Member Info for Penguins

Tony,

The stock tanks are for all well fluids and presuming if they are preparing to flow then thay will be displacing the kill fluid. No one at the site claimed the tankers were for oil export - just 3 tankers on site. We also know that tankers can leave empty, perhaps due to ensuring enough capacity.

Roganjt who I presume is the John FOTH retweets posted here yesterday 'Its fun to see what's going on down at HH. Did the tanker I posted have the right plate or not, who knows I had to leave!! Go check it out tomorrow and see for yourself is my advice!'

Interesting FOTH locked down his account this am - was he hoping speculation after yesterday's 3 tankers would drive the SP up in the absence of news from the site.

Btw It's no surprise that pboo is a trader, they all are - even FOTH who boasted about selling at 8.6p during the Broadford Bridge rampathon.

Yesterday I posted (thread was deleted) that surely the only reason for them to hang around the site was to hopefully enable them to pre-empt any RNS for their own benefit - but if they are selling with knowledge whilst encouraging others to buy whilst withholding that knowledge then they are worse than any supposed troll on this board they so despise but read all the time.

Nobody knows why there appears to be a delay to the 'imminent' ewt start, yet this board (and twitter) rivals the Beano and Roger the Dodger for the list of excuses offered - though I think UKOG have stopped mentioning 'nationally important' for the Kimmeridge Trollhunter.

But the HH-2z test is of the Portland - definitely not of national importance - a few million barrels recoverable hopefully (not tens or hundreds) so only very important for UKOG - Dunsfold, A24 and IOW all unproven, and even if all these were successful still not nationally important.

First RNS about Portland 2018 test progress was after 4 days of testing anyway.

As for when the ewt will start, eventually someone will be right - posters and tweeters have been predicting it for long enough.

Guess who posted - Nov 29th - 'Imminent commencement of testing. Monday 2nd December ?,if not sooner.'
& Dec 7th - 'Looking forward to the commencement of flow testing next week.'

As for waste tankers - luckily it hasn't been raining, otherwise...…….

It's interesting that you seem to think that the limit is arbitrary, doesn't cover at least 90 days of flowing and has no 'headroom'.

The HH-1 2018 ewt had a limit of 5300 tonnes which equates approximately to 40,000bbls. This presumably was for the planned (as in the planning permission) 89 days of testing of HH-1.

The testing commenced mid July 2018 and the 40,000 bbls limit was reached mid April 2019, 9 months about 270 days into testing. I think during that period thay must have been flowing for more than 89 days.

The average rate of 40,000bbls over 89 days is about 450bopd, maximums UKOG might have expected from the 2016 testing. Sadly that sort of rate was only ever reached or exceeded in short term flow rates.

Pboo,

There's positives and then just plain misleading

Eg:- assuming 33% downtime, that they permission doesn't cover expected flow during sustained rate testing let alone esome extra and using an inflated bbls per tonne figure for Portland oil.

Yes like Oliver Twist they can go back and ask for more - let's see if that's necessary during the planned initial clean up and 90 day test.

btw, If you seek mates on twitter, hanging around a well site or on here you have have the wrong idea of what constitutes mates..

Pboo,

I know you always make the most positive interpretation of RNS posssible and then claim it as reasonable but when I read the RNS I take it as continuous flowing or at least 90 days of flowing, not flowing and shut in periods:-

'the well will be flowed over a minimum 90-day flow period to assess its stable production performance',

and note it iis a minimum of 90 days flowing - 'minimum 90 day flow period'

The amount of oil permitted will have been arrived at in discussion with the OGA and covers the expected production during initial operations, clean up flow and shut in periods, as well as the minimum 90 days flowing, and probably headroom in case of better than expected flows..

Whilst permitted production has been increased during the HH-1 ewt it was because they tested for much longer than the original programme of 89 days, not because the well flowed more per day than anticipated.

I suppose you decided it must be only 60 days of flowing because you got back to the favourite figure of 1200bopd.

Except 1200bopd for 60 days suggests 8.8bbls to the tonne, even 745bopd seems high and suggests 8.2 bbls to the tonne both not allowing anything for the initial period. 38 api oil is just over 7.5 bbls to a metric ton, allowing only 1500bbls for the initial period works out at 667bood over 90 days.

Tony,

First the whole idea of using drill mud is to stop any formation fluids entering the well bore and it is constantly pumped down the drill pipe to circulate the cuttings back to surface.

Second the amount of oil that will be in the rock drilled out by the bit will be tiny.

After drilling the mud will be displaced, in this case kill fluid and in turn that will be displaced when they want to start the ewt. The volume of fluid in the slotted liner will be less than 200bbls (without doing a full calculation).

Regarding the storage and permitted volume of oil produced during the ewt both will have been decided through discussion with the OGA. I think the previous increases in permitted volume have been because they have exceeded the time originally agreed for testing (90 days?) not because they have produced at a higher rate.

As usual it's not clear if the 2000+ bbls is just for HH-2z or is it total storage on site?

'Storage tank upgrade now installed and hooked-up with 2,000+ barrels total capacity for imminent HH-2z flow testing'

Even 2000+bbls srorage just for HH-2z suggests a maximum of less than 1000bopd expected sustainably with nearly 2 days capacity needed (+ just in case space) for Saturday 1pm to Monday 8am. Of course extra tanks could be shipped in - but I expect it represents what they have modelled since getting c ore and log data.

.....and what's the +, 50bbls? past + have been as little as 1 bbl when 'over 900' became 901 - KL4 2016 flow test.

Interesting times eh.

Whoops,

That should be £165mm, no decimal point.

Mr009,

The only indication of valuation we have been given, very much dependant on a CPR supporting it, is based on 3 Portland producers and 2 injectors. For this set up SS estimated a NPV value of (mid case NPV) of about £16.5mm Whether with the plan of 2 wells and one injector this is too high, or too low with the recent claims made by UKOG regarding HH-2z sweet spot we shall see.

As a CPR for the Kimmeridge, or anywhere else won't be for some time (Q4 2020?) everything else will be sentiment, I wouldnt like to guess the number of shares in issue by the time a CPR emerges to calculate a SP (nor a 2P reserve) but more than now is certain and unless there is consolidation 20p a share seems a stretch even on massive sentiment - there's lots of pi (let alone ii, YA, Tellurian) who have collected lots of shares, including me!, who will be wanting out way before then (not you PCS of course) but a million shares at 10p (even 5p = £50,000) will be much harder to shift than at 1p.

Concerning the recoverable volumes the EA application has a geological section which makes interesting reading, though already out of date as the premis is that the whole of the Portland contributed to the flows seen in the ewt whereas the latest thinking was the 35ft sweet spot contributed the lions share.

But it is interesting reading as it illustrates how selective a company can be releasing information.

Absolute maximum recovery predicted was, as UKOG were happy to RNS, 45% dependant on a full voidage replacement scheme (injection)- though the text pointed out that had never been achieved to their knowledge onshore UK (don't think UKOG mentioned that) - but UKOG never quoted in the RNS when they quoted the 45% maximum that the range from least to most was 8% to 45% recovery.

Tony,

I doubt even SS is 'sure' of a figure, and UKOG have been vague recently about the anticipated flow rate having gone from 720 to 1080bopd, to 2 to 3 times or more, to 2 to 3 times an unspecified vertical well flow rate, to significantly more than 362bopd, to the current significantly greater than the vertical well in the last operational RNS, again without specifying which vertical well rate.

Is SS playing a blinder, for some reason hiding what UKOG really think to fool the (apparently stupid) minority shareholders in HHDL, or keeping the SP down for mates rates? or is he trying to signal a lowering in expectation whilst performing the AIM dance of the seven veils releasing possible positives (muid weight indicating better than expected pressure depletion, possible increased reservoir quality) which require 'A comprehensive electric logging and extended well test ("EWT") programme [that] will further clarify these potentially positive outcomes'.

What really matters is what the final veil reveals.

Soon (imminently) we will see what the flow rates are so what further veils does SS have - initial rates can be very high - especially half hour maximums or any short term rate so maybe a few of those - and not forgetting the Kimmeridge has been shut in for a while so another possible initial maximum there.

But the final veil will be the long term stable flow from which there will be no hiding (though if it isn't as good as expected I expect 'heavily choked' and 'prudence' to be wheeled out in posts.

As you are guessing 6 tankers a day I suppose that means you expect nearly 1300bopd for the long term stable rate (though that would need a doubling of the OGA permitted production during the HH-2z ewt), and for a rerate based on a CPR of the Portland - just keeping to SS NPV and just for the Portland at HH to underpin the current SP anything over about 4.5mmbbls, so to double it 9mmbbls, but that might not be until Q2 2020 if it's after the 90 day ewt.

To be clear I have no idea what any of the rates will be - I just apply a healthy dose of cynicism to anything in RNS but at least patience is something that investors in UKOG have had to have, but belief is no substitute for hard figures.

Oops,

Originally had the placing in July 2018 but realised the March 2019 raise was a placing and put that in instead just before posting. Should have gone to specsavers eh PCS.

As for the placing with an ii, there have been many to date - latest March 2019, just prior to the start of testing when meteoric rises in the SP were being forecast (and to be fair it did rise for a bit), No sign those shares stayed with the ii.

So ignore the bit about prior to testing beginning, although it is true for the July 2018 placing.

I think you'll find that the money raised might keep them nearly to the schedule promised previously which was to move HH-1 and HH-2z from ewt to full production, although that was promised by year end and should have included HH-1z. But as it will follow at least 90 days of HH-2z ewt, which won't start until well clean up is completed with flows and pressure build up periods, it looks like mid to late January - as long as the ground works are done and long lead gas generator turns up by then.

Promise was from Final results 15/03/19:- 'Our prime post period 2019 operational focus is to bring Horse Hill into long-term production by our target date of the end of 2019'

As for the placing with an ii, there have been many to date - latest March 2019, just prior to the start of testing when meteoric rises in the SP were being forecast (and to be fair it did rise for a bit), No sign those shares stayed with the ii.

As for purpose of the placing cash, the shortfall from Alba should have been expected as in June they RNS'd:-
'The Company will continue to monitor progress at the Horse Hill Project and will consider its position in respect of any future cash calls on a case by case basis.' having already defaulted on one cash call.

and they should have expected that the flaring of gas during production would not be allowed so again should have been planned for rather than having to do a last minute placing for this long lead item.

My view is they hoped to get away with flaring and use the unused production preparation cash to cover costs to keep them going until (hopefully) the test generated enough cash flow, whatever that is, or they could get another YA fix.

Argus,

It doesn't work like that. HHDL is the operator and as explained earlier UKOG will have agreed with the OGA to fund their subsidiary to enable it to perform the agreed work programme. What happens if the other shareholders choose not to pay their way is dealt with in the shareholders agreement and that does allow them to not contribute, but UKOGs agreement with the OGA prevents them from doing the same and letting HHDL default - unless of course UKOG ran out of money and then they wouldnt be able to fund their 35% either.

As Operator HHDL will also be responsible for the FDP, not UKOG, but UKOG will be obliged to fund HHDL if necessary.

As for rattled - I thought I'd save you embarrassing yourself quoting the JOA as being applicable to Alba, but please carry on. I would also point out that HH-2z & ewt is obligation work so sole risking not possible (read your paste)

Argus,

I wasn't going to post again but...……..

JOA - Joint Operating Agreement the agreement between the equity holders in the licence - ie HHDL (65%) and UKOG (35%).

Not the agreement between the shareholders of HHDL, UKOG, Alba and Doriemus.

So no Alba can't be sole risked - not paying is covered in the agreement between the shareholders in HHDL (as discussed earlier) the JOA has nothing to do with the internal workings of HHDL.

UKOG or HHDL could sole risk the other but as UKOG is the parent company of HHDL and has a controlling interest it would essentially be sole risking itself.

I hope you didn't spend too long finding those bits to paste.

Just reread the Alba RNS and realised the cashcall was for a total of £261,000, the key word 'contribute':-

Alba has decided not to contribute to the most recent cash call issued by the Operator, HHDL, for £261,000

That would mean they were not paying £261.000 x 18.1% = £47241 = 8 shares (my interpretation) and Alba's equity in HHDL would drop to 17.95% or a drop of 0.15% - a lot closer to the 0.1%.

That's enough for today.

Thorpedo,

my interpretation does seem unfair but your methodology would not result in minimal dilution for Alba for their original default of £261,000. With 18.1% that would infer a HHDL expenditure of £1.442mm. So a total (assuming UKOG and Dor paid all this) of about 240 shares issued (1442/6) - this would result in Alba's share ending up at about 14.6% (181/1240) 3.5% drop - not a minimal drop.

My methodology means only 44 shares issued (262/6) and Alba's share drops from 18.1% to 17.3% (181/1044). Still not as minimal as Alba thought (0.1%) but I think that might have been off the cuff in an interview. If 0.8% shared between the other shareholders equates to £261,000 that's midway (£326,000) between the £300,000 (Solo, Prim & Gun) and £350,000 (Dor) per percent in HHDL equity purchases.

Your example is extreme with Alba not ever paying a cashcall and a total expenditure of over £30mm (if HHDL's 65% = £20mm) but it does spotlight how unfair that case would be - maybe they didn't expect the show to last this long or be as expensive?

Maybe we're both wrong?

PS I don't think you're eyesonthepriz12 but it seems he/she doesn't see the irony in this statement:- 'Thorpedo gets it. How long before Ruthie accuses him/her of being me - the usual desperate tactic when the trolls are in a hole.'

So someone accusing me of being 'Ruthie' thinks that accusing someone of being someone else is using a desperate tactic used by trolls in a hole...…….

Thorpedo I don't agree

the logical outcome as your example would be that every time anyone contributed what they should they would get what they contributed divided by £6000 - but I would think that Alba would have a better understanding of the intent of that clause than you or I. Incidentally they defaulted quite a while ago (18 June RNS - £261,000) no change in shareholding yet.

But let's park that one, it should be pretty obvious which interpretation is correct when/if shares start being issued. As I posted though that might not be the only arrangement between the companies.

As for UKOG not paying into HHDL. When you get a license the OGA will expect a subsidiary to have a parent company guarantee - and when HHDL became a subsidiary of UKOG the same would be expected. Prior to that all the shareholders would have provided guarantees.

In a license all the companies would individually be responsible for all the work programme (ie UKOG and HHDL in this case, not any shareholders) - but UKOG allowing the Operator HHDL to go to the wall (effectively)against the obligation they will have given to the OGA, but continuing to finance the work through their 35% equity in the license could be interesting. Defaulting on support for HHDL, for whatever reason, when clearly the company has sufficient funds might not be a good tactic with the OGA.

This may be why the minority shareholders continued to pay their way until recently knowing UKOG were now contractually obliged to fund HHDL and they weren't!

Thorpedo - interesting interpretation but illogical - it's what UKOG (in this case) have to contribute 'extra' (ie a loan to HHDL to cover the shortfall from the partners) otherwise in your example they would be getting extra shares just for paying their share of costs - and actually of the £6mm 35% is for their direct equity in the licence.

So it will be 22.1% of the amount spent when UKOG are covering 100% of HHDL costs - otherwise why would Alba claim it had little impact on their shareholding in HHDL.

Stocktaker,

we'll see. You have ignored the attempt by UKOG to get the EA to agree to 540 days of 'testing' prior to even building the processing facility:-

‘Horse Hill Developments Limited (HHDL) want to undertake an extended well test programme on each of its 6 wells (HH-1 to HH-6) prior to construction of the processing facility. HHDL propose to undertake testing for 90 days on each well in a linear programme which has a total duration of 540 days.’

The Alba business is a distraction. If any one is interested this is the possible impact of the partners not paying.

UKOG/HHDL had less than £8mm at end June and YA minus Tellurian added only £500,000 to the kitty up to end November. UKOG have expenditures elsewhere but assuming not all that was gone say £6mm of that is 100% expenditure on Horse Hill (well +(flow test cost-oil sales).

if the partners didn't pay any cash calls that would mean they hadn't coughed up £6mm times 22.1% of 65% of that = £862,000, that would be an additional 144 shares or result in UKOGs share of HHDL rising to 80.7% or overall 87.4% of the licences (from 85.6%).

Assuming all the 2mm just raised will be spent on HH then that would add a further £287,00 (65% x 22.1% maybe less if UKOG have already applied the formula as the partners percentage would be less!) to be replaced by 48 shares giving a HH share to UKOG of 88%.

If HH-2Z + HH-1 generates free cash flow then there won't be any more cash calls until the next well so my guess is up to 2.5% extra equity in HH licences until then - assuming the £6000 per share is the only agreement that applies.

If these wells don't generate free cash flow UKOG will be contributing 100% to the shortfall and gaining small increments in licence equity if the partners continue to not pay cash calls.

Bit boring I know...…………………..and full of guesses, like most posts.

Which is - don't know why that posted,

That while additional shares are issued for every £6000 extra a company (eg UKOG) contributes to funding not made by another shareholder as there are more shares issued it doesn't result in the percentages he thinks.

For instance his £180,000 results in 30 more shares being issued to UKOG. Ukog currently have 779 of 1000 shares. So UKOG would have 779+30 = 809 shares, but the number of shares in issue is now 1030, the percentage now owned by UKOG is now 100x(809/1030) = 78.54% only 0.64% more and of HH that's only 0.42%.

I see he's corrected his sums now...….

I know Eyesonthepriz12 reads this board so I thought I'd point out a major flaw in his maths.