Member Info for Penguins

Apologies but I see Eyesonthepriz12 (EOTP) – who I won’t usually respond to as most of his tweets are ridiculous - has tweeted yet again about my post of 2 days ago about the planning officers report which included this:- '.... that flow tests and pressure data from the Broadford Bridge and Horse Hill wells sites have been sub-commercial....'

This is what he objects to in my post:- 'I suppose either they are lying to SCC - or forgot to mention it in RNS to their investors.'

EOTP tweeted:- 'The planning document extract is ENTIRELY consistent with the RNS of 29th March 2018.'

But the RNS quoted is just about BB, ('Whilst the KL flow rates observed are likely sub-commercial..'), doesn't mention pressur - and UKOGe have never RNS’d that the Kimmeridge at HH is sub-commercial or there ia an issue with pressure.

So not ENTIRELY consistent even with the March 2018 RNS but I assume UKOG aren't lying to SCC so HH Kimmeridge must be sub-commercial – presumably based on the significant testing that was performed before the Dunsfold planning application was submitted

We'll see about a TR1, 2 trading days to declare from when they pass a threshold + then UKOG have to issue it - but if Canaccord wanted more shares I'd have thought they would have done a deal with WH Ireland and snapped up an extra 100,000,000 from the placing at 0.2p - has everyone forgotten there were 177,935,544 shares of the placing not picked up by Canaccord.

Also if UKOG had placed £75,000 less shares at 0.2p then there would be over 800,000 less shares issued if they hadn't given the cash to YA. Not a lot in the great scheme of things (0.01%) but not exactly well thought out by a company already drowning in shares.

£75,000 divided by 0.2p = 37,500,000
£75,000 divided by 0.20473p (the YA conversion price) = 36,633,615

Pboo,

So how many tankers have been seen since last Friday? Is there any indication that UKOG are averaging significantly more than 300bopd - which would be more than 10 tankers in a week.

According to the various reports so far including today's seen but not video'd or photographed:-

May 11, 13, 14 - 2 each day = 6
Maybe 4 today

So in 7 days (last Saturday to Friday inclusive) 10 tankers seen if there are 2 this afternoon.

None reported Saturday 8 May, Monday 10 May, Wednesday 12 May that I could see on twitter.

Of course there are the unseen tankers which could be any number you want it to be as we don't know if anyone is there at the appropriate time but don't see any oil tankers.

And R or pboo, no I'm not going to waste my life hanging around outside HH counting tankers or trying to see what's going on, if you think it gives you a trading edge fine, good luck on that one.

I wonder if UKOG will tweet the 500th tanker (about 107,500bbls) or less than 7,500bbls since 28 April (when production was 'over 100,000bbls). For an average production of 2 tankers a day since 28 April needs to be today.

Using cash raised through placings to pay off part of a CLN is a positive gesture only if they don't need to raise again at a lower price and issue more shares for £75,000 than they would now. It's not clear whether there would be a penalty for electing to pay cash rather than shares, the agreement has a 10% charge for early repayment.

Over 1.2 billion shares have now been issued since the authorisation to issue 3 billion shares was granted 3 months ago at the GM.

MJFM...

Shares are reported as a buy, sell or unknown relative to the mid price. If all trades are above the mid price they are all reported as buys whether or not they are buys or not.

If you want to understand whether a trade is more likely to be a buy or sell you need to look at the trades taking place around the same time.

Not understanding this leads to posts (but probably from those that are well aware of this deception) saying stuff like 'all buys but the SP has gone down.'

The market at the moment is skewed because someone is prepared to cover millions of buys by selling at a lower price enabling the MMs to make their margin regardless of any pi sales. Probably why the spread is set to give the impression everyone is buying.

The problem is that eventually the supply of those buying at, for example, 0.22p dries up and the ask is dropped to encourage more buys. At the moment we don't know which of the many significant holders might be selling holding (or even buying!) or what their (current) bottom price might be. TR1 reporting hasn't been exactly Tellurian's strong point, YA convert in batches below reporting level and seem to forward sell despite the prohibition and Canaccord are the new faces and we won't know their intentions until, or if a TR1 appears with either an increase or decrease in their holding - though the sudden appearance yesterday of 2 x 50,000,000 share trades at the lowest price of any trade over £100 that day, (or for several days) suggests they were sells and were in a different league to other sellers with volume and market restrictions.

Really,

The MM's only took in 14,586 shares at less than 0.215p today (ie Sells) and they would have made a profit of about 35p on the difference selling them at 0.215p

If they sold (ie a Buy) the remaining 99,985,414 at 0.215p they would be losing a lot of money and they aren't a charity.

But we will see, 100,000,000 is more than 1% of the company.

Roganjt,

How's yesterday's list coming along, did even No 1 happen?

Oilybloke:

'likely' much the same as 'significant' - ie all depends how likely. They made that statement before any HH-2z testing (not clean-up).

Ironhide,

When have I ('all the time') recently been speculating about long term stable rates from the Portland, not what the current test and production might be producing based on the latest figures.

Need quite a few examples for an all the time accusation to be accurate.

My main comments are about the vagueness of UKOG guidance, significantly being a new favourite descriptive, or I say I have no idea, though I do post about other posters predictions of testing that swing between high numbers before the test (1000bopd anyone?) and when they don't materialise they suddenly remember it's a test, or being held back for some reason UKOG has failed to mention.

Sting,

The only consistent thing about figures that UKOG give out is their inconsistency.

Projecting long term stable rates when all you are told is a mixture of short term rates or averages over undefined periods with no indication of the objective of each test is extremely subjective as can be seen by the variety of predictions.

I've given up as following the drilling of HH-2/2z the change in understanding of the Portland reservoir Indicates the previous model was wrong and any figures given out before then likely to be wrong, and UKOG haven't provided any updates to predicted flow rates or connected oil.

The only flow figures given out for HH-2z post solving the water problem are unlikely to be representative of long term rates with significant volumes of kill fluid, which by definition exerts higher pressure on the reservoir, being pumped out.

Even the latest figures from the Portland are vague and contradictory. Over 300bopd flow (not production) from the start of production, which was mentioned as begun in the 31/3 RNS. Then 'about' 96,000bbls aggregate production on 31/3 and 'over' 100,000bbls on 28/4 giving an average from the site of over/about 143bopd from 31/3 to 28/4, nowhere near 300bopd.

Guessing numbers is no substitute for UKOG being more open about what is happening at HH and releasing information that is clear and is fully explained.

Ocelot,

You are still only quoting the Operating loss which adds a net £606,000 financing costs to the £4.788 loss you previously quoted.

But you are ignoring the cost of running the subsidiaries, which in the 2018/19 year had an offset of the oil revenue..

Here's a simple sum. At the beginning of the period (end September 2018) they had £12.427mm cash and cash equivalents.

At the end of the latest accounts period (end September 2019) they had £6.892mm - so £5.535mm less.

But they raised £9mm cash from a placing (£3.5mm) and YA/Riverfort (£5.5mm) so they spent £14.535mm.

They also received £2.411mm for oil sales, so total expenditure was £16.946mm.

However £5mm of that expenditure was for the purchase of Tellurian's 35% of HH licences, an extraordinary item and some of the money raised was specifically for that.

So total expenditure excluding the Tellurian transaction was £11.946mm. This in a year when drilling HH-2z had only just begun so the main expenditures were the testing, preparing for drilling, salaries, external consultancy and consultancy costs of preparing and submitting planning applications.

So if they failed to make cost savings and continued to spend at that level and did not raise any more cash by any method then to break even the group would need HH oil revenue of nearly £12mm (though there wouldn't be the expenses of cash raising) - not £4.788mm, or £5.394mm.

They have already raised £3.125mm 7 months into this financial year but have had expenditure of drilling HH-2 & HH-2z plus the continued testing of HH-1, the remedial costs for HH-2z, and it's subsequent clean-up and testing.

UKOG has said they are making cost savings so the 2018/19 expenditure figures are hopefully wildly more than they are currently.

But you are being selective by only including the losses of the operating activities when there are substantial investing activities, and these expenditures were probably mostly incurred in the testing at HH.

Ocelot,

Yes 'operating' loss which is carried forward to the Consolidated Statement of Cashflow.

But you are ignoring the 'investing activities' expenditures which are the costs of running the subsidiary companies. This was an additional £5.536 gross (Expenditures on £3.125mm exploration & evaluation assets had £2.411mm offset by test oil sales).

Unless you think that somehow UKOG didn't (or won't continue to) fund those activities as well.

This was your response (eventually) when I pointed this out before (19 April):- 'Penguins, Fair point, have omitted to allow for the (at present) "investing" costs corresponding to the revenues.'

Yes, they can cut costs but the total losses were over £10mm.

Ocelot,

28th April there was a workover of HH-1 with 2 cranes on site. Tweets saying the pump was removed from HH-1 and that a wireline unit was operating, and then the pump replaced.

So not sure that any announcement today will make any difference, more whether UKOG want to do it.

Wizard,

you post about all the work needed to bring the site into the production that includes 6 horizontal wells and an injector as if the money spent so far covers it..

But only one horizontal well has been drilled, and the 'development' site in the planning permission still has to be constructed. Where's the money for that and the Dunsfold and IOW drilling coming from + getting their planning permissions passed - there will probably be conditions that have to be dealt with like at HH. that will take time / money.

As for the posters saying production/testing will be ramped up - I haven't seen any statement from the company saying that the production/testing is being held back - just because the flow quoted by UKOG isn't up to expectations doesn't mean that they aren't flowing HH-1 and HH-2z at stable, long term rates that will continue. The only change specifically mentioned is the dual completion of HH-1 which won't be for a while requiring major downhole and surface equipment changes.

As for UKOG's profit - that's a very different calculation from just taking OP and subtracting HH OPEX.

Wizard,

Do you have any investments in 'funds'.

You buy units in a fund, not specific individual shares in a fund. It's a 'pooled' investment and a fund manager decides based on certain criteria (risk, geographic area, asset type etc.) which shares to buy or sell to generate returns.

So if you sold your units in a fund and it was a significant amount and there was insufficient cash in the fund the fund manager would decide which shares in the fund to sell to raise cash, it wouldn't be a few quids worth - and it would be unusual for this to happen anyway.

If these shares have been bought by the wealth management part of Canaccord I suspect their clients deal in larger amounts than most pi in UKOG, and would be trades of many millions at the current price.

Tymers,

no one else has a licence on the IOW (for some reason or other) so not likely anyone will be drilling apart from UKOG (one day) and whilst the 6% (that no one takes off the revenue) will be gratefully received by SCC it won't make a big dent in their annual budget approaching £1 billion - and some, maybe a lot of it, goes to the locality.

'iow well it's the test ground for most things and expect if we dont get drilling someone else will shortly'

what is that meant to mean anyway -test ground for most things - they're redrilling a structure that failed to flow from the Portland in one well and has been drilled twice already. They're hoping the failure was a mechanical one not a problem with the reservoir.

Do you know anything about the company you are invested in apart from that there are tankers leaving the HH site and the Brent price which has only gone up depending on the time scale you use.

TYmers are you confusing licence (granted by OGA) with planning permission granted by SCC.

Planning permission is for 20 years production so the clock might have started recently, and PEDL 246 has an anticipated expiry of 30/6/2039.

Of course UKOG can apply for both to be extended but perhaps you could explain why when IOW is underway rather than when they would have a better idea it might be needed, perhaps during 2038?

Ibug,

I disagree. They don't say production is 300+bopd. They say flow. They then say from production start. Unfortunately 'from' could mean 'since the' leaving uncertainty as to what UKOG mean.

My view is they mean since the start of production (ie when they started producing HH-1 Portland) the average flow from both was 300+bopd, but we don't know when they started production, what was producing when etc etc..

The results RNS said both HH-1 production and HH-2z ewt were underway then (31 March) so I suppose another question is how all these numbers fit together. If 300+bopd was produced just from HH-1 then add HH-2z at an unknown rate but hopefully at least 100bopd then that's 11,200bbls which would stretch UKOG's over 100,000 bbls to about 107,000bbls.

To me it's as clear as mud and the statements and numbers just don't add up.

Sting

As for the Kimmeridge perhaps the figures you so like point to the problem. They are initial flows, and UKOG do like publishing initial flows after shut-ins and then lapse into averages or volumes produced but no indication of the number of days flowing nor the final rate, and even that could be boosted by slowing and then increasing flow (yes I'm getting that suspicious).

Actions speak louder than words and getting an FDP for the Portland in HH-1 first and switching from their 'sim-ops' plan of continually producing from the Kimmeridge in HH-1) whilst drilling and testing HH-2z (with such fabulous initial flow rates promising a wonderful future with no decline) speaks more to me of what the Kimmeridge is likely to be capable of in stable flow than rates over a few hours. There are plenty of other indicators that the Kimmeridge isn't the regional nor Horse Hill bonanza originally expected. These words from Neil Ritson at Solo seem to have been prophetic:-

'Now these are fractured reservoirs and they will have been offloading the oil from the fractures. What we are going back in this year to establish is if you leave them open for a period of time what is the sustainable rate, which you would expect to be down in the 100 to 200 barrels per day range if it's going to be commercial.'

Anyway if you're happy with what UKOG have RNS'd about the Kimmeridge then it's worked hasn't it.

Mirasol,

after writing my last post it occurred to me that they can't put HH-1 Kimmeridge into production without a FDP addenda for HH-1 Kimmeridge (whether they would get approval for continuing the ewt is debatable but then it would just offset the ewt costs).

So would be treated the same as Portland production - income

Mirasol,

I'm not an accountant but I inferred from this that the income would be a separate item in the accounts so would appear as income to UKOG; this is what UKOG think about production income rather than ewt revenues (28/1/20 RNS):-

'Production will also enable oil sales to be booked directly as income, rather than simply netting off the revenues against EWT costs.'

Note that the FDP only covers HH-1 Portland production (Final Results RNS) : 'The FDP covers the HH-1 well and Portland reservoir unit. Further Horse Hill field development phases will be submitted to OGA via FDP addenda, initially the HH-1 Kimmeridge reservoir unit and HH-2z.'

So until Kimmeridge production (and HH-2z ewt) is covered by FDP they won't be able to book it as separate income.

Sting,

Maybe like every other 'low' after a drop gamblers / investors believe this is the real low. It may be, but it may not.

YA must be getting close to getting a 5 day VWAP that's low enough to risk another £75,000 (or more) - they could wait and if an encouraging RNS emerged still get their low price - or will they continue to convert without waiting as they'll want their money back while pi are still buying in case a disappointing RNS comes out.

My view - the last drop was at least as much because of the technical information in the 28 April RNS, as the fund raise -though the price was an insult as after 2pm the lowest trade prices (sells) on 24 April was 0.291p so actually a 30% discount to real sells, not the 20% from the artificial 0.25p bid price.

I was tempted to average down at 0.25p but something is just not right - under £2000 would have got my SIPP average to less than 1p (mathematicians should be able to work out approximately what I've got in my SIPP and my current average - though I have made profits before) my ISA is already under 1p - I still hope that they are holding back flows but there's a need to produce a reasonable volume of oil in a stable rate ewt to get the data required, maybe 100bopd is enough. They also keep messing around with HH-1 - working over HH-1 last week was a demonstration a reasonable amount of work can be performed under lock down - what's that about? Optimising? just keeping it flowing?

BTW they are planning (and I'll be first to point out things don't often go to plan with UKOG) to install ESP (downhole) pumps for the dual completion and if they just swap to Kimmeridge they can't book HH-1 oilo revenue to UKOG - so I think you should be pretty certain the 300+bopd flow (interesting they didn't use the word 'production') is from the Portland, which well it's from depends on your interpretation of the RNS.

Anyway been ordered out to the garden to dig.

Laters (awful word)

Ocelot,

I would hope that UKOG did foresee the possibility of fractures filled with water acting as conduits even if they didn't pass on the possibility to shareholders. In the RNS following the 2016 testing was this in SS's 'comments':-
'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.'

Given they thought there were fractures the possibility of water filled fractures exists. But predicting where they might be is a different matter. It could be that they had spotted the water filled fractures prior to flowing the well and hoped they would not be an issue but when they saw 'evidence of formation water ingress' (possibly a pressure surge) they shut the well in and proceeded with the rectification.

Obviously the pandemic couldn't have been predicted but if, as posters like sting keep telling us, good news is around the corner why aren't UKOG telling us what is happening now, saying why 300+bopd average, which wells are flowing what (and if that is just HH-1 what HH-2z is doing), where the 100,000+bbls aggregate production is from and why these numbers will improve as these are things that UKOG has control over.

R,

I'm still going with the figures in RNS and assuming that UKOG aren't making 100,000bbls+ doesn't mean 'over 104.000' (96,000 + 38 tankers or 8170bbls = 104170bbls).

As for your:- 'I honestly believe you have under estimated for whatever reasons you believe in' I have taken the UKOG figures as reasonable and close statements of flow - you have photographic proof and video of 37 tankers from the same period and believe there were 38 so something doesn't add up I .

But what does this sentence mean in your post:- 'So to get to my magic number I am missing 16/17 oil tankers, not a lot considering we are only covering the site until 10.45 ish and have not had coverage at the site for 4 working days.' Are you now saying your actual count based on video and photographic evidence is about 20 tankers or you think there were about 54 tankers or over 11,000bbls produced?

I don't think anyone is likely to be absolutely right but the fact that different posters (and tweeters) are calculating different things from the same RNS demonstrates that the wording is vague. Why would UKOG do that - my view is that it's to disguise what's happening - and the question would be why do that the same day UKOG want to get away a fund raising?

I had hoped following the 9th March RNS where the range of flow rates from HH-2z were given that finally UKOG would publish more detailed results - they seem to have returned to their old ways, or perhaps even worse.