Member Info for Penguins

I see Steptoes has decided to criticise my post on twitter:-

'To sum up Penguins' latest perfectly balanced LSE post:
"... illustrates a problem ... data is sparse and there are other issues. … Suggests there's problems ... uncertainties … commercial risk will be quite high."
Yep, balanced all right.'

This is what Xodus put in the CPR about Godley Bridge:-

'The structure is covered by only sparse 2D seismic data from which the shape of the discovery is defined but the maps do not close in the north east at the depth of the GWC defined in Godley Bridge-1.

The dataset available, therefore, gives significant uncertainty in the assessment of in place volumes, the main issues are:
> The Alfold-1 well reportedly penetrates the reservoir at a shallower depth than the discovery well but
is calculated to have no gas pay only some likely residual oil shows
> As mapped Alfold-1 is on structure and above the contact
> The precise location of Alfold-1 and its penetration of the Portland is unknown
> The structure does not close at the depth of the contact to the north east

To account for these uncertainties Xodus considered a number of possible scenarios. In all scenarios there was gas bearing reservoir on PEDL234 however, more data is required to properly estimate the in place volumes. Recoverable volumes were not estimated at this time due to the inherent uncertainties.'

Seems Xodus are equally balanced.....

Jammare, stop spamming the board.. we get it, we all try our best but a small development like this is not BP producing millions of bopd. Nor is it taking up vast swathes of the southern east, most folk don't even realise there are oil production sites across the Weald. As many point out better to have a regulated and inspected site than some of the production facilities elsewhere in the world.

PCS,

The Godley Bridge map illustrates a problem with exploration, especially onshore where data is sparse and there are other issues. The first well, Godley Bridge 1, missed the culmination so the second well was drilled to the south west, and missed the closure completely, so the structure map is redrawn so the culmination of the closure now sits between the 2 wells. The prospect also extends to the east out of IGas acreage - where the Alford well also just managed to be drilled off structure. Suggests there's problems with predicting velocity trends for depth conversion and difficulties applying static corrections to the seismic data - and not enough data. Xodus wouldn't ascribe contingent resources from the map produced by UKOG for their acreage because of uncertainties.

In the IGas CPR they haven't stated what risk they would apply to the 1C 6.75 bcf at Godley Bridge but considering the mapping issues and there's no current plans to develop it - and of course the less flexible more expensive sales option that needs to be factored in to the economics - commercial risk will be quite high. No mention of the 'planned' appraisal well IGas were so excited about. But most importantly that 6.75BCF is not in UKOG acreage.

As for Trollhunter's 'When it hits 8p later this year people will be talking of when it will hit 20p.'

Yes I remember last time - and what happened next? and while posters and tweeters were saying that it would rwould reach 20p they were probably selling- FOTH even boasts about selling at 8.6p. No problem with anyone making a profit - but not while telling everyone else to buy.

my view maybe up to £2.5mm at end January

Here’s my justification and calculation:-

Last consolidated cash flow account (6 months to 31 March 2019) had cash out of £7.711mm and cash in £2.567mm. Due to rounding UKOG calculated this as a net change of cash of minus £5.145mm.
Cash out of £7.711mm is about £1.285mm per month.

Starting the period with £12.427mm they ended with £7.282mm.

At end June SS stated there was less than £8mm left.

During the 3 months end March to end June UKOG raised £3.5mm. . Approximate HH oil produced during these 3 months was 14,000bbls = about £700,000 gross revenue + £30,000 from Horndean. (March accounts 6 month revenue from Horndean? was £103,000 with cost of sales £43,000 = £10,000 per month)

So cash in was about £4mm (assume the £3.5mm had a fee to pay), but cash left (less than £8mm) was only £700,000 more than left at end March. So £3.3mm gross was spent or £1.1mm per month.

Since end June up to end January about 32,000bbls has been produced (397*215 = ca 85,355 – 54,000). So revenue from HH over these 7months is about £1.65mm (OP av ca. $65, Exch av ca.$1.27/£1) + £5.5mm from YA and £2mm from a mystery ii + £70,000 from Horndean - say about £9.5mm add that to the ‘less than £8mm’ at the start of the period gives £17.5mm.

Outgoings have probably continued at £1mm per month (£7mm), perhaps more recently with all the additional kit more, drilling HH-2/2z say £3mm (maybe more) and £5mm to Tellurian. So outgoings totalled in my opinion probably more than £15mm.

So perhaps £2.5mm left at end January.

I suspect posters will claim outgoings won't be £1mm per month (less than the previous 9 months) - saying over the Sept 2018 to end March 2019 period there were extraordinary costs, and for the 7 months since they've stopped (with no evidence to support).

‘Therefore, the Board seeks approval to increase its authority to allot and issue shares so that it can act swiftly to establish Production via an ability to fund the Company's Horse Hill FDP and to ensure that the Second Deferred Payment can be satisfied.’

So what's the point they start to worry about a 'cushion'? How much will a workover rig or coiled tubing unit cost and for how long will it be needed, and there's a lot of extra kit on site. Act swiftly anyone?

PCS,

It's OK - maybe someone will come on the board having had a cosy chat with SS - 'all's well, patients [sic]' - or the big smile on SS's face was worth a thousand (encouraging) words.

Mirasol,

unfortunately GMs (and AGMs) are not about informing the pi of anything not previously announced as it would enable those at the meeting to trade on that information.

This meeting is all about the ability to issue more shares prior to the next AGM whether it's 1Bn or 3Bn shares.

PCS,

you're right - think of it as a micro width cavity in a cavity wall that may extend sideways and up and down a long way - in this case at least down to the water leg in the Portland - but possibly much deeper to beneath the Kimmeridge. It probably isn't vertical, although it could be, but slanted - and understanding the azimuth and vertical orientation of it vital to understand where it is located in the structure to avoid penetrating it (or if there are others they are likely to be parallel to it) again. They will also want to know if the fracture is possibly effectively sealed off from the reservoir through mineralisation on the 'inside' surfaces of the fracture - this would be good news and could make the 'fix' much easier and reliable.

Mirasol,

The statement from UKOG Iis pretty clear, all the Portland FDP will initially cover will be production from HH-1 and HH-2z (the wells that have been drilled) presumably because they want it to be approved soon but until HH-2z is tested the location of possible future infill wells and injectors can't be predicted to the level of certainty required in an FDP. The word possible in the RNS is an indication of that uncertainty - ie there is no drilling programme at present.

I'm curious as to whether, if there are further Portland producers drilled, whether they will be additional to the current planning or taken from the 4 planned Kimmeridge production wells?

As for planning delays 'HH1AN2' what planning is UKOG waiting for at HH that isn't within thier power to finalise by submitting the requested documentation? and when do you expect a CPR that's going to catch anyone out - with the possibility it'll be the rampers.

Wizard,

I suggest you find that application.......

Like so many planning applications in preparation it hasn't been submitted.

Wizard,

No.

UKOG are awaiting the decision to extend the site not drill anything (WSCC/079/19 Proposal: Amendment of condition no. 1 of planning permission WSCC/032/18/WC extending the permission by 24 months to enable the completion of phase 4 site retention and restoration). There is no planning permission, or application for planning permission, to drill a sidetrack or any further wells at Broadford Bridge.

In case you think they don't need planning permission to drill this is from the half year report (28/6/19):-

'Planning and permit applications for a further BB-1y sidetrack are also being prepared.'

Roganjt,

If you read the 28 Jan RNS the interference testing was carried out during the test period up to that RNS.

What was to follow was an intervention to improve the performance of the well, not more interference testing, they had already determined that both wells could be produced without detriment to the reservoir's performance.

Steptoes,

you are very selective in your excerpts.

' Penguins, for example, throws out more de-ramping chaff like "I think your valuation is a fantasy".'

But I then went on to explain:-So 1pps for HH is based on what - a 66% discount (plucked from ?) to a value based on a hope that the 'potential' is achieved, and your 2pps based on that plus more hope and your future valuation disappearing into the far horizon (which at your current rate will be 10,000 posts away.

Maybe the market (and thus the majority of investors) thinks the discount should be more with a large overhang of shares and the possibility of another CLN (please don't pretend you thought I was referring to reserves based lending) - as it is only an opinion.

So in actual fact the discount to your valuation is currently about 75%.

I also give reasons for my view of the Kimmeridge - which is more than you provide for your optimism.

As for:- ' Who has never authored a single 'truthful' post on here?' - you need to back that up with an example from every post I have ever made or that in itself is a lie.

Steptoes,

It's like a 2 year old stamping their feet.

as I posted - I'll leave that to you repetitively posting and pasting the same thing endlessly.

I'm afraid it doesn't make it any less of a fantasy story, but it does already show my predictions are already better than yours.

Steptoes,

I'm responding to your post and if you fail to understand that I think your valuation is a fantasy, like so many before (£1 party anyone) then I'm afraid discussing anything with you is pretty pointless but nevertheless.

So 1pps for HH is based on what - a 66% discount (plucked from ?) to a value based on a hope that the 'potential' is achieved, and your 2pps based on that plus more hope and your future valuation disappearing into the far horizon (which at your current rate will be 10,000 posts away.

Maybe the market (and thus the majority of investors) thinks the discount should be more with a large overhang of shares and the possibility of another CLN (please don't pretend you thought I was referring to reserves based lending) - as it is only an opinion.

As for the Kimmeridge producing 50,000 barrels (now a bit more but we don't know how much more) may be the problem.....we don't know because UKOG say very little about the Kimmeridge apart from initial rates, rates over a few days then maybe a final rate where there is no other information to assess whether the rates were held back, run at full tilt (though the pump rate reported elsewhere may be indicative) choked heavily - but that may be necessary to stop the pressure dropping too much - etc - all we get is jam tomorrow with future plans that keep the pot on simmer.

As regards the Kimmeridge what is happening now that is important. Not taking the Kimmeridge forward to FDP after a lot of intermittent production is a 'red flag', and fails to inspire confidence in the Kimmeridge's ability for long term flow at commercial rates, even in a well with sunk costs - that is the only one to flow significant volumes of Kimmeridge oil.

As for following your recommendations for posters and companies I should comment upon - I'll leave that to you repetitively posting and pasting the same thing endlessly.

Steptoes,

Potential?

The valuation of £250mm certainly depends on quite a few things that need sorting, including a CPR for both Kimmeridge and Portland. The NPV and volumes only given in interview by SS were between £15 and £20 per barrel and 14mmbbls recoverable. RNS mentioned recoveries up to 45% but failed to mention that they could be as low as 8% without injection.

No new OIP but connected oil was uprated to 11 to 14mmbbls per well but only 2 wells now. But all these figures pre date HH-2/z which has shown a different mode of production (sweet spot vs whole section) and discovered a water conduit which may or may not be unique.

As for the Kimmeridge. Is this what prompted UKOG to run an interference test and switch production to the Portland from HH-1:-

'The fool on the hill @Adrianwfire
#ukog #horsehill strange no heat haze from the flare stack for atleast 5 days. Yet the pump has been working all that time.on HH1 up until today when the pump was removed.
4:55 PM · Jan 13, 2020'

as the plan was previously to produce HH-1 Kimmeridge while running the HH-2z operations and ewt, then FDP production from HH-1 Kimmeridge and HH-2z Portland.

The plan now is to FDP Portland production from HH-1.

For any value to be attributed to the Kimmeridge even at HH needs a positive CPR for that reservoir or at least more than a few encouraging words about future plans which UKOG frequently demonstrates mean nothing.

The other proposed Portland wells have risk on mapping and poor reservoir quality and hope that the tests at Arreton were poorly executed. A24 seems to have been kicked into the long grass.

So the other licences represent costs rather than assets requiring wells and sites (£4mm?) until the wells are drilled and successfully tested.

But as long as you refer to it as your opinion fine, just as I am entitled to mine - which is more firmly based in reality.

PS your 6 month target becomes 5 months Monday - a month gone already with the only 'progress' being the Kimmeridge being switched off.

PPS UKOG seem to have forgotten to update the produced volumes we have such fun explaining since the 27 November RNS. Funnily it's the only way we have of comparing the short term rates they do like publishing with possible longer term performance.

PPS my fingers and toes are heavily crossed hoping that UKOG can sort out the Portland and get a CPR with sufficient reserves to justify a SP up to 2p. I just don't bother with fantasy valuations to try and convince others of my hopes.

PPPS I see you now accept a fundraise is a possibility.

So.

Flowed possibly up to about 400bbls from HH-1 Portland. Stable rate 293bopd for 24 hours (where's the 362bopd?). Although was the 435bopd an initial rate of the 6 hour test or an average over the whole 6 hours?

Another intervention of HH-1 underway to improve Portland flow rate.

Interference test confirms both can be produced from the Portland without detriment to either (after producing 400bopd from HH-1 after 6 months shut in). Interesting that a sweet spot layer can have a barrier/baffle between 2 wells that are not far apart - not what was originally expected as they shut in HH-1 specifically to avoid 'detriment'.

HH-2z routine intervention will commence February with a production logging tool obtained to establish where the water ingress is.

HH-1 will be initially produced from Portland under FDP enabling oil sales to be declared as income (a bit of accounts juggling) - needs generator/s installed and other surface equipment.

Apparently this is 6 months ahead of schedule, though in October this was in the sim-ops RNS:-

'Following a planned extensive HH-2z production flow-testing campaign, both HH-2z Portland and the HH-1 Kimmeridge well are expected to be put into long term production by the end of 2019.'

Plans to produce both Kimmeridge and Portland from HH-1, plans for Kimmeridge appraisal/production well.

Permission to issue more shares for Tellurian and for FDP (is this money to fund the works required again for site upgrades) at the AGM. Though there's still £3.35mm of shares to issue to Tellurian though loan balance reduction RNS probably incoming.

HH-2z ewt will commence following routine intervention which will be performed once they know what's needed to be done

HH-2z Portland production under FDP will start Q3. Further possible infill and injector wells.
So still jam tomorrow - and unclear when a CPR will be started - but if everything works out as hoped then it will be good. Let's see what happens with share issuing and the interventions.

Steptoes as you seem to insist on repeating your 'valuation' here's a repeat of one of my replies:-

I had to laugh - known value of Portland + Kimmeridge at HH (or 'complete guess') - '£250m. Could be a bit less, could be a bit more but who knows)' + 8 sites {48 Kimmeridge horizontals when current UKOG tally is none) in HH licences (let's forget Brockham sits adjacent to the northern part of the licence area) for the Kimmeridge, which seems to be in trouble even at HH - so just the £1 Billion there.

Then why not triple that - for the rest of the areas - so £3B - but because it might take a while to get the sites and drill the 144 wells (24sites x 6 wells each) you apply a 25% COS - so just the £750mm - can't see any problems at all with that kind of detailed examination of future value - or garbage in, garbage out.

The issue isn't what the value might be if everything goes well, it's details like Brockham might have 'proved' the northern part of HH is non prospective for the Kimmeridge, Broadford Bridge a significant southern part of PEDL 234.

Details like all the numbers for Portland are from prior to HH-2Z, when the model was based on production from the whole section not just the sweet spot, with the well in the sweet spot this may limit the connected oil and recovery thereof with intra-formational seals and mostly poor (ie not very permeable) reservoir.

Details like your £250mm just for HH based on recoverable oil of about 14mmbbls, but the 10mmbbls quoted by SS (30% of 11mmbbls connected oil, 3 producers 2 injectors) for the Portland was based on the 'old' concept of where the production was coming from - and the 1mmbbls per Kimmeridge horizontal needs to be CPR'd after being 'estimated' a long time ago - ie prior to HH-1z ewt.

The application for FDP approval is just for HH-1 and HH-2z so for the foreseeable future assuming a CPR emerges for the Portland the limit of 2P reserves could be just HH-2z without an injector. The recovery rate in those circumstances could be as low as 10% of connected oil, but even if the 11 to 14mmbbls connected oil remains correct a 30% recovery gives (according to SS) a NPV of about £72mm.

But until there's a CPR it is all just guessing, not fact and assuming anything about the Kimmeridge even at HH, let alone elsewhere, is very risky - the reason the company gave for HH1z delay was the need for more data - it's a pity they don't release a bit more of the data they do have so pi can have a view.

A lot has happened since November 2018 that needs to be input by the company into forecasts - it just isn't good enough after 18 months of testing and a new well to have had only limited (and sometimes conflicting) reveals of the current forward programme such that it's plainly obvious the November 2018 plan no longer applies. Even prior to the water problem it was unclear what well would be drilled next - and when.

PCS,

you have previously accused me of various untrue things so let's see if you can practice what you preach - I certainly shall practice what you preach from now on.

But what accusation - I pointed out that there was a tweet and a post within minutes (actually the post was 15:37, tweet 15:29) about me to demonstrate the 'fascination' some have even though I hadn't even posted at that point for over 36 hours. Perhaps you were worried about Rodders tweet about there being no such thing as coincidence.

QED

Of course I'm pleased there is a tanker - though not surprised as the pump was reported as pumping and the flare flaring - there was even one reported while there were no signs that HH-1 was being flowed, maybe they siphoned off a bit from HH-2z on the quiet? Interestingly, because of the expectation of tankers being reported all the time, when they are not is it bad news?

So exactly what 'new' good news is there to celebrate? If you think one tanker leaving the gates is cause for celebration you have a very low threshold of enjoyment - if sorting the water in HH-2z is routine I would expect whatever was being done to HH-1 (as the HH-1 Kimmeridge and Portland intervention was meant to be after HH-2z was routinely sorted) was even more routine and not be a problem at all as the company didn’t pre-warn of this workover.

Anyway where’s that expected RNS this week – there was plenty of time to calculate that initial rate after shut in for the Kimmeridge, total oil produced (so we can ‘discuss’ the average rate since the last one) and an outline forward plan for the HH-2z water issue beyond it being a routine fix at some time in the future.

S’pose you’ll expect it Monday, Tuesday............. yawn......Wednesday...……….

By the way - from FOTH on twitter, this rather proves my point:-

'hey poster penguins on lse BB. Why dont you want to celebrate oil tankers leaving #HORSEHILL ? . You say your invested! Of course you are you nasty little swampy. Go back to drill or drop with your other protestor pals. Stop lying about being invested #xr terrorists4’

PS – it’s tanker, not tankers..........................

Mirasol,

Scooping up equity and acreage seemed to be a ploy to confirm to the market that the Kimmeridge play was the right strategy - filling the hopper with drillable acreage once the play was proved.

The initial pronouncements at BB were full of 'good news' - if it worked there it proved the play (although even success wouldn't have done that - but that's another discussion). This was fine until the failure at Broadford Bridge became apparent - then the same at Lidsey and Brockham, and uncertainty at Balcombe, and dare I say HH.

But good assets bring competition, and as Mirasol points out there doesn't appear to be anyone else interested, indeed those actually already in (apart from UKOG) are leaving the bonanza behind because, perhaps, they can't or won't raise funds like UKOG - but you would expect at least one other company prepared to top, or at least push up, the 'bargain basement' prices paid by UKOG. It would also have been sensible to step aside and let a paying partner in as it is good business practice during exploration and appraisal to share costs - not every well is a success (believe it or not) and it would be better to not pick up 100% of the bill when things go wrong when cash is tight.

The Kimmeridge is hardly mentioned any more in regard to the Portland prospects being drilled (or anywhere else), and information on the flow rates at HH scant - is it a millstone round SS's neck? - having to show continued interest in a play with high risk whilst actually pursuing the lower risk (lower reward) Portland play? Posters here used to keep on telling us about all the learnings about the Kimmeridge that BB and the extended HH testing brought and that would be applied in the drilling of HH-1z and elsewhere.

Perhaps that's why HH-1z hasn't been drilled.

Pboo, you would say that wouldn't you, yet you've boasted of your profit trading of UKOG - and I don't think 2 hours on a well site makes you the experts you think you are.

and thanks to FOTH for this inciteful comment, I've made a couple of changes though.

'Seems there is an attempt to discredit me on twitter.

I'm quite flattered that I seem to worry some that much that they feel the need to do this'

Think about it.

Even when I don't post Rodders and PCS (within minutes of each other) feel the need to comment - yesterday (16th) when I didn't post at all - the board seems to be filled with squabbling kids lately:-

Rodders 15:29: pingu pingu where are you?
PCS 3:27:- 'Ibug, Penguins,'

As they are going to have to remove everything in the hole to deploy any tubing conveyed solution to the far reaches of the horizontal section of HH-2z it begs the question - did they know about the water before starting the ewt operations with the initial clean up?

Installing everything only to have to remove it all would be a waste of time and money unless they thought it was only a minor problem, but testing showed it isn't.

What will be first.

RNS about loan reduction.
TR1 about Tellurian's holding - though they seem incapable of following the rules
An operational RNS?

PCS - depends on your definition of a person I suppose - more likely YA or Tellurian 'making hay'.