Member Info for Penguins

Tkr,

Site storage capacity that UKOG are requesting permission for (SCC Ref 2020/0018) is just under 335 cubic metres, 285 tonnes, or about 2100bbls. This covers the current phase of work, and listed are 8 tanks.

The same document lists the number of tankers per day as 3 which seems appropriate as this would give about 3 days storage over a bank holiday weekend, Saturday afternoon to Tuesday morning.

There will be a further application associated with building the full production facilities:-

'For the avoidance of doubt, a further substances consent application would be submitted to authorise Phase 2 works prior to the installation of the new processing, storage and transportation facilities on land to the east of the existing well site.'

So it is clear that this application is for the current 'temporary' storage, prior to the installation of the planned 'new' facilities, and covers both HH-1 and HH-2z, as they are quite clear another application will cover these new facilities (not submitted yet) the 10 day shut down for essential maintenance and a planned upgrade of well test and production facilities is not the phase 2 works as mentioned in the application as they are designed primarily to enable simultaneous production from HH-1 and HH-2z.

It's obvious that this doesn't gel with predictions of 1000bopd 7 days a week - but maybe this represents a prudent, ewt level of production?

Profit: the 0.4p options are in limbo as they would have lapsed during a closed period. The board can, when the closed period ends, extend them (see RNS 16/04/18).

PCS,

Perhaps you didn't check your maths..

It was you that posted 500m shares for £1million:-

'2. £1 million due to Tellurian by end of March. That might be 500m shares.'

Which works out at 0.2p a share.

Perhaps I should have explained my comment better. We all make mistakes - but please check before accusing me of making up a figure.

Are you sure it was £500K.......

Until the wells are producing enough revenue for UKOG to pay the bills then by your definition they are imbibing death spiral financing. Hopefully soon it will no longer be the case.

PCS

You know I wouldn't be able to resist especially as you are trying to shut down debate by characterising anyone who doesn't agree with your opinions as a troll.

But all you have listed is a series of opinions about events that may, or may not, happen or happen when you 'expect' and claim anyone that points out these things you have pointed out is a troll.

Let's debate your expectations.

Your flow rates are just guesses, you may be right - I'll wait for the CPR, there's certainly not enough data to come up with anything but a guess

The financing has caused a drop in the SP - that seems to be an excuse used by 'positive' posters. Death spiral - well there's still £2.7million of YA CLNs and a good chance more (in addition to the Tellurian £1mm) might be needed. It's interesting you say they will all be gone by August - you posted that they would all be gone by end September on 11 September (a classic list see below) - and I'm pretty sure you meant September 2019. You're right that Tellurian aren't like YA - but to assume a white knight ii will appear is very hopeful. If one does appear as you say they would expect a discount - on your figures for a 0.5p vwap that would be 0.4p, and Tellurian should be able to sell loads at that price anyway, but 500million shares would be at 0.2p!

UKOG has grown it's acreage, asset is debateable with regard to any acreage outside HH - asset implies they could be monetise now which is unlikely as there are outstanding well obligations - and the value of additional HH equity is still to be confirmed, though I'd hope that 35% is worth a lot more than £12mm.

UKOG should have sites available to drill outside of HH in 2020, but will there be the cash to drill extra wells away from HH in 2020, an RBL, assuming they get one, might have restrictions. Dunsfold is targeting an extension of Godley Bridge - an undeveloped Portland gas prospect which if successful will be difficult to monetise, and Arreton planning has been about to be put in since early 2019 (at least) - and what's happened to A24 planning, another anticipated application yet to appear.

As for SS, to just say so what is just your opinion, not mine, or many others.

as you say blah blah blah

PCS list from 11 Sept 2019:-

'Next up
4. Dunsfold application on 16th Oct, nailed on, thank you SCC
5. ALBA buy out, for peanuts
6. DOR buy out, for even fewer peanuts
7. HH2z to flow 1000 bopd
8. HH1 to continue to flow Kim at 313 bopd
9. Cash from oil sales, 1300 * £50 * 85.635% = £390K per week, and that's just from HH1 and HH2z
10. IoW planning application to be submitted by Xmas
11. All YA and Riverfort selling to be done by end of Sept.'

Troll,

A pump will move the same volume regardless of whether it's water or oil.

But as gas is also mentioned this will be coming out of solution in the well - possibly because they have not choked back the flow enough to maintain pressure - and as it rises up the production tubing it will expand and actually push the fluid ahead of it, increasing the flow rate,

Perhaps why the maximum half hour rate is considerably higher than the average.

Hopefully as clean up progresses we will get better indications of likely flow rates.

This RNS was possibly the most open that UKOG have released in regard to flow rates and illustrates what can be hidden by just quoting short term maximums.

Perhaps knowing a CPR will be produced in the not too distant future (hopefully) based primarily on the HH-2z well UKOG are aware any information about flows from HH-2z in RNS will be compared to what the CPR has in it about the well.

A tanker, that's a surprise, after all even UKOG said they were producing an average of 223 bopd up to yesterday morning during the 48 hour clean-up.

PCS,

There is a difference between permission to do something for 20 years and actually doing it, and doing it to an extent that is significant.

They may well be producing at HH for 20+ years, but if production is down to a tanker a week will it be significant, or even economic which depends on OP and site costs etc.?

If the OP remains low, judging by the net in the accounts, Horndean production won't be generating a profit at about 20 tankers month, about 150bopd (UKOG's interest 10% of that). At what point will HH production become either irrelevant or uneconomic? Of course I forgot every other appraisal or exploration well will be successful and there will be field after field coming on stream.

There is an illustration of this in the admittedly out of date 2018 CPR. This had Portland production, even in the upside case, of less than 100bopd before year 10 with a start of 500bopd - it was 11 bopd in year 20.

Whilst you ignore the effects of decline, eg. 3500bopd for 365 days in your calculations of 'value', I'm afraid it can be very real, in the meantime, for the current understanding we will just have to speculate until we get what will be a very interesting CPR with at least properly produced production forecasts.

HH1AN2,

Maybe the SP will rise with buys more than sells but unfortunately the big bad seller tends to capitalize on any rise later in the day, and the MMs are well aware they can get their margin as long as they can shift those shares - even argus pointed out that YA played a blinder yesterday getting a price way above mid for their final sale of the last CLN on a day with a drop in SP. Even if YA leave it a day or two Tellurian need to pay their salaries, and reading their latest news things are getting pretty tight there.

Break even in the case of Saudi is the price they need for their economy, presume $42 for Russia is the same.

Lift costs are considerably less, I've seen Saudi marginal cost estimated at $3 to $10 per barrel - which is effectively what the $20 per barrel UKOG quote - ie no exploration, well drilling etc. - just site costs and maybe site specific company overheads.

If you consider that HH has to support (apart from a trickle from Horndean) all of UKOGs ventures at the moment, including 100% of testing, their break even price would be considerably more than $20. My estimate for 800bopd whilst testing is about £42 ($55) a barrel; 1000bopd = £33 ($43) a barrel - a fairer comparison to Saudi's $80 for today rather than when the site is fully functional.

Is it good – only time will tell.

The good news of course is the water ingress is shut off, but the quoted rates , even the maximum, are nowhere near some poster’s expectations. A lot of improvement required to get even near the rates many have predicted from HH-2z (though those predictions have lessened recently).

Now told the water ingress was significant, but solved, no mention of extent of ‘cluster’ or how much of the horizontal sealed off.

But even the initial 48 hours clean-up is not yet finished? ‘Dry oil flow rates during the initial 48-hour "clean-up" period to date’ - but the average, 223bopd, certainly not mid way between the extremes of 10 and 778bopd – so flowed most of the time well below 778bopd. So impossible, even for UKOG, to know what stabilised rate may be possible.

In a week’s time maintenance and upgrade of well test and production facilities will start for 10 days during which both wells will be shut in.

But full clean up will take a number of weeks – so a wait for better data/figures.

But then the ‘Full extended well test operations with simultaneous multi-well production are planned to resume directly after the shut-in’ which sounds different to a continuing clean-up.

So HH-2z will be killed (again) next week and clean up continued after the proposed site works – and during the clean up ‘further interventions are planned to help fine-tune and optimise flow from the well’.

So will that mean a return of the CT unit? - PSC - I did say they would want some results before 'fine tuning' the well.

No mention (yet again) of aggregate production so far.

Wonder how the finances are going, if oil stays low for even a few months - even weeks could be painful for UKOG - the hoped for free cash flow looks unlikely to fund all those upcoming wells – and a CPR will need stable flow for a decent period.

Eyebrows anyone?

Toughiv,

The 1087 bfpd was an initial rate (one of UKOGs favourites). The minimum of 40% of other fluids may not even have had formation water in it as the text was 'evidence of formation water ingress was also recorded' that could have been a pressure surge as the word recorded doesn't sound like something from a fluid analysis.

But that doesn't mean much as initial rates, with back flow the fluids put into the well is likely to be much higher than stable or sustainable rates. Hoppefully in the near future all the guesses for production from HH-2z will be superfluous, though it might be a while before there's an indication of sustainable rates.

But the NPV figure (it was never identified as NPV10) of between £15 and £18 per barrel of Portland oil (presumably less than the Kimmeridge because of the need of an injector) was based on a $70 OP. The OP with economy concerns and a Russian OP 'war' looks like it may be set for a medium period of lower prices.

For the immediate future a short term low OP will impact on UKOGs ability to self fund further wells and generate free cash flow for UKOG at even a steady 1000bopd (about £1mm revenue at $45) with the ongoing testing and production costs plus all the other ongoing project costs, at least all the kit needed for the HH-2z intervention is 'off hire'.

The last 'official' OIP for the Portland was just over 30mmbbls and this won't be updated until the CPR is produced. The 10mmbbls recoverable was not proven reserves, and not even contingent resources, and depended on 3 Portland producers and an injector so it may be the CPR will only have resources and not reserves of that level and those figures were based on an entirely different concept of how the Portland reservoir would behave (whole interval contributing vs sweet spot contributing 'lions share')., the good news it may be more, but may be less. The plan is now 2 wells into the Portland, this may change but more wells may be draining from overlapping connected oil with the increased 11 to 14mmbbls connected oil per well, so whilst short term production could be boosted ultimate recovered oil may be more or less the same.

The Kimmeridge is very much on the back burner. Not deepening the HH-2 pilot to garner more information and switching from the planned production of the Kimmeridge in HH-1 suggests issues even at HH where at least it has flowed at economic rates during the extended ewt. The Kimmeridge is not going to be anything but a contributor to sentiment for a long time in my opinion.

As for an RNS Monday - let's hope it's unequivocally 'good', seems a lot of 'good' RNS turn out to be less so.

I see Roger the Dodger's book of excuses is being heavily used this morning - and for quite a lot recently.

Whilst a lack of an announcement has rarely been a positive sign with UKOG whatever the reason for no announcement yet I would doubt it's because they are waiting for OPEC to decide/announce a predicted production cut - which has been leaked anyway.

Baits,

it will depend on a lot of factors so no SS won't know what rate the well will flow at, he might have a range of figures that may happen depending on choke, pump rate and how the horizontal sits in the sweet spot but lack of certainty in well drilling and testing will at least be something he will understand even if posters on this board do not despite the very real demonstrations they have experienced over the last 5 years.

Given the range of posters predictions of flow rates (often lower now than previously) from both HH-1 and HH-2z, but rarely what flow rate from the range offered by UKOG depending presumably on their agenda (instantaneous, initial, half hour, hour, 6 hour, 24 hour, 5 day average, last 24 hours, calculated sustainable, stable, 30 day average) it will be interesting how many diverse rates turn out to be 'right'.

PCS - I would expect they will be happy to get it flowing without water, workovers to improve performance would be down the line once they have better information to work on - you are right a bit of patience, wait for the RNS rather than the continual (but to be expected) speculation - including that in your (and my) posts.

Baits,

the clean up was stopped purely on evidence of water ingress. The 1087 was a maximum initial flow and at some point, almost certainly not at the start (when it would have been mostly kill fluid etc.) the percentage of oil hit a maximum of 60%.

I would assume that they expected the water ingress to get worse than the 'evidence' seen (whatever that was) which is why they stopped the clean up, based on evidence of water ingress, shut the well in and waited a couple of months to carry out what looks to be not a cheap intervention by Halliburton, so the actual impact on oil flow can't be known.

got to get that cash back somehow...…

3 Sep 2014 - Halliburton, the company contracted by BP to cement the ill-fated Macondo oil well in the Gulf of Mexico, has reached a $1.1 billion settlement.

I suppose they will be a bit more careful, that is if they are cementing.

PCS,

Unfortunately as FOTH has chosen to only allow those he approves of to see his usually over optimistic, and often completely wrong, guesses as to what is happening on the site based on photographs and videos previously made public and therefore available for balanced discussion - there is no longer any balance to posts made by those presumably privy to his musings, and I suspect FOTH is also is trying to control the flow of information from others.

Until UKOG decide to release information it would be wise to ignore any posts claiming knowledge from twitter based on guesses made by someone whose well site, and O&G E&P, experience and knowledge is based on an hours visit to the site hosted by SS (who is hardly unbiased), lurking around the site and trawling the internet for information.

Wizard

That is an assumption yoj have made. I asked fpr the rule not your interpretation of a bit from an RNS about internal accounting. Mirasol posted a fair bit of the rules and it isn't in therr.

and the excerpt from that post looks very selective and certainly doesnt say I don't think HH-1 won't producr more than 200bopd. When was the post you have 'quoted' from

Interesting Wizard

Can you quote the OGA rule that limits production to the cost of the ewt, once you've done that maybe you can explain how you know how much the ewt is costing and finally can you show a post where I have said HH-1 wont produce more than 200bopd.

They don't need a production licence, they need FDP approval, but youre right they do need a CPR.

Bridgedogg,

The computer model of the field and as far out as necessary to model all the elements (eg water drive) is essentially 'produced' by a well placed within it. The aim will be to match the production and pressures recorded during the ewt (& pbu) over a period of time with the computer model

Once that is done over a long enough period the future production of the well predicted by the model can be calculated. There will be tweaks to the model and from multiple runs, using a 'monte-carlo' type algorithm, a range of reserves can be calculated from the production that could be used for RBL

A simple reservoir which is much the same throughout, especially if it is well known, might not even need an ewt

But the Portland has had significant changes in understanding

In the 2018 CPR the uncertainty was such they just used 'type' wells not the data obtained from the limited testing and thus only contingent resources were generated, not reserves

The Portland Sand was thought to produce from the whole section, high water saturation with no water produced was not understood

Following HH-2 drilling it was thought that only a 35ft zone with intervals of high permeability contributed the lions share of production

The horizontal was placed in this zone. The initial clean up had indications that formation water was being produced, probably from a fracture at or near the toe of the well. The well was also at near virgin pressure suggesting a degree of separation from HH-1

An interference test was carried out between HH-1 and HH-2 and whilst in the RNS they do not state the degree of communication it seemed to confirm that HH-1 and HH-2z are separated. In the latest RNS it was stated that there are possibly a series of fractures at the toe end of the well.

The fix to shut off the water ingress should be successful but that isn't known yet.

A whole lot of information and assumptions to try out in the model so it will be complex with many variables - degree of separation between the 2 producing wells, fissures with water possibly making sections of the reservoir sealed off from wells, the degree the rest of the Portland might contribute to production, with intraformational seals/ baffles etc, variation within the 'sweet spot' etc.

Not a few days work after a week of ewt - in my opinion.

jmhy,

This was in the 11 September 2019 RNS before they knew about the water ingress, compartmentalisation and they thought they would be testing later in 2019.

'It is planned to commission a new Competent Persons Report to establish the Company's net Reserves following completion of HH-2z production testing in the Autumn.'

Bridgedogg,

That's the point, how could they have been so careless as to issue 1.4 billion shares when you think it should have been only 14million. Here's a clue, the nominal value of the shares is different to the value they are traded at.

Camperdown - it is pretty clear when posts are opinions or facts. PCS also stated an opinion in the same thread without mentioning it was an opinion but you didn't mention that.

PCS,

The value of issued shares are facts. The nominal value of those shares is also a fact, about £140,000 (about 1.4billion shares)

We have 'discussed' this before, There will also be YA converting (although that will be taken from the previous authority unless I suppose the SP crashes- see below) and the actual other reason: 'as well as act swiftly to develop and fund the Company’s Horse Hill field development plan.'.

This reason seems closer to my view of additional fund raising needed to continue to prepare for production than buying out Alba.

But I wouldn't even bet trimming my eyebrows on predicting what UKOG might do in the future, even if it is (or isn't) in an RNS or even a GM resolution.

From 2019 AGM:-

'save that the Company shall be entitled to make offers or agreements before the expiry of this authority which would or might require shares to be allotted or equity securities to be granted after such expiry and the Directors shall be entitled to allot shares and grant equity securities pursuant to such offers or agreements as if this authority had not expired.'

Tollesbury Stu,

Still here with your inciteful posts about UKOG rather than other posters - erm - thought not

Bridgedogg,

Perhaps putting HH-1 back on production?

The CT unit might be in the way of working on HH-2z, and the reason it's there is because a crane can't do the 'fix'.

From the last RNS:- 'Portland oil pool test production from HH-1 will continue during the intervention'

Wizard,

At the April 2019 AGM the authority to issue shares was £200,000. They have issued over £10,000,000 worth of shares since then - £6mm Tellurian, £2mm mystery ii, £2,5mm YA/Riverfort.3

Bladehater,

The thread ('Alba') was about issuing shares to UKOG because UKOG is having to cover Alba and Doriemus cashcalls. This came up because Alba's website had 2 different figures for their share of HHDL which is probably a mistake. I was speculating why it might not have happened, nothing to do with what HHDL owed UKOG (which is almost the left hand owing the right hand money).

PCS,

normally the comparison is done at the mid price.

However if you want to just go just by price the first trades today were at 0.684 - so 0.66 is still down 3.5% - and last trades yesterday were at 0.68p - 2.9% down.

Can't compare last nights closing mid price (0.65) with a trade price tonight which seems to be the way google calculated it 0.0057/0.65 = 0.88%