Member Info for Penguins

Cynder,

It is a pointless waste of time, and the High Court should stop vexatious actions, but central government deciding?

Tory party agrees to put oil site in leafy Surrey countryside is an unlikely headline. Labour Party decides to endorse more onshore oil exploration - another unlikely headline.

,,,,and if national significance was the decider they would want more than an RNS palming off the investors with the boss saying it was.

Why not try to find the it - it's in the saltfleetby presentation linked on the Angus Energy site.

Slide 7 of this presentation - don't see why Angus would lie.

https://www.angusenergy.co.uk/wp-content/uploads/2019/06/Saltfleetby-Gas-Field-rev14.pdf

Water disposal £49 / bbl.

It does indeed sound expensive, even if it's less we know it was significant enough to stop HH-2z testing. UKOG were all over the OPEX when it sounded low - I wonder if they'll mention what it's currently running at in the Final Results?

if certain posters report lots of posts I think admin just delete the whole thread. Maybe that's why some posters start a new thread every time they post.

But although the posts may disappear from the 'company' board they can remain in your listing.

This is from mine last night discussing yesterday's RNS, edited:-

'The RNS is hopefully a step towards a successful well - this is the bit where the machinery is almost certainly going to achieve the desired outcome, an access road and well site.

What comes next is the bit that matters and UKOG are very coy about what they expect, sticking to quoting a mean and high case for recoverable resource. The question is, if successful, how successful. Pre-drill OIP and estimates of recovery are one thing (as has been ably demonstrated by UKOG), but flow rates and EURs per well will determine profitability - low rates could still trigger production - article 6(10)of the petroleum law may be a double edged sword ('An explorer is obliged to develop the field and commence production following the discovery made with regard to the exploration license') with further wells / cost that may not be self funded.

The self funding suggested by UKOG (with Resan 6 (!) following Basur 3) depends on success first and then relatively high sustained production rates even with relatively high OP. Whilst UKOGs predictions of flow rates for HH has also been poor Basur / Resan has an analogue field nearby, E Sadak, which UKOG quote some data from and could guide estimates of production rates at Basur. Information from that field, not provided by UKOG, suggests very variable initial production rates, appraisal failure and rapid decline, perhaps why UKOG prefer to stick with OIP and rule of thumb recoveries. Not surprising for a fractured carbonate reservoir in a structurally complex area.

Nomlungu,

The explanatory notes on page 8 of the GM notice pdf expand on the resolution in the GM notice ( which for some reason my pdf reader won't let me copy so it took a bit of time OCRing it) allows already agreed deals - the PW deal was agreed before the AGM:-

'(b) (otherwise than pursuant to sub paragraph (a) above) up to an aggregate nominal amount of E300,000; and provided that this power shall expire on the conclusion of the next Annual General Meeting of the Company (unless renewed, varied or revoked by the Company prior to or on that date) save that the Company may, before such expiry, make offer(s) or agreement(s) which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of any such offers or agreements notwithstanding that the power conferred by this resolution has expired.'

and this seems to be the case for all these allocations.

To be clear this bit:- 'save that the Company may, before such expiry, make offer(s) or agreement(s) which would or might require equity securities to be allotted after such expiry'

to issue shares is about 1.6 billion until the next AGM or if they call an GM earlier.

The only shares issued under the 3 billion authority were those for the £2.2mm placing (1,374,999,993) plus probably some for WH Ireland to flog for doing it. The PW payments were agreed under the previous authority so don't count against this authority.

So at the current SP (no discount) that would be about £2mm - might be enough to see them through to the next AGM though a higher SP would be useful. If the Final Results are released before end March we'll know expenditures vs cash raises and revenues up to end September 2020 which might help in understanding if they are running on fumes now or not - unfortunately the expense of the October workover won't be included.

So UKOG can't issue 'billions' of shares in the near future.

Troll,

' and since they have to go straight to production we should be looking at it being self funding all the wells by the end of the Summer'

Any idea what production (not initial test level) will be required to fund the sixth Resan well that UKOG imply will follow on immediately from Basur-3 - I suppose that's if the July snowdrifts aren't too deep for the tankers - and the minor detail of the fourth try at Basur being successful - let's hope this time they've worked out where the structure is at depth. Notice they don't show a sample of the seismic showing the updip location - probably like a snowstorm.

I see they're mentioning the analogue E Sadak Field and the need to pump the oil - but yet again forgot to mention how much oil those modern wells are pumping - very forgetful - a bit like those that forget all those times they've copied and pasted vast tracts of UKOG RNS that eventually turn out to be just plans and expectations that never happen.

SS certainly has a cheek saying 'demonstrates the ability to move projects forwards at pace in Turkey, a welcome change from the UK' - UKOG has had planning permission for a full development at HH including 6 production wells at HH for 18 months, and planning for the HH-1z sidetrack for considerably longer - the reason for delay was because the Portland wells have failed to produce what UKOG predicted - and the Kimmeridge is, after considerable testing , hardly mentioned needing an appraisal well at HH.

Wizard,

do you realise that if you aren't prepared to explain this wonderful news that SS has put into the public domain you are not helping your cause in trying to support the company - although I suspect you aren't revealing where this wonderful news is because it doesn't exist, or your understanding of it is wrong.

But then as almost everything that SS / UKOG has said will happen hasn't I suppose it doesn't matter what SS put in the public domain for those that were listening.

As for a definition of failed perhaps you can compare what UKOG has said would be done at HH and what would be produced from the wells that you used to put in posts vs what the latest figures are?

Primula,

The act specifies that the valuation is sent to the Companies Registrar but I'm not sure it is made public - a valuation under section 593 isn't listed as being publicly available in the list I've seen - it might be considered it needs to be on record if at a later date there's a dispute but needs to remain confidential.

UKOG has made many share issues for equity in licenses - I suspect that their accountants would be aware of the requirements of the Companies Act 2006 and got the necessary documentation - probably more than anyone on this board.

Primula,

How do you know there's no valuation. Looking quickly through the legislation there doesn't seem to be a requirement to make the valuation public.

Looks from the accounts that the book value of the equipment sold was pretty low (zero? - though that wouldn't be a market value) the injection of cash, shares and debt increasing assets by about £1.4mm.

Mirasol

Not sure that UKOG are that charitable, nor that PW have that much in outgoings when busines is quiet - though there's the liability of keeping rented out equipment working- usefully handed over to UKOG - you might be right that they may sell one set back as all it's doing is gathering dust - though a useful spare if something broke, and there's more wells planned at some point in the future.

AFF,

Fool me once etc.

This current value, is it by any chance based on 'assets' and

1. what UKOG say they are worth?

2. what certain posters here say they are worth?

3. A fag packet calculation using a OIP times a 'rule of thumb' recovery times today's OP if it's reasonably high - none of these should be used in a 'real' valuation.

4. SS holding less than a litre of oil and rather light brown 'oil' seeping from a core (looking more like the deposit on my daughters Corsa oil cap) - installing a 'production' completion for testing?

5. An independent valuation by 'experts'?

Which of these got you to invest previously? If it's 1,2, 3 or 4 and the same applies now perhaps you should review your valuation, if it was 5 then you should never have paid 10p. In any case you should have learnt not to trust 1, 2, 3 or 4.

Loxley,

Main issue seems to be depth conversion of time mapping, gas flow on test at GB-1 wasn't great (about 1.5mmscf/d), but doesn't need to be offshore levels.

Gas or oil show - probably - flow test, maybe. Then the issue becomes an economic one if UKOG borrow the cash rather then dilute.

Need to prove map and thus volume is sufficient for higher cash outlay than oil production (even low volumes can be mom & pop profitable with an online storage tank and collection) and how many successful wells needed to produce enough to justify investment in gas grid connection (easy planning) or gas reforming plant - probably difficult planning despite 'green' credentials.

Presumably following the failed previous appraisal (including a sidetrack of Gb-2) the single well at Godley Bridge didn't economically stack up based on risk and probably lack of faith in the mapping. Outlay on single well production is high risk as that well may stop producing for non reservoir reasons (messed up intervention).

To me risky, but obviously not doomed to failure. With gas there's no income while testing, and infrastructure takes time - could be years even if very successful - but would have a proved value (see above) rather than mythical 'potential'.

Primula,

That's a massive assumption that value is inherent. In fact value has to be proved although for short (or even extended) periods ther can be a chasm between what a company is really worth and its MCap - it's what traders rely on. In AIM oil companies this can be because of a good sales pitch with expectations of a level of success that never materialises but takes years for it to be realised.

It's somewhat ironic that certain posters here point to my perceived negativity over the years (with explanations, but no forecast of SP) as proof of how wrong I've been in my posting - often at odds with what the company was suggesting and in certain cases vastly at odds with what those posters were posting.

UKOG talk about using new technology and bringing new thinking etc to undeveloped discoveries - then don't apply anything significantly new - probably because that's not the problem - it's not possible to economically resurrect the dead.

Oil companies scour the world for missed pay with new thinking. UKOG (or actually Angus) lucked into a fractured anticline at Horse Hill drilling for a much deeper prospect (Triassic Sherwood Sandstone) and then ran the luck. The reservoirs did manage to deliver oil at admittedly good rates from the Kimmeridge and Portland in brief spells of testing that posters (and tweeters) translated into even higher production rates and multiplied it by multiple wells and multiple sites that UKOG suggested could happen (with caveats) - some still expect that to happen.

Maybe the hope is that in Turkey they (or AME) can successfully pull off the trick this time, although a cynic might think they might just be happy with the initial flows bit.

What UKOG say is all very positive, lots of OIP, a high intial test flow rate from the discovery well, fast payback (all mentioned for the Weald) plus an easy route to production. What they must know though and haven't mentioned is what the field in production from the target reservoir, along the same anticlinal feature less than 20kms to the south east, is actually producing on average per well in 2020 (possibly less than HH-1), how many wells have been failures (zero payback) or requiring sidetracking (longer payback), decline rates (important in fractured carbonates)

Is the delay agonising over the location and drilling plan as the well was ready to go in July 2020, in January 2021 they were still designing it - or was that redesigning it.

Perhaps beyond the Xodus farmout brochure not the shooting fish in a barrel appraisal they thought?

Tollesbury,

you like to post about other posters, specialist subject 'what was your previous identity'. I do post about other posters if they choose to mention me, and I will refer to a poster if I'm responding to something they post (to make it clear what I'm responding to) - but otherwise I think you'll find I try to keep to posting about UKOG. So thanks for the suggestion but I think, like you, I'll choose what I post about.

Ozzy,

I presume you're referring to this 'Interesting he would 'say it' rather than put it in an RNS (as you claimed).'

Well you did claim it:- 'when the oil price dropped to it's recent low ukog did say in an rns that they would reduce production....go take a look.'

Neither Nomlungu nor I could find any statement in an RNS - so I assumed when you posted this 'anyway as you asked, Sanderson did make a comment along the lines of (not a quote)...... There is no point producing oil at such a low price so we will just flow enough to protect the well until the price recovers' it was because you couldn't quote which RNS it came from.

So still waiting.....it's helpful if you quote something to say exactly where it's from, or if you paraphrase it the actual wording.

R,

does it really matter? They are producing water and oil - there will be waste and oil tankers - anyway if this 'rumour' of increased production turns out to be true maybe it's just so they can mention 'current' rates in the interims (if they're out before end March) - or maybe it's the tanker trick that FOTH / DtD was so keen on pointing out until he bought back in.

Primula,

but APEX did sell their services to UKOG - we shall never know if UKOG would have chosen APEX otherwise. Maybe another company would have advised better - it would be cruel to suggest they couldn't have done worse - and UKOG are still trying to understand the Portland reservoir ' 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.' This despite being aware of the fracturing since March 2016 - 'Nutech will now reinvestigate the presence of significant natural fracturing and oil in place figures for both the Portland and Kimmeridge units given that all flow periods produced 100% dry oil.'

PS Allen D Howard was Founder etc. of Nutech.

Hopefully that's cleared the in basket for the time being!

Primula,

Allen D Howard:- 'I have been involved in UK Oil & Gas PLC since 2015, as a Director since March 2017 and more recently I was appointed as Non-Executive Chairman in August 2018......'

So he's been involved since 2015, chairman for over 2 years - but now he's going to sort out UKOG? I think you'd better find some other reason that things will change. I suspect he has very little involvement in the day-to-day running of UKOG, probably more interested in selling stuff done by his other companies that so far don't seem to have solved much. I suspect the 'vector' in getting into Turkey was Xodus who prepared the farm out brochure for AME.

As for APEX:

RNS 1 / 2 / 2019:- 'as part of the process necessary to deliver its oil production and drilling targets previously reported on 23 January, it has engaged a number of contractors, consultants and experts, one of which is Apex Completions, LLC ("Apex").

Headquartered in Houston, Texas, Apex, under an executed Contractor Agreement ("Agreement"), will help the Company further develop its understanding of the Portland and Kimmeridge reservoirs by delivering an integrated geological, geochemical, rock mechanics and reservoir engineering analysis and interpretation of the Company's Kimmeridge and Portland reservoir units. This work is designed to deliver a holistic understanding of the reservoir units in terms of characterisation and ultimately to help deliver a specific completion plan to extract oil at the best rates and volumes. The Agreement provides for Apex to periodically invoice UKOG for work carried out based upon the time spent by its personnel.

It is the Directors' viewpoint that Apex's technical approach and technologies are unique and not available elsewhere in the market place.

Allen Howard, UKOG's Non-Executive Chairman, is a Director of and a shareholder in Apex and, as a result, the Agreement is considered a related party transaction under AIM Rules.'

That went well, it was reported they billed UKOG £531,000 in YE 2019 report & accounts.

Ozzy,

Interesting he would 'say it' rather than put it in an RNS (as you claimed). But during the period of the lowest oil price in March to end April and HH-1 wasn't producing water they said that average production was 'over 300bopd', there was no suggestion this wasn't the desired production rate. During May the OP rose but oil production dropped and water production began. It's clear that they now have to hold back production due to water production, that's an economic decision taken during higher oil prices. What rate will be possible if water disposal using HH-2z is permitted (and works) UKOG haven't mentioned.

By the way the OGA's remit is to maximise recovery (not maximise bopd) so 'maximum' production will only ever be allowed to be at a level to protect the reservoir.

As for tankers - it isn't based at the site so there will be a trip from the yard to HH x 2 on separate days, 2 x returns to the yard - if I was quoting I'd offer a reduction for utilising the tanker for the whole day.

R.

the tanker in this afternoon's video was a waste tanker - if it is transporting produced water it still has to carry the same haz plates as a tanker full of crude. As the well was producing about 28% water in November and in January UKOG said water cut had stabilised (though failed to mention what the water cut was) it's hardly a surprise to see one.

Ozzy,

For someone who feels the necessity of posting many times a day, every day, obsession is a word perhaps you are well placed to understand.

But couldn't resist checking this rare 'fact' in one of your posts. Sadly couldn't find any statement in an RNS along the lines of:- 'when the oil price dropped to it's recent low ukog did say in an rns that they would reduce production.' - I'm sure you can help out and tell where it is, some of the RNS since then have been rather long and I might have missed it.

Even if they had said that they continued production at pre-price crash levels and increased it with installation of the high capacity pump.

28 April RNS:- 'Consequently, with daily flow rates from production start at Horse Hill averaging over 300 barrels of dry oil per day'

30 June:-
'The Horse Hill-1 well (HH-1) continued producing at high rates of over 300 bopd almost continuously during the period. Post period a higher capacity and energy efficient linear rod pump was installed on HH-1, leading to increased production from the Portland interval'

Roganjt,

I suspect there's a cost saving in doing 2 trips in one day - so they save up 3 or 4 days production before ordering a collection. Maybe with the higher oil price they can suffer a higher volume of water - but we might have to wait until 1st July for information on current oil, water and gas volumes, unless they include some 'post period' updates in the Final Results.

That would be a first, so which business plan is that?

23/01/2019:- 'the Company has now completed a strategic review of its asset portfolio and finalised forward plans to drill up to nine production, appraisal and exploration wells during 2019 and 2020.'

Since then one production well drilled - which failed (twice!).

They're not very good at following any plan. In fact it's difficult to identify any expectation or prediction by UKOG about timing of anything more than a few days in the future, or flow rates, that has actually happened, though there's plenty that haven't.

Any business plan ought to include a 'how we pay for it', with figures based on factual information rather than arm waving hopes - sadly lacking in any statements by UKOG perhaps because it's blindingly obvious what that part of the plan is.

Even when they state they are fully funded they're not - as they did for the August 2019 CLN about HH development - 'The Loan ensures we also remain fully funded for further capital expenditures necessary to get the field into long-term production once necessary regulatory permits are in place this Autumn' - that didn't last long, starting with a £2mm placing December 2019 to 'accelerate long-lead time gas-utilisation, facilities and other related works necessary to bring HH-1 and HH-2z into stable long-term oil production'.

Over £4mm placed in 2020 that has (probably?) brought a single well into long term production at an average of less than 100bopd.

Then there's the 'hope it works' conversion of HH-2z to an injector to be paid for, essentially needing a sustained rise in OP to make the economics look even slightly sensible, though if it's the usual share coin it doesn't seem to require an economic case as the SP is outwith the calculation as the BOD have mostly avoided investing in this company fhat will 'make £millions', having spent even more £millions.

Wizard,

Fine words wanting trolling stopped from someone who has an'opinion' about other posters purely because you don't agree with their comments about UKOG - the actual purpose of this BB eing discussion about UKOG, a company has serially announced 'good' news instantly (that eventually turns out to be not so good), and silence otherwise.

Of course that's history so what about current activity.

Currently we await news about the new Turkish Licences ('expected' early February), drilling in Turkey (originally 'expected' to start on 2020), how the production testing at HH is going now they have several months of data, timing of those wonderful 'plans' for HH, what they intend to do with BB (further delay site restoration?) and of course how it's all going to be paid for - with actual figures rather than arm waving about Turkey hopes.

What we do know: EA approval for HH-2z conversion to injector being considered late April (not from UKOG), HH gas production and water cut rates up to November from HH-1 (not from UKOG), historic production at E Sadak (not from UKOG), oil production in December from HH-1 (not directly from UKOG) and Loxley appeal in late July - finally something UKOG has mentioned as they are sure they are on to a winner (not the appraisal the legal case).

Have I missed anything - oh yes Arreton......?

TH2,

Perhaps I missed it, what does UKOG expect stable production to be in Turkey so we can see the significance of the similar cost to Horse Hill, and how, if the appraisal well is successful, that will offset the placing that will probably be needed to proceed with the committed work programme that UKOG will pay 100% of.

Also while you are quoting $13 to $14 is that likely to be the current cost per barrel at HH as according to the latest figures available HH averaged in November 100bopd, and about 30 bfpd of water to dispose of, when the reduced cost per barrel was calculated on 300boppd, and no water disposal costs.

I would hope the rise in OP has more than offset the cost of water disposal at HH, but UKOG are silent on current OPEX. We do know that water production in HH-2z made oil production unprofitable (Brent ca $40 in June) - but UKOG gave no figures for oil or water production after the second water ingress occurred at HH-2z.

Ocelot,

The important word you fail to acknowledge in your calculation is 'initially'.

Just suppose it starts at 250bopd and halves in 6 months, and halves again in the next 6 months and continues to decline.

Let's suppose half the wells drilled need sidetracking or fail. Lets suppose anything you like because UKOG fail to give any indication of what's likely - which could just be earning enough for the next well and little 'profit'.

Unlike a wildcat Basur / Resan is along strike along the same anticline to the E Sadak field, targeting the same reservoir.

Whilst UKOG is silent it's probable that E Sadak with about 6 producers is not producing significantly more than your 400bopd from a single well.

The question is would UKOG tell how much they expect from Basur-3 if it was about 400bopd initially in production - in fact why haven't they given any indication with such a good analogue so close by, operated by AME?

It may be nice to dream, and certain posters depend on it - but facts would surely be better.

Maybe no financial debt - but it does have commitments which it may not have the cash to cover, and plans for 3 wells in the UK (at twice the cost of Turkey wells) and possibly first of all a workover of HH-2z which will require at least a CT unit, or a workover rig - which will be a test of injection in a well planned for production

Ocelot,

Just because they over promised and under delivered they should still let investors know what their expectations are - an opportunity to redeem themselves, prove they do know what they are doing? Is the problem they can't over promise so would prefer to keep quiet?

A few days ago I said:- 'Unlike wildcat drilling where it's reasonable to hope for a significant find based on knowledge, but also luck, these are appraisals where hydrocarbon shows are almost a certainty, but knowledge of the reservoirs in production is also known. Even HH has, despite initial flows, conformed to the norm of low flows and water production of wells, in the Weald.'

UKOG don't say what results they expect from the proposed appraisals but I suspect it isn't what many hope.'

perhaps I need to spell it out. Their predictions would be constrained by knowledge - are the numbers (and there will be numbers) not 'sexy' enough.

It was noticeable that for HH-1 after initial claims of material improvement from the workover - which ended up being 'optimising oil flow' - they didn't give any figures of expected production after the workover - which probably would have disappointed judging by the change in wording.