Member Info for Penguins

and while you're working on that maybe you can identify a post where I've accused others of telling untruths, and I can address that as well.

Ozzy,

You keep claiming I tell untruths, or 'don't appear to be correct' but never specify what these 'untruths' are.

Pray do tell me what in my post was untrue, then I can address them. Maybe you should stick to posting about rivers and dredging.

Ocelot,

I know you don't think what's happened in the past will necessarily be repeated but in late 2018 SS gave an interview where according to rodders74 SS said "£150 to £200 million in the Portland alone"........."For each Kim well looking at £15 to £20 million per well, multiple wells per pad. HH is just one pad, data shows replicate HH at multiple sites"..........."each site at £100 million"

That was only 2 years ago, and after the HH-1 ewt had begun SS was claiming hundreds of millions of pounds potential value in the Weald. He's now making the same claims about Turkey but now the Weald is 'tens of millions" before the well has even been drilled. Will he be lucky this time?

He has also made errors of judgement - installing a 'production' completion in Broadford Bridge before testing which then had to be removed because it didn't flow - a rookie mistake or over confident - whatever it was it would have been costly.

You may be happy to only consider the positive bits of information that UKOG choose to release but there always was a different story about the Kimmeridge and the Portland since the 2016 short test where there were uncertainties about the flow mechanism - fracturing, and then in the 2018 the sweet spot - with Xodus uncertain about aspects of the reservoir in reports and ultimately the CPR.

Turkey is more difficult to dig out information but Ibug located scout reports that had monthly production figures for E Sadak from AME for various periods that showed that for three wells being brought on stream the data covered the production decline following was rapid.

These are the monthly field production from multiple wells before and after E Sadak 11s was put on production in July:-
Apr-19 25457 = 849bopd
May-19 24949 = 805bopd
Jun-19 22140 = 738bopd
Aug-19 27428 = 881bopd
Sep-19 22805 = 760bopd
Oct-19 23712 = 764bopd
Nov-19 18789 = 626bopd
There was a graph showing AME's total annual production in Turkey since 2014 in the November presentation with an estimate of 2020 total production (no more than 270,000bbls) giving a total from all fields averaging 740bopd.

UKOG however chose only to give one figure from E Sadak of 'initial well rates of up to 1,300 bopd'. Is that being 'positive' or misleading as they clearly drew parallels between E Sadak and Basur / Resan.

'Basur and Resan are also both geological look-alikes to AME's producing East Sadak field, discovered and put on production in 2014, some 20 km to the south east. East Sadak lies directly along the same folded elongated anticlinal (dome shaped) geological feature containing Basur and Resan and produces light 42° API oil from the Mardin limestones, with initial well rates of up to 1,300 bopd.

Based upon East Sadak field performance and geologically similar producing fracture-enhanced oil fields.....'

Ocelot,

My post was based on your calculation which gave a figure of £1.2mm 'profit' @ 100bopd in a year for UKOG's share of oil so it's just as well the OP has risen. At $40 oil it would be years to pay for the next well, luckily the OP only ever rises, until it falls.

One detail - the partnership will have to pay for all that oil to be produced but will only have a right to 87.5% as the government take 12.5%.

So using your figures of @$60 oil and $15 OPEX and average 200bopd gross production per day I end up with $2.738mm or about £2mm per year, before any other recharges by AME - with a quoted well cost of about $3mm.

But the next well is likely to be in July / August, and there's seismic earlier, not a year just months from now. It's just as well the OP has gone up.

Uless Basur / resan is significantly better than E Sadak it may be like chasing the red queen, the next wells production is needed to pay for the well after that with only small risidual production from the previous wells - and so on - and there will presumably be more wells to drill in the new licenses to pay for, UKOG may only be paying for only 50% after the first well but then they will also receive only 50% of the profit.

It could be many years, if everything works, before Turkey is actually repatriating cash to the UK.

Ozzy,

still here?

perhaps you don't understand - the reason they have farmed-in to Basur and Resan is because of E Sadak - so production from the wells on that field is very relevant - as is the opinion of Xodus on UKOG's mapping when considering Loxley, and the fact Godley Bridge was not developed.

Oh well - maybe one day you'll have something to say about UKOG rather than criticising those that do.

Ocelot,

You can be sure that OPEX in Turkey won't be the only costs recharged to UKOG by AME, but ignoring that a 200bopd average over the first year of production from the first well, if successful, may be achievable - from the scout reports E Sadak-2s averaged more that in its’ first year. (E Sadak-1 managed around 30bopd in 2014 & 2015 though). Using the scout report data (taking the difference between the full month before and the full month after production start) E Sadak-2S initial production rate was about 460bopd (year later, under 200bopd), E Sadak-3 started at about 400bopd, and E Sadak-11s about 150bopd.

But, assuming the OP averages about $60 over the year, the majority of your calculation of the profit (and AME's 50%) will be needed for the next well - except that was planned for July / August this year, along with the seismic in May / June - so further funds will surely be required at that point. Of course if Basur-3 is 'successful' (based on initial rather than long term performance) hopefully less shares will have to be issued.

As for Loxley the (sensible) market will take a view on risk and not necessarily believe everything UKOG say - UKOG may put a similar risk of success at Loxley to Arreton (65%?), but Loxley is an appraisal of a field not previously considered worth developing, based on a map that Xodus wouldn’t use in the 2018 CPR - they did use the Arreton mapping.

So does the minus £4/5mm(?) to drill Loxley up front cancel out any perceived value where the risk of success and cost of development is factored in - and risks associated with that?

The rises prior to the planning meeting/s were well orchestrated P&Ds and wasn't reflecting a real shift (doubling!) in UKOG’s value (IMO) – before the meetings it was clear UKOG would be able to drill in the future at Loxley, though there is the possibility UKOG may walk away. Fine words were spoken about the M Prospect (offshore IOW), Baxters Copse, A24 – all now gone.

and yet I've explained my position, not based on a golden future, in fact relying on UKOG's USP of short term news.

Pointing out how unreliable that is as an indicator of future performance doesn't seem to prevent the 'fools rush in' syndrome which I suspect, judging by certain posters joining in with P&D activity and then disappearing, I'm not the only one relying on. There's also a long term gamble, but oil reservoirs also don't tend to change their spots.

Ocelot,

Whilst past performance is of course no indicater of future performance what else is there to go on (apart from, for the Turkish adventure, the data from scout reports, rather than UKOG, that shows rapid decline in production from wells in the analogue E Sadak field).

Comparisons of the language about Turkey with the claims originally made for the Weald, prior to the reality of poor flow rates and decline contained within obscure RNS but confirmed by OGA released data, suggests the leopard has not changed it's spots even now where HH is concerned, to the extent of another cunning plan with lots of wells, funding based on hoping Turkey is successful.

But UKOG prefer initial flow rates, OIP and prospective resources to 'sell' the Turkish dream rather than releasing the full information about Basur-1, and similarly just mentioning OIP, reserves and one flow rate from E Sadak, the field on trend a few kilometres away with some 12 wells drilled to date, some of which are in production from the same reservoir as targeted in E Sadak.

With such a wealth of information surely available from this analogue field, operated by AME that they reveal in scout meetings, why hold back and only mention a single flow rate - why not allow investors to better understand this 'irrisistable' opportunity, or is it based on hope that for some reason, like the promises for the Weald based on short flow tests, it's best to ignore previous performance.

Ibug,

At Wytch Farm the main reservoir, the Sherwood Sandstone, is more uniform - a thick reasonably pourous sandstone which is more easily modeled - and they've had 40 years of production of up to 110,000bopd to pay for the infrastructure for production and disposal.

I don't think 'If Wytch Farm can make a profit on their water cut figures anyone can' really characterises the situation.

I suspect (hope) that with 3 to 4 waste tankers for every 10 of oil UKOG is making a profit, but unfortunately I doubt without fund raising they will be able to convert HH-2z to an injector 'in the Spring'.

In the update, like the October workover, they don't give any indication as to what the conversion of HH-2z to an injector would bring to production so that their vision of 'success' could be understood - and ultimately compared to results.

ZXY,

This is UKOG's comment to drill or drop (from DoD website):-

“In October we were producing back completion fluids from the Horse Hill-1 well intervention, with the resumption of formation water production being in November.”

Obviously UKOG know what happened in November (and more about October than they're saying) - I wonder how likely it is they produced about 1465bbls of oil with zero water in October and then in November the water returned. It may be that UKOG pleaded cost and effort to accurately record the volumes wasn't worth it. The OGA cares little for the onshore, with miniscule production being an irritant - maybe they were happy with 'estimates' (total water minus completion fluid) but didn't publish them.

As for what the current situation is, the fact they didn't indicate the stabilised water cut in the update suggests it hasn't improved, but again we don't know.

We don't know what 'lions share' meant but the apparent lack of significant improvement suggests that it's still true the sweet spot is the main contributor to production of both water and oil - so sealing off the main productive zone would probably see very low oil, but possibly little or zero water, production. I also suspect if UKOG had intended to seal off the water then they would have said so as if it worked it would be a good thing.

I think you decided it was edge water - I was less sure (I checked my post) and I still believe this could be fractures feeding the sweet spot - whatever, the quote about 'fluid' rather than oil or water suggests they don't expect to get one without the other where ever it's coming from.

But we are both guessing based on minimal information, and a company trying to be as obscure as it can - percentages of months, total production, no water figures - rather than just giving daily production figures.

Cynderlad,

One of the issues is that the Portland, over most of the interval, is not very porous, nor very permeable and UKOG have said the lions share of production was coming from the so called sweet spot. Looking at the production volumes we have been told it appears the deeper and more prolific perforations haven't made much difference suggesting the sweet spot was already plumbed in quite well to the well, and the remainder of the Portland section is still contributing the non-lions share despite the new perforations.

A significant sentence regarding production in the January update was this:- 'The PBU data also helped identify a potentially significant contribution to Portland fluid flow from a natural fracture system'

This suggests if they want to produce oil there's going to be water so they need strategies to reduce the water cut - the shut ins may be one they are trying - allowing pressure to build up which may reduce both water ingress and gas coming out of solution.

Instead of RNSing that the water cut had stabilised UKOG could have mentioned actual flows of oil and water.

Many posters took the view that the workover would raise production to more than the 'more than 300bopd' (which was the last flow rate that UKOG mentioned for HH-1 in any communication), whilst the OGA was releasing figures that confirmed that the flow had declined. It's almost as if UKOG is in denial, not giving a rate, hoping like they did at BB, that if they keep ploughing on something would turn up.

As for the zero water in October it seems reasonable as it would be impossible to accurately meter the completion fluid and reservoir water separately - no figure better than a completely wrong one, and presumably acceptable to the OGA.

It seems that the expectation is Turkey will be successful - and save the company, and maybe it will, but will UKOG admit it if it isn't. As long as they keep giving meaningful, and positive, updates it should be OK, silence following initial flow rates would be a warning sign.

Cynderlad,

they have hardly mentioned they are producing water let alone any details as to where it's coming from. Whilst they said in the 5 November RNE:-

'it should also be noted that in the normal course of conventional oil well optimisations there can be a requirement to change the placement of the downhole pump should the flow characteristics change over time, this can be the result of various factors including the break-out of solution gas and increased water cut'

However it would be more likely the pump would be moved up the hole if water ingress was a result of a coning or rising OWC.

But the plan was a 'full re-perforation of the well's Portland section using larger and more deeply penetrating perforating guns, at twice the perforation density per foot compared to the current completion. The reperforations are designed to materially increase the ability of oil to flow into the wellbore'; from 4 June RNS.

There has never been a suggestion of blocking anything before or after the intervention and the fact that they the water ingress was coming from fractures in HH-2z, and this in the January update:- 'The PBU data also helped identify a potentially significant contribution to Portland fluid flow from a natural fracture system.' Note 'fluid flow' not 'oil flow'.

I'm still of the opinion the water filled fracture/s are intersecting the 'sweet spot' layer rather then the well. Maybe UKOG will be more specific about their findings.

Well that's a conundrum. No water yet UKOG plan to inject the produced water using HH-2z. Gas production is also down to about the amount expected.

If the produced water is contaminated with kill fluid perhaps the volume of reservoir water isn't known, or at least uncertain, for the month it happened? UKOG said water psoduction was stabilised, not stopped. They haven't even declared a tiny amount which they did in March and April.

...... Ocelot and how are they going to do that?

From AME Business Strategy:-

'reduce initial investments invested in high-risk exploration':-

'2- Focus our capital program.
We are in projects go faster operation to invest and deliver sustainable cash flow over a long period. We reduce initial investments invested in high-risk exploration. The 2014 and 2015 capital program will focus on the short term, higher netback opportunities. Long maturities exploration expenditures in 2014 are expected to account for only about ...% of the total capital spend AME.'

.......and farm out underperforming 'pieces':-

'4- Unlock net asset value of the portfolio.
AME asset base includes large positions in several long-running pieces that generate little to no cash flow. We will continue to high-grade our portfolio and consider divestitures and joint ventures where the underlying values are not reflected in our financials. Our goal is to unlock ........ $ in value through joint ventures in the next 12 - 18 months.

http://aladdinmiddleeast.com/Our-Business-Strategy/EN/1/26/A

But looking at the dates these pages were written some time ago and they still aren't a public listed company - just a motherhood and apple pie statement?

Sorry Ocelot, I assumed from your post capitalising 'initial drilling' you were suggesting initial = first - and seismic cost was, despite your not capitalising, also 'initial'.

So what was the purpose of highlighting initial?

Ocelot,

UKOG are experts, unfortunately at writing equivocal RNS.

You take initial to mean all the costs of the first drill and the later seismic programme, like ZYX I take it to mean costs prior to the actual drilling and seismic operations being carried out.

What UKOG put in the 14/10 RNS was: 'Further to its successful 02 October equity raise, UKOG will now fund its agreed share of key initial preparatory operations so that the first oil appraisal well, currently planned as Basur-3, a surface location for which has now been chosen, can be drilled as soon as practicable in early 2021.'

Until AME start drilling they may have the funds needed for drilling as a cushion but l'll hold my opinion that if not before there's likely to be a fund raise soon after drilling commences.

Ocelot,

We will see. I suspect UKOG are desperate to announce the drilling in Turkey before having to fund raise again, but if they have shelled out £550,000 to PW that wouldn't help, but may be preferable to having to issue shares to PW and still have to fund raise. They appear to have a close business relationship with PW so the contracted timing may have been allowed to slip.

But it is inevitable they will need to fundraise as their only income is from HH and Horndean which might generate enough cash in 2 to 4 years to drill another UK well, and they have plans to drill more wells at HH presumably before that.

Turkey may generate enough cash to self fund the next well, but that is by no means guaranteed, and depends on success and high enough flow rates, the analogue E Sadak field appraisal and production drilling appears problematic. Suffficient free cash exported from Turkey to fund UK drilling may be years away or never, as may RBL based on reserves in Turkey..

Ocelot,

but what operating costs - total, per barrel?

We've had three different definitions of operating costs:

‘result in an operating cost ("opex") at field level of $12/bbl, a reduction of around $7/bbl from extended well test costs.’
‘asset-level opex, inclusive of tanker export, sales and marketing, now equates to $17/bbl.’
'From January 2020 to January 2021 our total operating costs have reduced by 66%.'

As the cost reductions for first two were going to be after January 2020 (announced in April) they were already predicting a cost reduction of 37% in 'field level' OPEX per barrel, and of course production when producing also may be down more than 50%. During January 2020 they achieved stabilised production of 293bopd from the Portland and during October, November and December averaged about 135bopd - but there are a lot of unknowns.

So already a prediction of a 37% reduction and a figure of 66% reduction in 'total operating costs' is meaningless without further information (standard UKOG operating procedure), was it an estimate for the whole month of January, operating cost per day, per barrel - some of these could easily be a reflection of much lower production.

ZYX - yes an RNS would be required because the total number of shares in issue will change.

Ocelot,

if they paid cash now it will just be added to the next placing - as PW don't get a discount to vwap it might be better to pay in shares (it's UKOG's decision) but then that might not be favourable to PW if the price dropped. Maybe they've returned some equipment instead as they don't need two sets of production kit for a while?

There's remaining authority for about 1.5 billion shares - at today's SP about £2mm less fees.

Ocelot,

if they paid cash now it will just be added to the next placing - as PW don't get a discount to vwap it might be better to pay in shares (it's UKOG's decision) but then that might not be favourable to PW if the price dropped. Maybe they've returned some equipment instead as they don't need two sets of production kit for a while?

There's remaining authority for about 1.5 billion shares - at today's SP about £2mm less fees.

Apologies,

there have been 3 interviews about Turkey. 2 in July, one only 7 days ago. Not sure I've listened to them but he shouldn't be saying anything not in RNS or released reports. Obviously in the November 2018 interview he did.

The interview is this one:-

https://www.share-talk.com/stephen-sanderson-chief-executive-uk-oil-gas-plc-lonukog-interview/?utm_source=twitter&utm_medium=social&utm_campaign=SocialWarfare

Looking at the list of 'great positives' there's parallels with what's being said about Turkey. Let's hope in 2 years time we're not looking back at the posts and RNS - there hasn't been an interview - about Turkey and wondering what happened.

Here's what I posted the next day on the same thread which was considered a deramp etc.

'Rodders,

Everyone has the same opportunity as you to read the RNS and listen to interviews If the only conclusion that could be made from these facts is that UKOG was undervalued surely the SP should be higher. I know you want to blame everybody else, MMS, shorters, derampers (really - the volume of ramping on here has reached a new high) anything but a different point of view to yours.

I know SS said a lot of apparently positive things but what was missing was how the 'values' were arrived at. Some numbers were revenues, others were based on an NPV without mention of the discount rate (but based on $70 oil which won't be what Xodus will use) and others were unclear whether it was per well, several wells or per field.

But most of all will UKOG deliver. There seems to be a problem that deadlines are missed sometimes by years and expressed confidence in outcomes turns to silence, then bad news (BB).

Previous work by operators at Godley Bridge and Arreton places risk on their non Kimmeridge targets and they won't be tested until 2020, which looks like the earliest any further Kimmeridge sites will be tested by UKOG.

Hopefully upcoming CPRs will stop some of the bickering over value - certainly of HH, but the rest of the Weald is still a massive unknown with uncertainty over what exactly happened at Balcombe (big flow rates over very short periods) and BB supposedly messed up (though HH which wasn't targeted at the Kimmeridge flowed OK).

Brockham looks like it might be delayed a little (but perhaps not) and success there should help, but failure wouldn't be a great result for UKOG either for all those that seem to think UKOGs and Angs futures are not intertwined.'