Member Info for Penguins

Tymers,

You really have upped your game - though what game I'm not sure:-

'The UK government will support UK onshore oil every drop will be procured at a rate to ensure businesses are safe guarded and reduce import imo ukog will be just fine.'

So what is the government going to do - requisition the tankers at the gate (or at the end of Wytch Farm's pipeline) and drive it to the refineries - oh and pay less than the global price - or more?

I'm not sure how much oil is produced per day onshore UK but excluding Wytch Farm's approx. 13,500 I should imagine it struggles to be more than a few 1000 barrels. UK consumption may have dropped below 1.6 million barrels per day but what is needed 'on the street' is refined products, petrol, diesel, fuel oil etc anyway.

So onshore oil, in round figures, about 1% of daily consumption - I know every little helps but UKOG's share of the 1% at best might be about 2%. I don't think the UK will grind to a halt if UKOG stops producing for 10 days so you can stop worrying.

Wizard,

I very much doubt that UKOG have a £1mm held for future develooments. They said they had to raise £2mm in December partly to pay for the non-paying partners share of HH-2z and:-
'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.'

No mention of future drilling.

Tymers,

I'm sure UKOG would like break even costs of $14 a day but UKOG quote production cost of under $19 per barrel with long term contracts in place ie not yet - but a production cost per barrel will be production dependant as there will be fixed costs regardless of volume produced (ie per barrel will reduce with higher production), and other costs that may remain constant per barrel - so production cost quoted will be for an expectation of a specific production level - we've not been told what that would be for under $19.

Current break even for UKOG is an entirely different thing. Depends on how much it costs to run UKOG, its subsidiaries, all the planning work on the other sites and of course the ewt and production costs at HH. Break even would be all that divided by daily production.

Also I don't think UKOG has suffered a business interruption due to coronavirus - which is what the loans are for.

Pboo,

That's an interesting excerpt from the RNS. So the clean up was continuing throughout the week from Monday 9th.

So where were all the tankers from Monday to Saturday? Tuesday, Wednesday, Thursday one oil tanker reported each day plus one waste tanker on Wednesday. 3 tankers reported Monday 16th could be for 4+ days production as that could represent production from Thursday morning through to Monday afternoon when the last tanker left the site.

On Friday 13th (when no one was watching the site - roganjt's post 16/3 @ 12:18 'eyes took the day off' - so who knows how many oil tankers left the site) FOTH tweeted a picture at 11:14 am of the flare stack with a tweet stating the HH-1 pump was running.

So what is the flow rate from HH-2z based on the tanker sightings, how much flowed from HH-1 on Friday or other times when no one was watching?

So adding an unknown flow rate for HH2z based on one day's tanker sightings to an unknown flow rate for HH-1 Portland and then adding another unknown rate for HH-1 Kimmeridge is certainly meaningless,and possibly misleading.

There could be shut ins and the flow choked back - though presumably for technical reasons not because of the OP as any production of even a few thousand barrels now (which even at today's OP would be welcome revenue) shouldn't impact future production

It would be best to wait and see how much UKOG are prepared to put in an RNS. Silence has never been good. In the current situation it's disastrous.

Brilliant, why?

HHDL revenue is already in the consolidated accounts. It doesn't get counted twice just because it is owed to UKOG, though it can be transferred back tax free as a debt repayment I suppose when there is anything left over.

Loads owed, but it needs revenue greater than costs to even think about repaying loans which at the moment is very unlikely, and even if there was any extra I'd expect HHDL to retain any profit for a while yet for future costs for the major site rebuild (not the soon to happen rearrangement) and further wells. If there's any shortfall the flow of cash in the next few months will be from UKOG plc into HHDL and UKOG (137/246) Ltd

Roganjt,

no problem, but of course we can all come to our own 'count' of unseen tankers. The one that will matter will be when UKOG get back to mentioning it in their RNS

Mick2

Nothing magical about it. Production costs quoted for a well site vs break even cost of the company

Here's a clue - the cost of production of the well site when it is in full production shared across it's bopd vs costs of running a site not in full production, and testing a well, plus all the other costs running UKOG and it's subsidiaries shared across the company's bopd - so that's plus 15bopd from Horndean.

In the accounts that include testing at HH (end September 2018 to end March 2019) but not the set-up period the overall consolidated cash flow out was over £1mm per month. There were one-off items but the following three months saw cash out of about £1mm a month if SS's statement about less than £8mm left at end June is to be believed. I would be surprised if they have halved that with testing continuing, planning to submit and consultants fees, though you would hope they have been on a cost cutting drive.

660 bopd (3 tankers + Horndean) at $35 OP is about £560,000 per month - and at the moment the OP is bouncing around just over $30.

It may, or may not be that low for long, too many factors involved political and economic to predict even tomorrow's OP.

Roganjt,

the unseen, uncounted, tankers gambit....fine.

2 tankers so far, great, but I wouldn't get too excited.

The last reported tanker was Thursday morning. So 4 days clean up + has HH-1 been pumping, let's hope there have been shut ins on both wells? They will probably be draining the last drop of oil from the tanks to capitalise on today's high OP (you never know!) and in preparation for the site works.

The reality is that tankers have not been streaming out of the Horse Hill site since day 1 of HH-2z being flowed which many posters and tweeters assumed would be the case.

Expect posts 'explaining' that the wells are choked back or shut in, HH-2z is cleaning up - things that could have been anticipated when bold claims of instant high flow rates were made.

Wizard, as for production costs of $19 - firstly when? secondly what is more important is UKOGs break even cost which at the moment is a lot more than $19, or even $30 odd even at 2 or 3 tankers every day.

One last thought. Will the SCC planning meeting (25th March) for Dunsfold go ahead in the current panic?

pboo,

apologies reading your tweet it seemed that was what you were suggesting - ie the equipment on site was going to be used for production from the Kimmeridge now - obviously I misunderstood.

Your tweet in your guise as wealdoilers:-

'My opinion on Oil Seperators
Pic 1 original seperator still on site, replaced by pic 2 3 4 a much larger seperator to cope with anticipated increased flow from HH2.
HH1 Portland can be mixed with HH2 Portland and HH1 kimmeridge can use the smaller one. Job done.'

thanks for clearing that up.

The site will probably be re-arranged when HH-1 is in dual production. I guess SS wanted a period of certainty, re-jigging HH-1 may be simple but any downhole operation has risk.

pboo

apologies - reading your tweet it seemed you

List of all the equipment on site for oil production and testing as detailed on the site layout plan for production from HH-1 and HH-2z in SCC 2020/0018 submitted 31 January 2020, I've added the tank volumes detailed elsewhere in the application and shifted relevant items to highlight them:-

EQUIPMENT DETAILS:
40: BLOW DOWN VESSEL
41: VENT STACK (DOUBLE) WITH 3" & 4" VENTS
42: FLOW MANIFOLD
43: SEPARATOR 1 WITH BUND
44: HEATER 1 WITH BUND
45: KNOCK OUT POT
46: DATA AQUISITION
47: GENERATOR
48: COMPRESSOR
49: CHOKE
50: SAFETY SHUTDOWN (SSD)
51: PW OFFICE
52: PW WORKSHOP
53: GROUND FLARE
54: BUND (18m X 15m)
55: BUND (13m X 7m)
56: SEPARATOR 2
56A: SEPARATOR 2 OIL & WATER METERING
56B: SEPARATOR 2 GAS METERING
57: HEATER WITH BUND
57A: HEATER 2 CONTROL ROOM
58: GAUGE TANKS X 4 - each 27.9 cu metres (175bbls x 4 = 700bbls)
59: WATER TANK - 27.9 cu metres (175bbls)
60: PROCESS TANKS X 2 - each 69.95 cu metres (440bbls x 2 = 880bbls)
61: STABILISATION TANK - 55.64 cu metres (350bbls)
62: EXPORT PUMP & METERS X 2
63: UNICO VARIABLE SPEED DRIVE (VSD)
64: ELECTRICAL SUBMERSIBLE PUMP VARIABLE SPEED DRIVE (VSD)
65: DIESEL TANK (1,000ltr)
66: DIESEL TANK (1,000ltr)
67: DIESEL TANK (2,000ltr)
68: PROPANE STORAGE (12 X 47kg BOTTLES)

Compare the list of equipment UKOG think they need at HH for HH-1 and HH-2z and what FOTH thinks will be there, and why:-

'3 separators 3 heaters
HH1 Portland and kimmeridg. HH2z Portland.
Flow meters x 3'

We shall find out soon if the Kimmeridge is being flowed in HH-1 - UKOG think late spring, are FOTH & Weald Oilers (pboo) suggesting be will when the site rearrangement is completed end March/early April, at least we shall find out quite soon.

and the latest from FOTH -

'Hey Pingo Don't forget the gas! Gas to wire ££ from 2 Wells and 3 producing zones'

I didn't - see my post 16:59 yesterday:-

'look out for the generators that were long lead items - being bought with the £2mm placing - will the 'leccy board be in to connect them up - meant to be required before 'production'.'

Ohmetoe,

Friday's rise based on mid prices at close 0.375 (12th close) to 0.475 (13th close) = 26.7%
June 29th 2018 based on mid prices at close 1.675p (28th close) to 2.175p (29th Close) = 29.8%

Which was following the announcement of testing equipment being on site.

Erm,

Hilarious being lectured by a poster who has so consistently been wrong - connected oil to a well = recoverable reserves being one of your more memorable despite having UKOGs definition spelt out to you.

As for a mistake in investing in UKOG, I suspect that's more likely your issue, at least I have the cajones to still point out what's wrong rather than continually whine that the market doesn't understand that every RNS is good and the SP should be higher, and trying to tempt others to invest.

Better to understand what is behind movement in share price than continually thinking the market is wrong - and where have I been belly aching - what has happened has been more or less as I've commented - though perhaps a bit worse, but like everyone else I could justify that it's only because of coronavirus - that's not belly aching it's demonstrating an understanding of what's going on.

I hope (but don't necessarily expect) the Portland will flow well enough to support a significant rise in the SP, though from where it is now that possibly won't ease tha pain for a lot of holders. Until UKOG start testing properly and give up to date information the initial clean up flows offered little encouragement. The change over time in expectations for flow rates from a Portland horizontal in RNS was indeed worrying, hopefully it was because unlike posters here claiming flow rates at the upper limit of earlier UKOG RNS'd expectations UKOG were being more prudent.

Any comment about Kimmeridge production when they return to flowing end March/ early April. Last night you were saying it was probable the equipment on site was for dual completion of HH-1 - let's see if its hanging around the site until late spring - doesn't sound like something SS would do whilst keeping production costs down to $19 or less.

Your predilection for name calling rather than sensible argument gives an indication of your intelligence, you need to up your game, give examples rather than wild arm waving accusations.

Ohmetoe,

Fascinating that it's been more stable than most oil companies, this past week, it was still down Friday 6th closing price to Friday 13th closing price (0.575 to 0.475 = minus 17% despite Friday's rise) .

That may be so but what about the past month, year? Unless you bought on Thursday or over 5 years ago, you woulld have had to be lucky (or YA) to have sold at a profit on Friday's rise (and the closing mid price was actually 0.475p, not 0.5p as shown above). I'm sure YA were grateful for the RNS, will there be a Monday RNS will be another 'loan reduction' with a nice 10% discount.

Monday may also see an RNS with more details of the clean-up (though obviously impossible on Friday morning) but sightings of tankers full of oil seem to have been about one a day (I know - there are plenty not seen). After that there are planned to be 10 days where the site will be reorganised so expect lots of tweets about the site equipment and speculation as to what it's for - though I would recommend looking at the site storage planning document for the site during 'phase 1' HH-2z ewt and HH-1 production, would save a lot of hanging around the site.
.

This document does have 2 separators and 2 heaters, almost certainly because until being stored in the site tanks the streams from HH-1 Portland and HH-2z Portland need to be kept apart for metering of the volumes of oil and gas and, if present, water.

From the statement in the RNS on the return to production and testing in late March/early April the Kimmeridge will not be flowing, just Portland, what are your thoughts Wizard etc.

Please don't claim I've lied or been wrong about UKOG or have some 'agenda' - not agreeing that almost every RNS has in fact not been the good news claimed by many on this board appears to be the wider market view as evidenced by the SP. YA might not have helped but many claim a 'good' RNS will be enough to raise the SP regardless of YA.

Whilst reading and understanding an RNS is regarded as a crime on this board I shall continue commenting on them without being childish and name calling others that disagree - which is supposedly the style of intelligent discussion on this board - roll on Monday.

Wizard,

Bits of equipment delivered to a site that is about to be rearranged is more likely to be for that, not 'probably' for something happening in late spring.

as for not speculating what a bit of kit is for - I think it's probably not for the dual completion of HH-1. There that's my guess, but it's not compulsory to make guesses about equipment on site it's a choice you have made - though you haven't said what they are apart from 'for the dual completion of HH-1', was that what they were captioned by UKOG?

But you are still stating something at odds with the RNS - 'If they are flowed together at this stage or not.'

There is no 'if they are flowed together at this stage' - or have they lied as they won't be doing it until 'late spring via a conversion of the well to a dual completion' according to the RNS only this morning.

Wizard,

So you think the equipment for a dual completion of HH-1 is on site already, it won't be - you posted in case you have forgotten already:-

'The 2 new pieces of kit on site delivered yesterday are probably for the dual completion & production from HH1.'

Probably not.

What was the purpose of your post - to imply that the dual completion would be happening now and not late spring as UKOG have stated - why would you do that eh?

The purpose of my post was to point out that the dual completion was scheduled for late spring which you seemed to have forgotten to mention in your post - which made it extremely unlikely that the equipment was for HH-1 dual completion.

I realise scsiborg would prefer a misleading post

Wizard,

sometimes when I see posts on here I wonder if I'm the only poster that reads and remembers the content of RNS, it was only this morning UKOG stated:-

'Portland oil pool Production will commence via Horse Hill-1 ("HH-1"), with Kimmeridge Production planned to be added in late spring via a conversion of the well to a dual completion.'

Late Spring - not early spring.

Rupertsmum,

according to UKOG on Monday this week:-

HH-2z clean-up operations are planned to continue over the coming week, after which essential maintenance and a planned upgrade of well test and production facilities will occur. These operations, designed primarily to enable simultaneous production from HH-1 and HH-2z, will require both HH-1 and HH-2z to be shut-in for a period of up to ten days.

Depending on what UKOG define as the coming week there might be a tanker or two Monday and then a lot of lorries with stuff coming in and stuff coming out, expect lots of really interesting pictures of, well, lorries - look out for the generators that were long lead items - being bought with the £2mm placing - will the 'leccy board be in to connect them up - meant to be required before 'production'.

Thorpedo,

UKOG (137/246) Ltd is an equity holder in the licence (not a shareholder in HHDL) so will have to pay as they will have taken on all the obligations that Magellan/Tellurian had, penalties at JOA level are more punitive - but why would they not pay their 35% of costs? Of course up until the well becomes a production well I suppose they could have been carried for costs - but we were never told enough detail of the agreement to know whether being carried meant they did not get their share of oil. Might be why UKOG are keen to get it into production.

Thorpedo

So presumably they can book sales in 2 subsidiaries, 35% in UKOG (137/246) LTD and 65% in HHDL of which until the non contribution situation is sorted out UKOG have a 77.9% share of.

But UKOG (137/246) LTD has to pay cashcalls as a member of the JOA.

In the accounts the income from the HH-1 well will count as revenue and presumably they will have to assign a 'cost of sales' as they have previously for Horndean. The costs of the ewt presumably included in the - 'Expenditures on exploration & evaluation assets' and the ewt oil sales appearing as 'Receipts from Sales of Test Volumes' - though it will be end June this year before we see any figures in the half year accounts to 31 March 2020.

Bmdjf,

until there is a CPR with reserves for HH (not Contingent Resources or Prospective Resources or Oil in Place) the only reserves UKOG has are associated with their 10% share of Horndean - in the 2018 CPR these totalled 85,000bbls.

Trollhunter - let's see what tanks are on site after the 10 day re-arrangement

PCS,

Presume you didn't buy first thing this morning though - that would have been for mugs believing the rubbish on this board.

Not sure if you're right about 5 though.
1 of course is true,
2 I don't think the word is cannot, chose not to is probably a better way of putting it
3 I also said it was good news, but expected
4 not clear, they would need to submit more data than they have for full approval of HH-2z production
6 no idea, hope you're right do you mean maximum half hour rates added together, or what really matters sustained rates - but don't go quoting prudence or choked back if it isn't a sustained 1000bopd
7 don't care
8 hardly a leap, more a step in the right direction already signalled and expected (priced in?)
9 RBL after CPR, so May? Until then what - your 1000bopd really needed?

I'm off for a couple of months soon to a very different time zone so maybe the reverse of the saying of 'sell in May and go away'

Tollesbury stu,

and your understanding of the RNS is presumably that it isn't good news?

I suppose you aren't interested in what UKOG have told OGA about production rates expected from HH-1 or how the HH-2z clean-up is going, or when there will be a CPR planned with reserves for HH-1 so that RBL can be obtained,(apparentlymat 0.5%.

Well I am as only with this information can a full assessment of how good the current situation is, and it's all information that UKOG should have.

Good news, but as PCS would say 'expected', and the main difference seems to be to enable reserves for HH-1 to be booked (when they are CPR'd) and an an accounting difference with regard to how the revenue is treated.

Whilst estimated future production costs are estimated at $19 or less what will matter until other fields come on stream are the overall costs incurred by the company including ongoing testing costs at HH site and -site preparation and drilling costs elsewhere.

As has previously been stated initially the FDP will only be for HH-1 Portland, HH-2z added following the extended ewt.

Whilst UKOG was able to include information about the plan for dual completion of HH-1 in this RNS, there is no mention of progress with HH-2z clean-up which is continuing nor any comment about the performance (rather than accounting treatment) of HH-1 following what appeared to be multiple interventions or anticipated performance of HH1 that must surely be an element of the FDP.

Camperdown,

Perhaps they ignore stuff here and on twitter and actually read the RNS, and perhaps this planning document:-

31/01/20 Application Document including Application form redacted.

Which includes details of the site (probably following the 10 day re-jig), including a plan, with 2,100 bbls of storage - and that they expect to export the oil from HH-1 and HH-2z in 3 tankers a day.

Seems at odds with the 1000/1200/any other figure quoted as production rates in the upcoming HH-1 production and HH-2z ewt.

On other threads:-

Sting,

on what basis do you think that there is sufficient cash to drill another well and sidetrack costing - £5mm?

You need to look at why they had a placing for £2mm in December when UKOG could have reasonably expected to have been producing a lot more oil than they have in late Dec/Jan/Feb/Mar at $60, and not paying for the water fix.

Generally, but with reference to the above, I'm starting to worry if UKOG don't raise some cash very soon, let's hope Halliburton took some share instead of cash.

Companies can go bankrupt even when they are generating revenue if it isn't as much as their outgoings and no one will lend them cash to cover the shortfall.