Member Info for Penguins

Thorpedo,

Sub commercial means just that, below a level to be commercial, and UKOG stating it is because of flow rates and pressure data at both Broadford Bridge and Horse Hill gives a definitive reason.

Was pressure the real issue with BB, we know flow rates were definitely sub commercial there, was this the problem with Brockham, lumping HH in with BB suggests something more than we haven't got a CPR yet at HH so can't declare it commercial (even internally like HHDL did the Portland).

No information about flow rares during the last month of KL3/4 testing at HH before the switch back to Portland, and assuming the recent workover was to switch to Kimmeridge - why no RNS nearly 3 weeks since testing restarted?

I do read a lot, and thoroughly. This sentence was in the Drill or Drop review of the Loxley meeting and I didn't believe it, and it took a while to find it.

In isolation it could be dismissed as beefing up the reasons for the need for that specific site, but in conjunction with the statements in the half year report, or should I say lack of them, about HH-1z a pattern emerges of hesitancy about further drilling of the Kimmeridge.

If you consider the statement to be negative (ie 'a deramp') that is your analysis of a statement by the company.

If you actually read the planning application they want to test the Kimmeridge where it should be more mature (Hmmm Brockham anyone?). What is odd is that the horizontal sidetrack where they want to test different completions is planned to be in the Portland.

Which brings me to its statement:

Therefore, the most important technical goal of the exploration and appraisal work at Loxley is the confirmation of
the Kimmeridge/Portland ‘Geological Concept’, namely the presence of an open and continuous natural network of
hydrocarbon deposits capable of flowing to surface without stimulation.

Whilst in the sum up RNS to the 2016 flow test there was mention of fractures in the Portland it has never been mentioned since, this seems to lump the two together as possible regional targets.

Not sure how they are going to play this at the September planning meeting, an application which includes wells to develop the Kimmeridge at HH and an application for a site they must have to further test the Kimmeridge because it is sub commercial at HH?

This is a statement in the above in Amended Planning Statement and Environmental Report (page 22 of 47):

'Flow tests and pressure data from the Broadford Bridge and Horse Hill Wells Sites have been sub-commercial'

Interesting, something they haven't mentioned in any RNS about Horse Hill Kimmeridge. Reading the whole paragraph it looks like they might delay further Kimmeridge drilling until after different completion methods have been tried at Loxley.

Keyboard's a bit dodgy......

correction

…... there would be more than 6 million sells out of the 13 million traded...……................now nearly 14million.

As I'm here I will waste a post explaining (yet again, and probably to a poster who is well aware of it) that the red/ blue is meaningless

If the published spread was the actual spread 0.926 to 0.949 then it wouldn't be a sea of blue........and there would be more than 6 million sells out of the the.3 million traded.......

Thorpedo,

What drilling took place September 2018 to March 2019. BB was drilled in 2017.

The Exploration and Evaluation cost includes the cost of the ewt (or where else does the cost of it appear?) and other costs, probably including preparation of planning applications and some costs associated with the new venture cash pool - which I acknowledged. The fact that this cash burn continued after March with cash remaining of less than £8mm at end of June according to SS tends to confirm these costs are continuing at a similar rate, and haven't dramatically reduced which is what you are suggesting has and will happen.

As for debtors assuming they are the other shareholders in HHDL (who else would owe them money) they are unlikely to be able to repay until there is significant positive cashflow from the site.

When the £3.5 million was raised if HH-2 had been drilled soon after then 3 months of cash burn which saw the £10mm plus that was then in the coffers reduce to 'less than £8mm' by the end of June wouldn't have been so much of a problem as that well would be producing during its ewt.

Pausing after drilling HH-2 and ewting the horizontal has the added benefit of actually being able to produce a long promised CPR which could enable a cash raise based on reserves to fund future work rather than wait for revenues to build up.

Sting,

Overlaying the plans for drilling these 2 wells illustrates that the rig and equipment would make it impossible to build the cellars whilst drilling, it will be challenging to continue with the ewt whilst drilling.

There is also the small matter of cash. There don't appear to be sufficient funds for UKOG to fund their share of 2 wells whilst continuing to fund the ewt, have a reasonable level of contingency and also fund just running the companies for 3 months whilst ring fencing significant funds for the new ventures that £3.5mm was raised for.

Whatever testing is currently happening doesn't seem to have been much of a change in terms of tankers leaving the site so previous cash burn per month of about £ 900,000 net of the revenue from the test oil production has probably continued leaving probably about £7mm cash at the end of July.

Assuming HH-2/2z begins early August and takes 6 weeks and costs £5mm by mid September there will be about £3mm left assuming UKOG pays about 50% of the well cost, continues with its share of HH-1 ewt cost and revenue, and company costs and thus a similar cash burn continues. This would be enough to pay for HH-1z and 6 weeks cash burn (just) but most of this £3mm is said to be for new ventures assuming some has already been spent assessing new opportunities.

It was never intended to drill these wells back to back, plans change but if the Portland horizontal performs within expectations (or better) then pausing to ewt and generate positive cash flow may enable the cellars to be constructed and funds accrued to drill further wells and the development site.

UKOG/HHDL will have agreed with the OGA a plan for the ewt which will have flow rates and time periods.

The export limit will be determined by the plan. If they have a good reason for extending the ewt the OGA will extend the export limit.

Therefore continuing with the ewt demonstrates they have not exceeded whatever the current limit is. There was a lot made of the Portland test having to eke out the daily volumes because of the export limit - but the flow rate and length of test agreed decides the limit.

Perhaps more intriguing is the actual number of testing days there have been vs number of days agreed in the planning permission.

Tollesbury,

enjoy your trip, I'm having a break as well so the board will probably be spared my apparently misleading posts.

I also just look in and unfortunately there is almost always a post that is actually misleading usually just guessing stuff. So my posts are usually just trying to calm down some of the nonsense posted on this board (you may notice I rarely start a thread), if I had to do twitter as well I'd have to see if TW would pay me as it really would be a full time job.

Tollesbu,

you have a woeful history of just posting meaningless accusations with regard to my posting about UKOG. I admire your persistence at 'popping up' soon after I post with your insightful arguments refuting my opinion, and explaining these inaccuracies in my post.

Hmm - no you don't, all your posts are just criticising other posters - do you have an opinion apart from a misguided opinion about other posters?

Maybe this time you could point out the actual inaccurate information in my 20:16 post, I went to the trouble of actually pointing out the inaccuracies in zooms post by quoting RNS and even found a bit that suggested the flow testing was being carried out optimally.

Zoom,

'KL layers we were limited by our separator and only carried out 50 Hrs of tests.' - really.

Perhaps these excerpts from 16 Jan RNS will help:- Commingled KL3 and KL4 production from an aggregate 187 ft perforated interval commenced on 4th December at a maximum half-hourly rate of 426 bopd and continued throughout the Christmas and New Year period, producing 8,829 bbl of 40° API crude. The programme included several pressure build-up tests and testing of different pump configurations, settings and equipment.
Following the installation of a new downhole pump and an optimised surface hydraulic pump unit, stable commingled production resumed on 7th January at an increased initial rate of 525 bopd. The sustained daily rate over the subsequent week averaged 303 bopd. A de-waxing treatment applied on 14th January led to an increase in hourly rate to 351 bopd. Commingled production continues.

I make that a period of 43 days with pressure build ups and workovers. The testing continued during January and into the start of February. In addition to this the 15 Nov RNS:- 10,248 bbl of KL3 oil was produced over 30 days so including your 50 hours at the start of KL3 production I make that probably a lot more than 50 days of actual testing.

and there has been absolutely no mention of the separator restricting flow - why else install a 'new downhole pump and an optimised surface hydraulic pump unit'.

Funny how all those folks that worry so much about my, in their opinion, misleading posts are so quiet.

as seadoc points out there is a plan for gas to wire, if you actually read the planning - or any RNS your posts might not be so misleading.

Redheadedrager,

Just voted, what happens now, does that nasty person go away, or does it just prove that the board is full of a bunch of posters who are b***s deep in something they don't understand and would rather only hear good news, after all it's worked so far.

Bridgedogg,

If you can find a previous RNS where they have mentioned a horizontal flow rate as a multiple (2 to 3 times) and they haven't also put in a target rate, and probably a statement about 362 bopd (also mising in the latest RNS) please point it out rather than thinking it.

I am not claiming anything is a scam, just pointing out changes in the statements the company makes that may or may not be significant. Rarely however do companies highlight aything negative especially on AIM unless it's the only news they can release, even then they will try and waffle about some positive outcome down the road.

Wizard,

You claimed I would not reply etc. I did and it wasn't even obscure, just used the company's most recent RNS guidance.

Redheadedrager,
I only point these things out. You can do as you please, but if I post an accurate reflection of what is in the most recent RNS don't claim I am being disingenuous.

Redheadedrager,

As you might be aware statements change from one RNS to the next. Why - often because things change. Companies don't say look this has changed, they just change what they are stating. With UKOG this happened quite a few times with rig timing.

In the half year report RNS 28 June which is after the date of the excerpt you are posting the company has changed the statement regarding horizontal flow rates

'Company's predictions that future horizontal well performance could achieve two or more times that of the single vertical HH-1 well.'

I defy you to find any statements about target flow rates in this latest RNS. There are also differing statements to previous ones about HH-1Z on top of the Q3 drilling of HH-2.

Statements in RNS are not casually put in, they are there for a reason.

I keep seeing in responses to my posts (eg Quincet last night) that in these tests they are protecting the reservoir (or similar wording) so tests have lower rates because of 'restricted' flow. Surely the next thing they should put is that despite protecting the reservoir in thesearch relatively short term tests when they go into production where they want to produce for 20 year hey won't bother with protecting the reservoir.

Quincet also complained that I post half truthe. What was ridiculous about that was my post was in response to jptop who only posted flow rates (and mangled the RNS statement) from the initial KL3 test in 2018, I posted virtually all the flow rates involving KL3.

Wizard,

I think UKOG stated in the last RNS 2 or more times the flow rate of the HH 1 well, they didn't actually say what flow rate nor a target bopd.

If you know better then post your estimate, but it obviously isn't a simple ratio of hole length in the reservoir.

JPTop.

You've mangled what was in the RNS 10 October, this is what was stated.

'KL3 flowed 40-41° API continuously and naturally to surface (i.e. without any pump) over a 50 hour initial planned oil flow period
Sustained continuous oil rates of between 563 and 771 barrels of oil per day ("bopd") on 36/64 and 38/64 inch choke, respectively, recorded over last 24 hours.'

and for a fuller picture with a bit more than just initial rates - 15 November RNS:-
'KL3 produced at an initial metered sustained natural flow rate of 771 barrels of oil per day ("bopd"), with a maximum recorded half hourly rate of 902 bopd. The average sustained daily rate over the full test period was 342 bopd.'

January 16 RNS
'Commingled KL3 and KL4 production from an aggregate 187 ft perforated interval commenced on 4th December at a maximum half-hourly rate of 426 bopd'

16 January RNS:-
'Following the installation of a new downhole pump and an optimised surface hydraulic pump unit, stable commingled production resumed on 7th January at an increased initial rate of 525 bopd. The sustained daily rate over the subsequent week averaged 303 bopd. A de-waxing treatment applied on 14th January led to an increase in hourly rate to 351 bopd.'

No further rates were mentioned in the next RNS.

Notice anything.

KL3 flowed 40-41° API continuously and naturally to surface (i.e. without any pump) over a 50 hour initial planned oil flow period

A couple of posters agreeing Angus have got it wrong is obviously popular but maturity is a complex problem and is an area of very specialised expertise so it won't have been any of the Angus people who will have come to that conclusion.

Angus will also have had to convince the OGA that testing was not worth while and if the reason was they had messed up the reservoir I don't think the OGA would have agreed to them just walking away.

Maturity varies not only laterally but also vertically and with time. Heat flow is a factor but so is depth of burial (pressure). The Kimmeridge has been buried deeper, uplifted and had a lot of overburden eroded, and then had more overburden deposited increasing its depth of burial again - and the original ultimate depth of burial and then the amounts of removal and deposition will have varied across the basin . In the Weald the maturity that a sample will test at will not represent the maturity it would have had it not been through the techtonism the Weald has been subject to. This would mean that oil generation is no longer occurring where present day burial and heat flow would not support it. So a sample may be mature but no longer oil generative.

Unfortunately until Angus give out more information explaining what mechanism it is of maturity that is causing the problem it is difficult to assess the impact on the overall Kimmeridge story but does cast some further doubt as to the Kimmeridge play extending to the margins of the basin

Argus,

recoverable oil multiples - of what, and why?

Nobody apart from UKOG knows what the estimate of 1mmbbls recoverable oil per Kimmeridge well was based on.

As you say we now know that testing has confirmed that the KLs are plumbed into a oil column from KL2 to KL4 - but all the Kimmeridge tests will have been accessing this volume regardless that UKOG didn't know it. They already thought the KL3 and KL4 were connected after the 2016 testing so it all depends if the 1mmbbls is based on any modelling and whether that became skewed by the KL2 to KL3 feeding into the well and providing pressure support to the short term tests.

If the 1mmbbls isn't based on modelling then multiples of what?

Argus,

If you had read my post not only have I included the whole of the 600ft but also the shales above the KL4 (I only deducted the shales below the KL2), I didn't deduct the oil in the shale above the KL4, about another eighth of the total.

From the RNS - '600ft (200m) or more naturally fractured zone, extending from the deeper KL2 to at least the top of the KL4 zone.'

So not shouldhavdone's 12BBO but nearer 2.5BBO (P50) in the 600 foot of Kimmeridge - and how much of the 55 square miles this is spread across lies adjacent and on trend to Brockham? These figures are derived from the Schlumberger report and the RNS of 18 June 2015.

Although they now realise that the oil is being produced from a 600ft zone it isn't just since this was realised that this has been happening - it will have been a factor in every KL test and any analysis thereof.

Nutech did a similar OIP study for HH, and they also did a study of Brockham for Doriemus which had only slightly less OIP in the Kimmeridge at Brockham than the HH figures.

It is becoming clear that the existence of significant volumes of oil in the Kimmeridge in the Weald calculated by Nutech or anyone else is not an indicator of whether or not it is recoverable, even at HH they are performing more testing and gathering more data for the Kimmeridge prior to the HH-1z sidetrack to 'mitigate risk', so even at HH there is uncertainty.

I'd take the wise words of FOTH, with minor modifications as this from one of his 'helpful' posts about UJO:-

'Its always best to look at the risk as well as the blatant ramping on any lse bb. Nothing is a dead cert although reading the BS you'd thing it is.'