Member Info for Penguins

Ocelot

pointing out UKOG has managed to spend nearly all of £59 million + any oil income drilling and testing 3 wells in nearly 6 years is great because when they make a profit they can offset it against tax is not a reason to invest.

It's now clear that the commerciality of the venture seems to depend on selling shares not producing oil.

Sting,

Whilst you don't see 'compartmentalisation' it seems UKOG were interested enough to perform an interference test to check out why the section of reservoir that HH-2z was in was at 'near virgin' pressure:-
'"interference" testing campaign undertaken to assess the degree of communication between Horse Hill-1 ("HH-1") and the new HH-2z horizontal,'

and the analysis lead to them determining 'that both HH-1 and HH-2z can be produced from the Portland at the same time, without any detrimental effect to the reservoir's overall performance' presumably whatever the interference test showed it enabled the production change from Kimmeridge to Portland - which wasn't the original plan.

The fact that the 'lions share' of production is from a restricted and variable quality zone means that sub seismic faulting or even depositional features could interrupt connectivity across the field, and managing to drill either side of whatever interruption exists is either a chance in a million or a sign of a more extensive system of fauting or other means of separation.

Near virgin does suggest some connectivity but that might be tortuous.

To return to the 'more than 300bopd' I still can't think of a good reason why UKOG would release a figure for only the flow from HH-1 when they stated the HH-2z ewt was continuing. This coupled with the approximate 4000bbls produced in 28 days to 28 April (ie not 28 days at over300bopd, about 13 days) when HH-1 production had already begun by 31 March according to that RNS.

Apologies,

I just thought you'd made a mistake - you're saying the 300bopd is from HH-2z only - just seen it in your previous post as well.

That's a new one.

Sting,

Whilst I understand that you think that the 300bopd 'flow' is only from HH-1 I don't.

However if you read my reasoning it's solely based on what UKOG have asked for in terms of tanker export from the site when it's been rearranged which was 3 a day, 18 a week, and assuming it was a maximum allowing some headroom so based on 15 tankers a week. See:- SCC Ref 2020/0018

How that squares with all the temporary flow rates you (short period averages included) and others quote I don't know, maybe they know something you and I don't - eg all the data, not just what they have published. I agree it is disappointing but based on something other than UKOG 'propaganda', poor as it is.

Ibug,

SCC Ref 2020/0018

Submitted 31 Jan 2020

RNS 28 Jan:- 'Plans to install a dual completion to enable HH-1 to produce from both the Portland and Kimmeridge oil pools are being formulated.'

Also RNS 23 Dec:- 'a short HH-1 intervention is also planned to further optimise both Kimmeridge and Portland test production from the vertical wellbore.'

This planning application appears to cover the interim period with regard to storage and export of crude until the site is extended and the 'full' development site is built.

It is still to be determioned by delegated powers - but to me indicates what they intend for the site for the time being - or why else submit it.

Ibug,

They are only planning to have 2 separators on site in the 2 well producing set up (according to the plan in 'The storage of crude oil in association with planning permission for retention of the wellsite and production of hydrocarbons.') and one of these will be dedicated to HH-2z, assuming it's done before the ewt ends, and separators need to be before metering for oil/gas.

As they will be pumping not flowing reservoir pressure is not an issue as they will presumably flow line to surface before mixing the Kimmeridge and Portland oil, the API is different but unless tanks and tankers are dedicated to each reservoir they're going to be exported mixed anyway.

A complication is operational (FDP'd oil) vs investment (test) oil so (relevant for the accounts) unless they are going to FDP the Kimmeridge first it will be an approximation for HH-1.

Maybe they'll add a separator, if I were UKOG I would like to know what is flowing from each reservoir. Alternatively they could alternate the flow allowing each reservoir to 'recover'.

HH1AN2,

it's Sandersons actions that influence the SP but he doesn't decide what the SP is or will be. The SP is decided in the market.

But If as you say he would prefer a successful company have you come to the conclusion it isn't?

I won't repeat my earlier post but the simple response to your post is if these are truly Sanderson's aims - and I would expect them to be - why doesn't UKOG publish flow figures or any information to encourage buying of shares. As this has to be factual and true is the reason they haven't because they are worried that they won't match expectations?

Ocelot

As essentially the SP has been dropping for 18+ months it seems rampers also prefer to ramp against a dropping share share price, giving them the opportunity to constantly claim the SP is about to rise from the latest bargain low.

R,

You have the opportunity to counter all the negative views with your positive opinion on flow rates and gatecrash what you call a swampies poll of flow rates and you duck the chance.

I may be remembering wrong but I think you've posted 500bopd from HH-1 Kimmeridge and Portland and currently 100 from HH-2z ewt, any view on long term stable production rates?

Apologies in advance if I got that wrong.

is a RNS that clearly sets out:-

1) what long term flow in numbers is expected from HH-1 Portland - as UKOG have FDP approval they have this number but seem shy to tell their investors.

2) what long term flow is expected from HH-1 Kimmeridge also in numbers - whilst still to request FDP approval from the OGA they have tested the well for a long time and as other posters pointed out produced a lot of oil from the Kimmeridge - they will have a pretty good idea of what it will be - a range would do.

3) A proper indication of expected flow rates from HH-2z which should be apparent - even what current rates are with any provisos would be nice - and if it isn't being ewt'd as some believe, despite the RNS stating it had started, and the indications previously that it would be a 90 day stable flow ewt, have the cajones to say why it's not flowing. Anything but 'significantly more' or 'greater' than an unspecified number.

4) When they will drill further wells at HH and how will they be financed (RBL, CLN, placings, 'profit from oil sales'), and if RBL confirm when a CPR will be commissioned. End of June will be half year reporting to end March - though no production from HH just oil sales but should give a more up to date view of the finances.

Basically give investors the information they need to start to assess the value of the company. He was certainly prepared to predict potential reserves and values 18 months ago, although not in an RNS - a lot has happened since.

But he certainly isn't a superhero oilman - continually failing to meet his own plan and 'fire fighting' rather than being prepared for the inevitable problems along the way, silence or vague RNS the preferred communication channel. To praise him for essentially 'doing his job' managing others to solve his problems is undeserved. The test of how successful a company is, and thus it's BOD, is it's market cap. Whilst £300+ million was not a fair starting point is less than £20million right - the problem is apart from those that think nothing has changed (while everything seems to have changed) there is no way currently to place a value on UKOG except the 'market's' valuation.

If instead the next RNS is more talk of other opportunities, IOW, Dunsfold - even A24, and waffle about HH rather than detail will it be tin hat time?

It's predictable that anything happening on site and anything seen is interpreted as a positive, one day hopefully it will be. Last time a crane was seen they pulled the pump off HH-1 and replaced it.......but maybe this time.....

A few days ago a large lorry and trailer both with curtain sides so the load couldn't be seen was spotted leaving the site.

WealdOilers (Pboo) on twitter yesterday:- 'I wonder if the 2 new ESP's to go in the Portland and Kimmeridge HH, were on that lorry the other day'

I wonder.

But the name on the side of the lorry was J&G Environmental. Perhaps they've taken up the specialised shipment of oil site equipment, or perhaps they are shipping something to do with what they do best:- recycling waste.

Although the company specialises in print waste one specialisation is plastic drum recycling.

Apart from that Roganjt posted weeks ago there was loads of kit lying around on site waiting for the HH-1 intervention ('all the HH1 production kit is sitting by the fence').

Mirasol,

Production from HH.

Based only on UKOGs planning permission application ( 'The storage of crude oil in association with planning permission for retention of the wellsite and production of hydrocarbons.') which requested permission for 3 tankers a day leaving the site until the full site is built. Assuming that's a maximum over 6 days I'll go for average production of 450bopd from dual completion of HH and HH-2z ewt.

Wasred,

I think you misunderstand. This sentence in my last post:-

'Enter a whole lot of ramping with predictions of £1 parties etc and I was the fool that didn't understand because I had read what HHDL expected (and posted it) from the Kimmeridge test at HH (Close to what happened at Broadford Bridge)'.

is not because I was fooled but because I had posted excerpts from the Environmental Method Statement for HH-1 that said the well might require swabbing just to get a sample of Kimmeridge oil - the main aim of that Kimmeridge testing.

So not crying or blaming anyone else for my investment decisions in UKOG. If you read my posts I regard it as a risky gamble and have less reason to whine about being deceived as I frequently point out my opinion of the shortcomings in RNS.

The revenue is from Horndean but there were costs of over £90,000 to get that so net was about £10,000 per month. In total operating losses were over £4.5mm net

Oil sales from HH were accounted under investments and were over £2mm but all the costs of running the subsidiaries including HHDL were over £5mm excluding the investment of purchasing additional equity in HH. If you want detail look at the final results not a rubbish article promoting paid for services.

Wasred you forget Wizard (134), Ocelot (270) and Tymers (254) but these are just UKOG posts.

Wizard,

Problem is that until decent production kicks in you pay most / all of the costs, and if the well fails no benefits,

We are still waiting for reliable figures for HH, as for Dunsfold and IOW, gulp, more high equities (Dunsfold 100%) with risk.

Ocelot,

that's what the agreement says.

But here's one of the more obvious examples:-

16 September RNS:- Conversion of £600,000 for 60,926,076 shares (incidentally @ 0.985p)

BUY(?) on 11 September at 16:12:41 for 1.275p of 35,926,076 (Planning Permission day - nearly 300,000,000 shares traded and the price spiked a bit and lots of buys above this price)

A rather big coincidence.

I've been following YA sales for years and most of the shares are sold before the conversion RNS is issued, but you are right it can't happen.

I think they have stopped making such obvious sells with the last 6 figures matching the conversion.

Mirasol,

we don't know what other agreements exist but if I were a minority shareholder I would be mightily p*****d off if the majority shareholder decided to extract cash from the company and not repay my debts at the same time. In the AIM readmission document there are extracts of the HHDL share purchase agreements which outlines how the debts are repaid 'all repayments are to be made on a pro rata basis between shareholders.' and whilst the other shareholders are not paying cash calls they are still owed money by HHDL, and it would be the same with dividend payments - all shareholders would be paid.

Maybe UKOG has rewritten the shareholders agreement to enable transfer of funds to the parent but not the other shareholders - but if HHDL needs to execute further work they'll need money in the company to do it, even though UKOG has to guarantee funds will be available to execute the FDP.

But it appears you agree that any repayments to the shareholders will be pro-rata and there won't be any cash going from HHDL to UKOG for a while - but I disagree he does have to hope that HHDL doesn't run out of funds and therefore needs more cash from UKOG which can only be supplied by raising cash from selling shares for the time being.

Ocelot,

on what basis are you claiming that YA haven't sold all of their previous conversion before today's conversion? It seems the 2 x 50,000,000 share sale 13 May wasn't Canaccord so YA may be the culprit.

…......…….not any more...………..

Troll.

those 'profits' they're going to be needed by HHDL - which is where they will be made and held - and without repaying debts in proportion to all the shareholders they can't send the money to UKOG. All that UKOG can do is retain some of the cash raised ostensibly for HH and hope that HHDL doesn't run out of cash buying all the kit rather than renting it and have to send more funds for workovers or other necessities..

If a workover of the horizontal section of HH-2z is required that's a CT Unit at the very least.

Paying cash didn't last long and then having to issue £75,000 in shares at less than 0.2p (38,580,247 shares) when the previous conversion was over 0.2p (£75,000 would have been 36,633,615) and paying cash which was raised at 0.2p (ie 37,500,000 shares issued for it) what is the finance director doing?

Argus,

31/03:- ‘Production has now commenced from the Portland oil pool via Horse Hill-1 (HH-1) along with continued test production from HH-2z.’

You seem to have missed the bit about HH-2z so I quote the full extract.

It's referred to as flow ('daily flow rates'), not production. 'Production start' is stating when this flow rate started, not where it was from.

The problem is there is no sign that the volume of oil leaving the site exceeds an average much over 300bopd yet 'HH-2z ewt is ongoing', and the ewt was a 90 day flow period following clean-up.

Here’s some extracts from RNS, what do you think?:-

12/11:- ‘The EWT, which will include the use of a British designed high-capacity/high-rate downhole electric pump or "ESP", is planned over a minimum 90-day flow period,’

27/11:- ‘Once full clean-up is achieved, the well will be flowed over a minimum 90-day flow period to assess its stable production performance’

23/12:- ‘Whilst HH-2z continued to clean-up prior to the current shut-in, returning oil, completion and drilling fluids to surface, evidence of formation water ingress was also recorded.’

09/03:- ‘Dry oil flow rates during the initial 48-hour "clean-up" period to date are encouraging, with metered daily rates averaging 223 barrels of oil per day ("bopd"). However, as is to be expected in the early clean-up stage of such a horizontal wellbore, both oil and associated gas rates have been very variable. Half hourly rates have thus ranged from a high of 778 bopd to a low of around 10 bopd during intermittent short periods of "slugging".’

31/03:- ‘Production has now commenced from the Portland oil pool via Horse Hill-1 (HH-1) along with continued test production from HH-2z.’
............and...........
‘The HH-2z well clean-up and EWT have been resumed following this successful intervention.’
......and...........
‘Around 96,000 bbl of oil had been produced’
............and...........
‘HH-1 in stable oil production, HH-2z EWT ongoing’

28/04:- ‘which has now produced over 100,000 barrels ("bbl") of dry oil’
..........and........
‘Consequently, with daily flow rates from production start at Horse Hill averaging over 300 barrels of dry oil per day ("bopd")’
……….and...…
'HH-2z EWT ongoing'

My view - no reason to suppose the HH-2z 90 day flow to assess its stable production performance is not underway. Why does ewt production appear so low - tanker count & 300bopd. about 4000bbls in 28 days - when HH-1 seems to also be in production with pump seen pumping sporadically. Many posters predicted 1000bopd from HH-2z ewt.

LSE337,

Not just SCC - I posted this on 29 April 2020:-

HH-2z meant to be drilled early 2019:- 'HH-2, which has SCC planning and Environment Agency consents, is planned to spud in early 2019'

and then ' ...by the drilling and production testing of two horizontal wells, HH-1z and HH-2, both planned to start in spring 2019'.

HH-1z not drilled at all, HH-2z started end September 2019.

IOW planning was going to be submitted in Summer 2018, they have only recently done so.

From 29th June 2018 RNS:-'PEDL331 Arreton oil discovery, UKOG 65%: ...........and a planning application is expected to be submitted this summer.'

Duhsfold/Loxley/Godley Bridge appraisal from 11/9/2018 RNS:- 'Drilling of the BB-1y sidetrack well is planned to directly follow the drilling of the new 2019 Kimmeridge exploratory and overlying Portland gas appraisal well in the basin-centre area of PEDL234, a planning application for which is expected to be submitted this Autumn. Submitted April 2019.

The HH Portland CPR was to be commissioned following the submission of the planning application for the Horse Hill Development site - which was submitted in December 2018 - I don't think they meant 20 months later and counting.

The forward plan for HH in the November 2018 Corporate Presentation would have seen the 'development' site (as per the PP) built already and drilling of HH-3 to HH-6 well underway.

If you realise SCC delays then UKOG ought to and get those planning applications submitted at least to their own schedule.

The County Council has had to reluctantly postpone this Thursday’s meeting of the Planning & Regulatory Committee. This will be the first remote meeting of this committee and officers feel that further time is required in order to ensure that all legal requirements are met. Specifically, the council needs to take steps to ensure that all background documents are accessible available online.

Northfork,

Why do posters keep celebrating a rise in the futures OP, in this case for July - and it hasn't gone up $3 since yesterday anyway - if you are quoting from oilprice.com then the price you see is last night's closing price and that was up $1.37 on Thursday's closing price, and up $1.53 from the previous Friday's closing price.

But UKOG sell on the spot market and current prices are not available. The EIA has a spot price for European Brent for 11 May of $25.53 when the closing futures price on oilprice.com was $29.63, and prior to that during April the spot price was less (sometimes a lot less) than the futures price. We certainly don't know what price UKOG get 'at the gates' of the storage facility but as they have to store and sell it there will be a discount.

Codi1,

Welcome, a new poster, and on a Saturday, hey ho.

I doubt Dunsfold planning will make much difference, wells cost money and converting the PP into actually drilling may take some time, especially as the committee will be keen to apply conditions that will delay full approval as they did for the HH development - to show voters they care.

I think investors would be keener to know how HH is going from UKOG rather than rejoicing in Dunsfold getting planning permission which is recommended for approval by the planners anyway.

Wizard.

yawn.

Thank for realising that I didn't say UKOG lied to investors or SCC.

But I assume that UKOG declaring the Portland commercial just after the first phase of Portland testing was what - a joke?

Declaring something is commercial is obviously not dependant on it being in production (eg UKOG and the Portland) as you would normally need to decide something is commercial to decide to develop it - so that would happen during or after testing.

The drilling of HH-2z would have had to be supported by an internal economic case which would make assumptions based on the HH-1 testing - it's a pity they didn't get a CPR produced that showed the 'robust' economic case and illustrated how commercial it was to investors. What has stopped UKOG getting a CPR done to enable RBL, the economic case to drill HH-2z was presumably compelling.

But you could decide to continue to produce a well where the well cost is already sunk even if the cost of drilling would make development uneconomic - maybe that's what commercially viable means?

and again you're making stuff up - constantly saying lack of pressure in the Kimmeridge? Examples please - make sure they are referencing the Kimmeridge...….....but why do UKOG mention pressure?

Wizard,

I also note that sentence has two further wells HH-1z and HH-2 scheduled in Q2 2019 - no HH-1z and HH-2 (just) in Q3.

and can you pass this on to your new mate - read what is written:-

I posted:- 'I suppose either they are lying to SCC - or forgot to mention it in RNS to their investors.'

So having pointed out that the RNS was not ENTIRELY consistent to the excerpt in the officers report and that I assume that UKOG didn't lie to SCC EOTP now tries another angle

'Point to the RNS where #UKOG have lied, or declared the HH1 Kimmeridge commercial.'

Well wizard seems to have found it for me, but actually what I said was 'forgot to mention it to investors' - not lied, and EOTP is still concentrating on the commercial bit - what about the pressure bit - I agree commercially viable isn't the same as being commercial - I pointed that out a while ago so UKOG passes the test of not lying to investors, though that isn't what I said.

My post 12/10/2019:- 'and to save wizard a post - I know about the statement about 'commercially viable' - not quite the same as sticking out an RNS saying the Kimmeridge is commercial'

Seems the reason my post count has gone up is dealing with tweets based on what posters think is written - not what is written.