test the Kimmeridge in HH-3 HH-4 might not be drilled - just like HH-1z wasn't.

The latest mapping is very different so any OIP previously calculated needs to be revisited, though I don't remember UKOG mentioning the remapping in RNS.

Wizard,

When and where was HH-3 as mooted as the first production well - and targeted at 1000bopd - possibly because it was going to be horizontal in 2018. Also the locations of either of the horizontals in the 2018 CPR are not where HH-3 is going to be placed according to the latest map in the 2021 EA documentation.

I would have another look at the 2018 corporate presentation.

HH-2 Second production well.

HH-2 horizontal • Production Target: 750-1000 bopd - note horizontal, and not where it is now planned to be drilled.

Well you'll be saved from reality for a lot longer if the CPR isn't commissioned until HH-4.

R,

'If there is a placing it will be at 7am tomorrow'

Why, not every placing is announced at 7:00. All you can say is if it isn't at 7 am it could be later, Tuesday, Wednesday - etc.

02/10/2020 11:43 £2.2m placing funding initial Turkey operations

Wizard,

No mention of HH-3 being horizontal so why 1000bopd - optimal vertical well in Portland was estimated at 362bopd (or maybe now 300bopd initially - or much less eventually) - slant well maybe a bit more but as it's mainly from a single limited interval not significantly more. Kimmeridge also slant well - and I'm guessing they might next well actually deepen it into the Kimmeridge (unlike HH-2) to do a test - which may be the end of the Kimmeridge.