Member Info for Penguins

Tollesbury,

I see you are up to 81 posts in the last 30 days continuing on the theme of other posters rather than the company this BB is about. You've also thrown your lot in with trader Tymers which reveals more about you than any of your other posts.

What compels you to spend so much time 'policing' this board whilst having practically nothing to say about UKOG?

Invester

Perhaps you could expand on your reasoning why, in your opinion:- 'The UK needs UKOG, and the Gov will back us... imo.'

UKOG currently produces (possibly ocassionally) 'more than' 300bopd from the Portland, a relatively poor reservoir only a target in structural closures. The horizontal into the Portland is currently shut in having a water issue - UKOG are uncertain of it's future, choices included conversion to injector.

The other target is the Kimmeridge. Intended to be a target of a horizontal sidetrack to HH-1 and a deepening of HH-2 neither happened. It was also intended to be produced from HH-1 whilst HH-2z was tested, this also didn't happen.

There have been plans to dual complete HH-1 so the Kimmeridge could be produced, but was not mentioned in the last operational RNS.

The Kimmeridge has also been tested in several other wells in the Weald in recent years (Brockham, Lidsey and Broadford Bridge - the jury is still out on Balcombe), none have been successful.

Loxley is a diversion, regardless of outcome UKOG will need to fund raise to drill unless it's delayed a year or two and HH performs significantly better. Loxley will be the third appraisal well of the Godley Bridge discovery (the first two failed) it will be targeting an eastwards extension of the structure based on a map Xodus in the 2018 CPR wouldn't calculate GIP from as there were issues with it.

Not sure you might be the most researched investor, here's a post from January 2019.

SP ????
30 Jan 2019 10:26
Can someone tell me why the SP is dropping... can't understand why we are not at 4p minimun ??

Here's a hint:-

RE: Happy PI
18 Jul 2020 23:51
SO True, wasred...lv counted 24 green filtered...............

Troll,

He certainly didn't say they will install the necessary equipment to reformulate natural gas to hydrogen, it was àn option, and it wasn't mentioned in the actual planning application, just something thought up for the meeting. The only definite commitment made in the published statement was that they will be 'hydrogen ready' should Loxley be successful - whatever that means. He also mentioned it being produced as 'transitional gas' which seems to mean just producing gas.

As you seem so knowledgeable perhaps you could give us an idea (unlike UKOG) as to the amount of kit required for natural gas reformulation to hydrogn (the article linked by UKOG on their twitter feed showed a picture of an industrial area outside Hull) and the sort of throughput required to make it an economic proposition.

I suspect it was a bit of 'green' BS conjured up just before the meeting.

Wizard,

Starbright did a bit of transcription of the interview and included a link to the interview. It's on page 2 of starbrights posts.

I'd urge caution using anything from late 2018 given the results of HH-2z (well what UKOG has deigned to RNS) and the absence of any urgency to develop the Kimmeridge.

StarBright

Posted in: UKOG Posts: 1,024 Price: 1.525 No Opinion RE: SP action ... theory 28 Nov 2018 11:59

Swizz,

In reality the actual trading range has gone down slightly since yesterday. Why is the spread 0.18p to 0,20p when the trades are between 0.18p to 0.185p - an attempt to drum up interest showing a false price rise - everyone getting a bargain at 0.185p (or less!)? Seem to be hardly any sells though - is PW about to supply shares at a lower price. Maybe a big trade at the end of the day near 0.18p?

I suspect the 'price' which was a matter of agreement between UKOG and PW had plenty of padding in it to allow for PW selling the shares at below the VWAP price. Why would PW take a risk on the price dropping when the price is based on a VWAP without any discount - this would mean if the price/spread remained the same they would sell at a loss.

Nobody (including Tymers) can possibly know what the actual value of the second hand kit that has been sold to UKOG - nobody apart from UKOG and PW even knows what equipment was included for the £1.65mm.

I can't see any reason why the SP would rise based on saving 'more than' £1200 a day ivs issuing over 131million shares.

The main issue though is that by buying this kit UKOG are admitting that this is the production set up at HH for quite a long time.

I suspect that most of the indignant investors on this board blaming planning committees, nimbyism, swampies etc for confounding UKOG's plans to drag the UK out of recession are probably far more interested in a hoped for spike in the SP based on planning permission being granted or commencing drilling than the actual results that really matter.

The question for UKOG investors should be how likely is it that either Loxley or Arreton will be not only commercial enough to pay the wages bill but commercial enough to recover the impact further placings or CLNs to fund them, in the absence of better flow rates at HH, will have on the SP.

UKOG seem hell bent on redrilling these failed prospects where previous operators have decided that UKOG's main target is not worth developing, in Loxley's/Godley Bridge's case after two attempts at appraisal.

You have to believe, despite Xodus criticism, that UKOG's map somehow works for Loxley, and that for Arreton UKOGs assertion that the DSTs of the Portland in Arreton-2 were faulty and it wasn't a valid failed test.

Worrying about the UKs need for a few hundred bopd or a mmscf/d when a single successful North Sea well would be expected to produce multiples of either of these rates seems a bit of a false argument for drilling either of these wells where the 2018 CPR was so dismissive of UKOG'S mapping (Loxley) they wouldn't calculate contingent resources or for Arreton Xodus just accepted UKOG's critical assumption that the previous test was faulty.

Ocelot,

'As for asset level OPEX - so is the $13 just an accounting sleight of hand?

Does this ($13) only cover HH-1 costs as the FDP only covers HH-1. But presumably they've also bought the kit that now spends most of it's time idle waiting on a intermittent flow from HH-2z - and who has actually bought the kit - UKOG as PW are accepting UKOG shares in part payment? - so are they renting it for nothing to HHDL.

Seems a simple question and I've included a number of uncertainties. Perhaps you know the answers for certain?

Does this ($13) only cover HH-1 costs as the FDP only covers HH-1?
and who has actually bought the kit - UKOG as PW are accepting UKOG shares in part payment?
are they renting it for nothing to HHDL?

I suppose I could have added 'what about HH-2z OPEX if 'asset level' only includes costs attributable to HH-1?

Ocelot / Troll,

we know exactly what troll was trying to do (look 2 tankers on a Monday, forgot to mention none on Sunday), but the deal to reduce asset level OPEX to $13 hasn't been seen to go through as UKOG would have to RNS the issue of the (possibly) 144 million shares to PW.

The Company has signed a binding Heads of Terms with PW Well Test Ltd ("PW") for a £1.65 million purchase of all existing PW Equipment used to produce oil and gas at Horse Hill. The purchase is via three equal instalments of £550,000 as follows:

- Initial instalment payable upon signature of the asset purchase agreement via equal amounts of cash and UKOG shares. Full title to the Equipment will transfer to UKOG upon this initial payment.

As for asset level OPEX - does this only cover HH-1 costs as the FDP only covers HH-1. But presumably they've also bought the kit that now spends most of it's time idle waiting on a intermittent flow from HH-2z - and who has actually bought the kit - UKOG as PW are accepting UKOG shares in part payment? - so are they renting it for nothing to HHDL - so is the $13 just an accounting sleight of hand?

The cost of this will ultimately be borne by shareholders as more and more shares are issued to pay for this kit. Let's hope it came with a guarantee and service agreement.

Ibug,

As per normal UKOG don't give any indication of what the volumes of water and oil were from HH-2z - but the frequency of waste tankers with no obvious increase in oil tankers leaving HH suggested the water cut is high - maybe it was only flowed for hours:- 'however water cut built up, necessitating the well to be produced intermittently as the water disposal costs outweighed oil revenues.'

Xodus in the 2018 CPR expected water production from HH-1 but they didn't make any predictions as to when, or what mechanism it would be through, though they postulated:- 'water break through – will it be edge or bottom', no mention of fractures.

Wytch Farm (producing from different reservoirs in a different Basin) has a processing plant which enables, no doubt, the treatment of water which surely must be discharged into the nearby Poole Harbour in large quantities as very little is re-injected, else there would be over a thousand tankers a day shipping the stuff out. (about 315,000bfpd).

UKOG won't have the luxury of a treatment plant for easy disposal, but do have an interesting conundrum - no water from HH-1 but plenty possibly from HH-2z so conversion of HH-2z from producer to injector will entail gaining permission to inject water from elsewhere into the Portland until (if?) HH-1 produces water.

With a fractured and possibly compartmentalised reservoir successful water injection is also not necessarily going to be easy to achieve.

Trollesbury,

You forget the number of times that UKOG have made statements in RNS about timescales, plans, flow rates and expectations that have never been realised, more often than not just 'forgotten' rather than informing pi of the change of plan or likely outcomes. Silence being the alternative.

CPR promised just after submission of planning application for HH development (late 2018 - still not bothered though often telling shareholders of the advantage of Reserves Based Lending) , HH-1 sidetrack into the Kimmeridge (didn't happen) then producing the Kimmeridge from HH-1 whilst testing HH-2 (nope, though no explanation except they could produce from the Portland), HH-2 (and HH-1z) going to be drilled early 2019 (late 2019 - except no HH-1z), delays submitting planning applications for Arreton (going to be submitted in Summer 2018 - submitted 2020), Loxley (going to be submitted Autumn 2018 - submitted April 2019) and delays after submission often caused by UKOG submitting further information.

Most recently strongly positive statements about HH-2z just after rectifying the water issue, then.............nothing.

Suspicion that UKOG has tried to influence the market, ably assisted by the 'eyes', by occasionally saving up crude at HH and sending multiple tankers out (including waste tankers) when production was an erratic 'more than' 300bopd (Production about 17,500bbls over about 90 days since 31 March) less than an average of 200bopd - so even the 'average' or 'stable' over 300bopd is an exaggeration.

Those that have suggested that any 'expectation' or plan might not happen are accused of being trolls, swampy's etc. - yet seem to understand better what's going on than those claiming superior knowledge with predictions of ever increasing SP - whilst the SP declines.

So will the next 'plans' to be executed happen, as they are no longer mentioned - dual completion of HH-1, a Portland injector, needed to keep Portland production going, or any further wells at HH in 2020?

Even if they happen further fund raising will be required plus funding required for Loxley, IOW and BB and possibly A24 - all risky endeavors - though all probably (hopefully for the sake of shareholders) kicked into the long grass

Ibug'

a new Kimmeridge horizontal well, not a sidetrack from HH-1.

What would be different for Loxley? BB is planned after more well/s into and tests of the Kimmeridge, when they will confirm their decision to drill (or not).

'This extension will enable us to incorporate key future well and test information'

At HH they could just put in a new pad and drill once they have completed all the planning conditions - how many are left? Even if Loxley PP got overturned today there are 8 pre starting any work conditions to comply with, then build the site. For something of 'primary interest' why not get on with it now?

Northfork,

if pressure is a problem then solving the drill mud (if it is a problem) is a minor thing, as is not acidising, though that might affect flow rates - injecting into a fractured reservoir for pressure support is not that easy, well it's easy but getting it to do what you want may not be.

Ibug,

Not sure of your point but they could core then sidetrack anywhere, as if it's a neccessity they will need to do that at Loxley anyway.

UKOG didn't even bother to drill the HH-2z pilot through the Kimmeridge (like so many RNS'd 'plans') which would have given them decent log information which would have enabled a pretty good assessment as they have log to core comparison data at BB for the Kimmeridge.

But without any new data I would put it in the KL3 at HH (which if they get round to drilling a horizontal Iin the Kimmeridge is an odds on favourite anyway) from the Nutech analyses, based on 'pay' thickness of the KL and the fracture analysis through the shales and KLs.

Pboo,

Why did they put this in their March 2019 Final results then:

'Post well analysis concluded that the acidisation process, used to clean perforations and the near wellbore, likely released fine grained clay particles from the rocks, which then either blocked or significantly reduced the flow potential of the Kimmeridge's natural fractures.'

Nothing about the drilling mud. In fact I'm pretty sure that came from Vonk who was about to drill a well that would also test the Kimmeridge at Lidsey so needed to find a reason ffor failure at the great success that BB apparently was that was an operational error, not a problem with the reservoir.

But then in the Loxley planning application submitted in 2019 they stated that HH and BB Kimmeridge was sub commercial because of flow and pressure data.

A year after testing at BB was complete and following testing of HH-1 they cite two different problems with the Kimmeridge.

A simple question. Why not drill a new Kimmeridge horizontal well at HH as obviously drilling HH-1z is out of the question without any other production? Apart from it's not BB or HH (which perhaps in itself says a lot about the Kimmeridge at those sites) if testing the Kimmeridge at Loxley will answer questions about BB and HH why wouldn't drilling and trying out a different completion at HH be even better? or would failure at HH be a problem in itself whereas a failure at Loxley could still enable another try at HH to keep the dream going.

Wasred,

actions speak louder than words. Offshore rounds are held regularly, onshore rounds the last one closed 2015, the one before that 2008. Onshore has small sites producing little oil but requires relatively a lot of oversight. Mostly small, underfunded companies operating on a shoestring whose purpose is primarily to pay the BOD wages yet inferring that a licence from the 'government' and meetings with the OGA shows some sort of support for their endeavors, whereas with so little competition applying for a licence with virtually no money and a work programme that consists of desk studies can get you a licence.

For example this is an extract from the consultation document recently issued on the revised OGA Strategy:

'secure that the maximum value of economically recoverable petroleum is recovered from the strata beneath relevant UK waters; and in doing so'

They often (always?) seem to forget there's an onshore industry.

If SCC ratify the decision of the committee then UKOG will have to appeal through the inspectorate, almost a certain victory but it will take time.

As for the voting I understand they went off line for a while after the vote and returned to vote on the reasons. We don't know what happened during the off line period but perhaps they confirmed the vote. As this was the first virtual meeting any review of the process will probably be with that in mind. Assuming the councillors have confirmed their votes since then despite the chaotic 'live' event what process is available to overturn it?

The committee is under no obligation to accept the planners recommendation otherwise every application the planners recommend for acceptance wouldn't need to go to committee and their only purpose would be to overturn the professional planners recommendations to reject.

It's an opinion, you or I might not agree with it and it is almost certainly because they are elected councillors thinking of votes (I suspect most voters are not shareholders in UKOG), but they do have the power, regardless of the weight of evidence against the objections to continue to object.

So unless SCC come up with some excuse to refer it back to the committee, say if the voting was not confirmed as recorded, then the decision will stand and an appeal to the planning inspectorate the only recourse available to UKOG.

Wizard,

they are not proposing carbon capture. The 'green' thing is natural gas production and conversion of natural gas to hydrogen - unfortunately if you follow the link on UKOG's twitter feed you get a lovely picture of Saltend Chemicals Park near the city of Hull with cooling towers and a large industrial area. It would have been better to illlustrate what plant would be needed for reformulation of natural gas to hydrogen and what sort of volumes are needed to make it a commercial venture, or was it just waffle.
'Net Zero by 2050 is clearly the right choice. CCCs report recognises that natural gas plays a key part in attaining net zero, both as a transitional fuel, and, more importantly, as a feedstock for reformulation into clean burning hydrogen'

Thinking a bit more about stimulation acidising (not good for the Kimmeridge but probably OK for the Portland) might improve porosity / permeability in the near wellbore reservoir without enhancing the fractures if the pressure within the fracture resists ingress of the acid. This could improve the oil flow preferentially.

Ocelot,

Stimulation is used to increase flow into a well so unless they have a method that favours oil production over water that seems an odd choice of 'possibles'.

Sidetracking runs the same risk as the donor well except there may be merit in a vertical rather than horizontal well, HH-1 which is vertical is still presumably producing dry oil, so perhaps the chances of intercepting a fracture becomes less. Given that HH-1 has no issues these fractures may be self sealed with mineral deposition on their inner surfaces, only leaking where intercepted by drilling.

Water injection will have it's own issues as the well is presumably located in an optimal producing not injecting location, and fairly close to HH-1. Injection might preferentially enter the fracture system and result in early breakthrough to any producer.

But a tweeted video of the site had what appeared to be a horizontal surface pump in it - the only well site use listed on the Schlumberger's Web site was water injection. Details and links in my post on Wednesday,