Member Info for Penguins

Argus,

I've only ever seen mention of Magellan/Tellurian being carried through HH-1 drilling, testing and completion. Any future work programme beyond HH-1 wouldn't have ben known in 2013, and it's highly unlikely an open ended carry for more wells would have been agreed to by HHDL.

This from a Tellurian press release:

'The Horse Hill-1 well lies within the license area of PEDL 137. Pursuant to a farmout agreement executed in December 2013, HHDL is the operator of and owns a 65% interest in both the license and the well, and Magellan is carried 100% for its 35% share of the costs of this well, including drilling, testing, and completion costs'.

The upcoming well and sidetrack is a licence obligation (RA is Retention Area for PEDL 137 and 246), from RNS 4/4/2017:-

'The RA work programmes, now agreed with OGA, comprise; the planned Horse Hill-1 ("HH-1") Kimmeridge and Portland production tests, HH-1z Kimmeridge Limestone ("KL") and HH-2 Portland appraisal wells, 50 km² of 3D seismic, 25 km of 2D seismic and a PEDL246 exploration step-out well.'

......and sole risking is not possible as the obligation work is not complete (from JOA in Re-Admission Document):-

'Any participant may undertake sole risk drilling or development once all working obligations have been completed and such sole risk drilling will not cause any conflict with any approved programme at the cost and expense of the participant carrying out such project.'

So either Tellurian pay, and have a say, or they get another carry, or they sell out. If they default paying for obligation work they lose their interest in the licence which could revert to HHDL.

Seems nobody actually reads / checks posts.

That p/e ratio would be useful (perhaps - though really you should be looking at a peer group rather than a sector average) if UKOG was a service company.

That p/e ratio is for service companies probably predominantly in the drilling sector.

'average-price to earnings-ratio-oil-gas-drilling-sector'

for instance CEU (Canadian Energy Services) from their web site: 'Core Business: Drilling Fluids' & 'Production and Specialty Chemicals'.

The HH assessment of OIP I'm referring to was Nutech's, I see the Schlumberger one was differentt with a higher figure for Kimmeridge.

I guess it's down to who you believe.

Wizard,

I think you'll find that the 10 billion barrels OIP is for the whole Jurassic in the 55 square miles of the HH licences, not just the Kimmeridge it includes the Oxford Clay, Lias Clay, Oolite and Corallian.

The Kimmeridge amount includes a lot below the KL2 in shale and nobody knows what the recovery rate might be, and of course that recovery is from contacted oil - ie it needs a well to contact it.

The Kimmeridge CPR won't have an assessment of recoverable oil beyond the HH site though UKOG might make an extrapolation from the CPR.

As for the planning application whats the reason for not applyin for 3 wells and 2 injectors now?

Wizard,
those figures are for 100% not the just over 50% UKOG has.

The figure for Portland is based on 3 wells and 2 injectors, not 2 wells and one injector.

The figure for Kimmeridge is based on 6 wells per site not the 4 planned at HH.

and when are the planning applications for all these sites going in - exploration first then production.

Wizard,

Sting,

I doubt that the 2 sidetracks will be run at full bore together, and high volume flow rates will be of limited time. If they need to be prudent flowing the Portland in the vertical well to not impact the horizontal's testing will they need to be prudent flowing the horizontal once they've got the high rate numbers.

IN my opinion it's unlikely that a drilling rig could be located on site with the amount of civils required just for the cellars for HH-3 to 6 which are intended to be beside HH-1 & 2. Even flowing both may be a challenge during the site upgrade required.

There are a few explanations for the 'delay', Tellurian sorting themselves out, waiting on rig, even planning the final trajectory etc waiting on understanding the reservoir/s, but in the RNS the expectation is in about a month

Ninetails,

Perhaps a rehash of my post on April's Fool Day might help.

Here's a valuation based on figures given by SS, admittedly in an interview, not an RNS.

For the 4 Kimmeridge wells expected recovery per well (=potential reserves) is 1mmbbls and NPV per recoverable barrel £17 (@$70 OP - SS NPV £15 to £18 per barrel) – so about £68mm.

The Portland is more tricky as the indicated recovery of 10mmbbls was based on 3 horizontal producers and 2 injectors, planning is for 2 producers and one injector. The diagram of wells shows one of the Portland wells in the HH fault block (HH-2) with the injector, and one in the Collendean Farm fault terrace (HH-3) without an injector.

So whether these 2 wells will manage to recover two thirds of the indicated 10mmbbls recoverable with only one well being supported by an injector is anybody’s guess, but assuming they do then that’s 6.7mmbbls worth about £117mm @£17.5 NPV per barrel (SS NPV of £15 to £20 per barrel)

These total £185mm – UKOG currently at just over 50% = about £92mm. Current shares in issue 6,047,606,516 = 1.56p per share. With NPV range about +/- 10% 1.45p to 1.71p.

Of course these numbers will change once the CPR is issued, but at least this is based on figures given by SS, not just some random poster.

This valuation doesn't take account of risk, but conversely no value for any other prospect - but until these are proved up by drilling (a cost) these will have little actual value though sentiment might rise if Brockham or Balcombe come good this year proving that an alternative site works.

Big minnow,

If they are looking for sites, which is what they state (ie not acquire assets), IGas have plenty of acreage in the Weald, wich includes many producing fields. They also have the original Godley Bridge licence.

Mirasol,

I can't recall there ever being a statement by the company that there was a skin problem with HH-1.

No mention of it not being attainable in the September RNS - and it specifically names the HH-1 well.

'that further HH-1 Portland vertical well optimisation could achieve a forecast sustainable initial 24/7 pumped rate of around 362 barrels of oil per day ("bopd")* when full scale long-term production commences'.

Also my main point was that to have such a precise figure they would need to have a fairly advanced reservoir model, 362 doesn't sound plucked out of the air - unlike 720 and 1080.

I also wasn't referring to the development but the OGA approval for the 2 wells (HH-2 and HH-1z) upcoming requiring all licencees to be signed up. Note UKOG only say EA and Planning approved in the 15 March RNS.

Off out for the evening...….

Warik,

It would be good to have a first CPR assessment of reserves for both the Portland and Kimmeridge at HH.

If after so much testing they can't issue a CPR you really have to wonder why. I know when posters were claiming a CPR would be issued days after the Portland testing I was amongst those sying weeks or months and I'm sure there will be posts and tweets about having to wait until every bit of testing is finished but the amount of data they had in February from the Portland and Kimmeridge would in normal circumstances be more than enough to produce a pretty accurate CPR.

Months ago (September) Xodus issued a figure of 362bopd for optimised production from HH-1 Portland. My view is this must have been from a fairly complete reservoir model for such a specific number to be spat out. Maybe that's the only number UKOG liked, although since then they have not performed an actual optimised test to prove this forecast - which is used to estimate their horizontal production of 2 to 3 times production from a vertical well which is an industry benchmark not calculated from the ewt data.

Is the issue that without planning permission and OGA approval for the development that only resources could be assessed. An economic run assuming that the resources are reserves (as it isn't a technical problem) could be made but these would not carry the weight of reserves based economics.

As for unknowns there is Tellurian. Whilst UKOG dictates what HHDL do its unlikely the JOA allows HHDL to do as they like with no discussion with Tellurian with regard to operations. When HHDL was paying all the bills, carrying Tellurian, Tellurian probably had little or no input but any work beyond the ewt will be joint funded unless another deal is worked out.

Is Tellurian trying to do a deal with HHDL, UKOG, someone else? and until that's resolved no operations beyond the ewt can take place unless they participate instead. I believe (means I haven't checked) that for OGA approval to drill the upcoming wells all licence partners have to agree the proposed work and as this work is part of the obligation work programme the JOA doesn't allow sole risking, so unless they are out Tellurian have to pay their way (or have it paid for them by a carry like the deal done for the ewt) so their agreement or exit is required.

Presumably the pump test just displaced kill fluid to surface which is why no fluid from the reservoir reached surface.

Whatever data they consider to decide whether to bring the full test equipment to the site until they actually produce to surface they won't know how successful the water isolation has been. It would also be prudent to produce for some time to establish no other pathways for the water exist before declaring problem solved.

No mention of where the bridge plug has been set, why the secrecy?.

Silas, the previous flow test appears to have flowed very little oil, mostly water which brought small quantities of oil with it (RNS 4 Feb):-

'It has become apparent that a part of the perforated interval is producing water, which is inhibiting significant oil flow and therefore has not allowed for sustainable flow rates of oil to be reported at this time.

Small quantities of oil of 40 plus API have now been returned to surface and sampled in the returns and has been confirmed through analysis as Kimmeridge oil'.

I never thought I'd say this but pboo is right they have only reperforated the uppermost KL, the KL4.

The reperforated section stops in a zone marked as having no fractures in a shale interval (look at BR X4Z Drilling results presentation, slide 7) which to me suggests that the bridge plug has been set.in that section to isolate the uppermost limestone from the section below.

This might be to more or less guarantee no water production even if the ingress is deeper than the KL3 (the next deeper limestone), as HH has connectivity between the KL3 and KL4 which may still be present at Brockham.

Until they tell us where they have set the bridge plug though this, like many other posts, is just a guess.

Zoom,

probably not.

April 11th 186 tankers (RNS at 7 am) stopping production for workover.

April 13th production resumes (twitter - Jo has just filmed the Pump working Maintance work over.)

May 1st - (twitter) 201 tankers. 18 days, 15 tankers.

UKOG has indicated the long term test would be at a stable rate of just over 200 bopd.

Wizard, last night you posted:-

'I did not see any depletion in 440 barrels per day under test conditions from a vertical well from the Kimmeridge or Portland did you?'

I didn't see it either - could you tell us where it has been RNS'd that the Portland or Kimmeridge flowed 440bopd for any length of time at a stable rate?

It has been previously RNS'd that 362 was the calculated optimised, and sometimes said to be initial, sustainable flow rate for the Portland from this well.

Most, if not all, RNS'd Kimmeridge tests seem to start at higher rates for short periods then UKOG give an average, not a sustained rate, that includes these higher rate flows over a few days that's much lower than these short term rates.

Saltfleetby, which has produced over 1.7bcm (over 60bcf) and condensate is an excellent fit to what has been revealed.

It's in the East Midlands near the coast,, nearby Teeside refinery was closed a few years ago (2009)

Barndoors,

Talking of waffle ...…………. I've not seen anything in your posts on this board apart from passing opinion on other posters.

So challenging you on facts is a bit difficult.

Barndoors,

In reply to your post 18:01 yesterday.

Perhaps you didn't understand that the first part of my post was a copy and paste from March and addressed to Rodders74 (unless of course.....). No need to rewrite what I'd already written.

The bits about Portland and Kimmeridge were not from that post.

But a poster who registers late Friday afternoon is pretty obviously a banned poster having a weekend of fun - cheered on by FOTH and cohorts on twitter, where you're probably more at home anyway.

As for the rest of your post - where's the examples of me always choosing the worst outcome, although apparently not a whole lot in my post from a 'factual' point of view that you'd take issue with. Most of the time I use the most likely outcome, worst outcomes are complete failure

Just because I identify the many uncertainties doesn't mean I expect certainty, it's a more sensible outlook than everything will be alright and plan on that basis (ie hold regardless).

As far as value is concerned I got that wrong - 1.52p is a valuation for both Portland and Kimmerdieg at HH based on current shares, licence equity, PP plans and SS NPV figures - see my post from 1 April 2019!. Portland only is just under 1p.

I say the Kimmeridge is tricky and I include HH in that - although in reality it's not what happens at HH that matters it's the tests elsewhere as for a decent SP it's these and more that matter.

Brockham and Balcombe (and HH even) Kimmeridge are yet to be proved commercial to an extent that the phrase 'national significance' even starts to have relevance - but my post was about UKOG and despite many posters presumption that any other site's success = Weald proved, QED all UKOGs acreage proved, job done, it isn't.

Success elsewhere is encouraging yes but it needs a wide spread of many successful tests across the Weald for the play to be considered proved.

Here's an extract from a post of yours on the Angus board this morning, perhaps you should consider the irony of your posts and how it could so easily be said about this board:

The 'caution' (realism) in my posts comes from a wish to counter the dishonest posters that try to manipulate the SP for their own ends - the pump and dump merchants.

Just for you Barndoors (well actually it was for Rodders on 12 March - that isn't you is it - memory failing?) - is the joke 'after the horse has bolted'?

I don't hate UKOG, but I do think that the way they have released information has been deliberately difficult to analyse and often appears to be misleading, only CPRs will clarify with full disclosure.

I have nearly 2 million shares in UKOG - but I still like truth not deception, and I trade in and out so technically underwater but turning a small overall profit even at these prices. I bought 250,000 more yesterday at 1.209 following my dummy buy where I the buy price was 1.206 (see my post yesterday afternoon).

I have stated before unlike a horse race you don't have to wait until the end to take your winnings

When the stonking RNS turns up I shall like most posters be happy, it still hasn't happened.

I expect you'll claim I'm lying - but I'm not, maybe you will be unable to understand my position but as I've said previously ramping for short term positivity probably garners long term disappointment.

Better to keep to realistic expectations (and despite what you claim that's what most of my posts are about) then you will really understand whether an RNS or CPR is actually positive or negative.

I have in various previous posts said the following:-

Portland - should be OK but depends on horizontal - but only just about (on SS figures) covers an SP of around 1.5p. Holmwood is exploration - 50/50 and will it also be exceptional. Godley Bridge new mapping being tested in this appraisal well - as gas needs better flows than Godley Bridge 1 to really be worth anything. IOW depends on view original testing was messed up.

Kimmeridge - very tricky and needed for decent SP. If UKOG have identified the only and correct reason for Broadford Bridge failure then redrill will be interesting but allowing the licence just to the south to lapse odd.

Is HH unique - is a structure necessary, is nearby faulting necessary (nearer fault at BB = more fracturing) what is required isn't known - or at least by outsiders.

As for Tellurian as another alternative I've already floated is this, (16 March):

An alternative might be UKOG taking Tellurian's equity for a further carry which would have much less impact, just increasing UKOGS share of costs and revenue (which may be nuetral as they occur as expenditure is needed rather than an up front payment.

It may also be Tellurian sell elsewhere which would be a boost, depending on price.

As the 2 upcoming wells are obligation there's no automatic option to default and pay an uplift to re-enter.

EOGL,

It was on a Portland thread but maybe it was about the Kimmeridge, but nevertheless could it also be a factor in the Portland.

The Portland at HH is much poorer than at Brockham in terms of porosity (6.7 to 14.2% vs 20 to 26%) and also has generally higher water saturations (40 to 60% vs 35 to 45%). Brockham figures are from the Holmwood CPR where they used Brockham parameters for the volumetric calculations.

Yet HH flowed far better than any other Portland vertical well - 21/03/2016 RNS: 'The final Portland test of 323 bopd, over an 8.5-hour, period is the highest stable dry oil flow rate from any onshore UK Portland well.'

I suspect that's why Xodus were sitting on the fence regarding the reasons for no water / good flow (note for barndoor -' I suspect' is code for IMO)

Barndoor,

'never sharing any opinions / conclusions'. Really, I suspect some posters think I overshare.

Barndoors,

Like you I'm pointing out the plethora of ifs and buts and 'coulds' that are littered throughout UKOG RNS including I suspect what you term 'end conclusions' that many posters state as if they are irrefutable facts.

Apparently not only is it not permissible to correct a misleading (a polite way of putting it) post, it's also not allowed to post an opinion - and that's in you opinion.

EOGL

That's one possiblem scanario, oakleak has another (though I wouldn't quite express it like that) - and there may be others, Xodus think there is more than one.