Member Info for Penguins

Rodders,

Everyone has the same opportunity as you to read the RNS and listen to interviews If the only conclusion that could be made from these facts is that UKOG was undervalued surely the SP should be higher. I know you want to blame everybody else, MMS, shorters, derampers (really - the volume of ramping on here has reached a new high) anything but a different point of view to yours.

I know SS said a lot of apparently positive things but what was missing was how the 'values' were arrived at. Some numbers were revenues, others were based on an NPV without mention of the discount rate (but based on $70 oil which won't be what Xodus will use) and others were unclear whether it was per well, several wells or per field.

But most of all will UKOG deliver. There seems to be a problem that deadlines are missed sometimes by years and expressed confidence in outcomes turns to silence, then bad news (BB).

Previous work by operators at Godley Bridge and Arreton places risk on their non Kimmeridge targets and they won't be tested until 2020, which looks like the earliest any further Kimmeridge sites will be tested by UKOG.

Hopefully upcoming CPRs will stop some of the bickering over value - certainly of HH, but the rest of the Weald is still a massive unknown with uncertainty over what exactly happened at Balcombe (big flow rates over very short periods) and BB supposedly messed up (though HH which wasn't targeted at the Kimmeridge flowed OK).

Brockham looks like it might be delayed a little (but perhaps not) and success there should help, but failure wouldnt be a great result for UKOG either for all those that seem to think UKOGs and Angs futures are not intertwined.

Wizard,

the important information in the CPR will not be OIP.

The most important information, as far as the company is concerned, will be 'bankable' 2P reserves.

Next most important will be 2C Contingent resources.

These numbers will be the result of production forecasts and that plus the estimate of connected oil will give a figure for recovery.

From SS's interview the range of reserves + resources currently expected for HH (gross) seems to be about 13 to 15mmbbls or, if they drill 6 Kimmeridge production wells 16 to 18mmbbls.

This is calculated on the basis of his 10 to 12mmbbls recoverable oil in the Portland although this is higher than the 30% of about 30mmbbls OIP also quoted, and his 1mmbbls recoverable from each Kimmeridge well (also stated in the presentation)l.

Taking SS's NPV(?) value of £15 to £18 per recoverable barrel (say £16.50) this gives a NPV(?) value to UKOG (47%) of between £101mm (13mmbbls gross) to £149mm (18mmbbls gross) ie up to 2.7p per share based on SS's valuation.

What will be interesting is what happens to Tellurian's share as the tests come to an end. Whether they keep it and pay their share, they keep it and are 'sole risked' by HHDL (assuminng that's a possibility) or if they sell it, what price.

Wizard,

I think you miss the point.

If the value, once produced, of the estimated recoverable oil is for the Kimmeridge over the life of a well £15 to £18 per barrel (1mmbbls recoverable per Kimmeridge well, so £15 mm to £18mm) it is unlikely that the value of oil per well in the first year is £20mm.

Because of the nature of time value of money this will be front loaded but not to the extent it is more than the value of all the oil produced from a well.

So no not £20mm a year for a single well.

I see you are valuing one years production from HH as not much less than the lifetime value SS put on HH (£250mm to £300mm gross).

What is needed is a clear CPR derived valuation with production by year with reserves and resources that complement each other, then everyone will be working from the same numbers, not guessing what someone said.

Phil,

I certainly accept that the planning application may be different to the scoping document but massively underestimating, in documents to the council and local residents, the number of tanker movements when they could have had a pretty good stab at the well productivity based on the 2016 test data may not be a smart move.

Phil & Rodders,

It was based on Portland and Kimmeridge.

From UKOG web site.

'Horse Hill 2018'

'Horse Hill Developments Ltd, a UKOG subsidiary company and the operator of the HH-1 Kimmeridge and Portland oil discovery, has recently submitted an outline long term HH Portland and Kimmeridge oil production plan (called an Environmental Impact Assessment Scoping Request Report) to Surrey County Council.'

Quote: outline long term HH Portland and Kimmeridge oil production plan

The figures of an average of 3 a day average over 20 years is from the Environmental Impact Assessment Scoping Request Report, the 2 a day are from the 'Facts about Horse Hill' leaflet distributed 'averaging two two-way movements per day when the site has settled into its long-term steady production cycle'.

Quote: 'the site'

But if you believe otherwise - fine.

Thorpedo,

the 1mmbbls per well is not only mentioned in the podcast (at 8:56 ) 'if we keep at $70 oil and we get one million barrels of oil per well' but also in the presentation on slide 14:- Target recovery 1 MMbbl/well.

So not correcting me...…

Thorpedo,

I think you were so eager to try and diss my post you forgot to read it.

Yes I said that SS said an EUR of 1mmbbls per well, and then I said this (in my original post):-

'Another figure at odds with this was the Portland recovery of 10 to 12mmbbls from 3 wells which would imply a EUR per well of 3 to 4mmbbls. I suppose we'll have to wait for the CPR to square that circle and what is required to achieve 30% recovery as 45% was the max previously quoted with 2 injectors.'

So no you didn't correct me. 'which would imply a EUR per well of 3 to 4mmbbls.'

and then:-

He also said that HH Portland was worth on the basis of that NPV(?) £150 £200mm, so yes we agree.

Red,

I know you're being silly as SS (he's the CEO of UKOG you know) said that 10 to 12mmbbls of, oil was worth (depending on volume recovered, OP of $70 and presumably an unknown exchange rate and an unknown NPV(?)) £150 to £200mm and we don't actually really know the basis - and is the oil recovery a P10, P50 or P90 number.

Still that's what he said, not me - apparently you (and probably the FOTH seeing as he's muttering away on twitter) know better - $660 - $780mm...…….great. - but I would prefer to invest on what UKOG say.

10,000,000bbls is 45,454 tankers (@ 220bbls per tanker which is an average of 6 tankers a day, 7 days a week, 365 days a year for 20 years when Mr Sanderson is telling the council it's an average of 3 a day for 20 years (presumably only Monday to Saturday and to locals it will be only 2 a day when the site has settled into its long-term steady production cycle - and that's only the Portland. With the kimmeridge it will be an average of 9 a day over 20 years.

So one story for the investors...………...

Thorpedo,

previous guidance was contacted oil of 10mmbbls per well.

What SS said was (at 7m 10secs) - 'when we look at the Portland we've got about 30mmbbls of oil in place....the well test shows that we will need about 3 wells each recovering about 30% of the contacted oil that they see, that's about 10mmbbls per well so when we look at the three wells that's about 10 to 12mmbbls of oil that we can get out of the ground.'

Your interpretation of EUR of 9mmbbls per well implies nearly 100% recovery.

Thorpedo,

sorry just reread and realised the point you were making - read my post I do say 3 to 4mm EUR from the Portland.

Thorpedo,

listen again - the 10mm was connected or contacted oil......it wasn't very clear but then he said a total of 10 to 12mmbbls

SB

Despite others certainty not sure.

Various figures were mentioned, first was a NPV(?) of £15 to £18 per barrel at $70 oil. He inferred it was about the same for both Portland and Kimmeridge. For a Kimmeridge well with the quoted 1mmbbls EUR (Estimated Ultimately Recoverable ….oil) that gives a lifetime value of £15mm to £18mm.

Another calculation is if there is no OPEX (ie income only)at 720 to 1080bopd @ $70 = about £14mm to £21mm.
The problem with £21mm is it assumes no depletion and compared to an EUR of 1mmbbls given this would mean 1/3 of the total oil is produced in year 1.

Another figure at odds with this was the Portland recovery of 10 to 12mmbbls from 3 wells which would imply a EUR per well of 3 to 4mmbbls. I suppose we'll have to wait for the CPR to square that circle and what is required to achieve 30% recovery as 45% was the max previously quoted with 2 injectors.

He also said that HH Portland was worth on the basis of that NPV(?) £150 £200mm - and the Kimmerdige at HH and elsewhere was worth £100mm per site (6 wells?).

Back engineering the £100mm would suggest recovery per Kimmeridge site of about 6mmbbls.

and for 50% of HH at values quoted (@ $70 oil) £125mm to £150 about 2.7p to 3.6p, total recovery about 18mmbbls, we'll see if these numbers are quoted as reserves in the upcoming CPRs.

I think answers to the following questions might be helpful as they are the subject of a lot of posts;

The HHDL planning permission for the appraisal ewt of HH-1 is specified as 210 days (as requested) in the decision notice but UKOG is showing in the gantt chart the ewt continuing to June 2019, have you requested an extension to phase 1 from SCC?

The RNS was unclear as to whether the 10,248 bbls was produced during 30 days of actual flowing, giving rise to the average of 342 bopd,could you confirm that is the case, and if so why is that described in the presentation as a sustainable rate?

What do you mean by sustainable - hours, days, weeks, months?

Why is further funding mentioned (slide 11) for production start up in Q1 2020 as UKOG has previously stated that funding through 2019 is in place for core projects?

Ambition for initial flows of 1000 bopd from Kimmeridge wells in the presentation is not reflected in the start up volumes quoted in the scoping document of about 3,600 bopd from hh-1 which from statements in that document is production from 3 Kimmeridge and 3 Portland wells. I know on the website UKOG states that if higher rates occur you will request an increase but it appears that you are already underestimating production?

The presentation has a suggestion that there will be multiple production sites across the Weald (4 to 8 per 100 sq kilometres). How many sites with multiple wells actually in full production do you envisage UKOG being involved in by 2025?

Will you be publishing a figure for contacted or connected oil in the KL3, will any or all of this be shared with KL4 as they are in communication, or will you wait for a KL3 & 4 joint figure?

Why did the RNS include a figure of 800psi without any other information. Hydrostatic pressure appears to be in excess of 1200 psi at the depth of KL3, is what appears to be a 400psi drop good, bad or indifferent.

I have no idea what the answers might be, but there's plenty of scope for very positive answers, though I don't suppose many (if any) of these questions will be asked or answered - maybe a clarification of the 342bopd.

If he just trots out statements like some of DHC posts (quality of oil, thickness of Kimmeridge, area of Weald etc) then I think it won't impress.

Rodders,

you posted that they have permission from the PP for 3 years for this ewt ('So this EWT can go on for 3 years') but now you're saying overall testing (including HH-2 and HH-1z is 446 days, which is also wrong as they may take a bit of time preparing for and drilling HH-1z and HH-2

As a point of detail phases 2 & 3 total 210 days - I think even HHDL would find it difficult to define site restoration, phase 4 as ewt. (your 256 days).

Phase 2 Drilling of a Sidetrack from HH-1 and EWT
Phase 3 Drilling of HH-2 and EWT
Phase 4 Restoration

Calm down - the SP is rising.

Also could you be specific about loans from other HHDL shareholders -

Alba in their November 2017 accounts stated:
The above investment represents an investment in 18.1% (2016 – 15%) of the issued share capital of Horse Hill Developments Limited (“HHDL”) and an associated loan to that company.

So Alba have a loan owed to it from HHDL as do Doriemus.

Doriemus:-

The company had the following amounts outstanding from its investee companies (Note 11) at 31 December:

Horse Hill Development Ltd (“Horse Hill”) £683,000

Gunsynd:-

Horse Hill Developments Ltd (“HHDL”)
Investee Company Cash call Loan to HHDL £108,000

So who owes money to UKOG apart from HHDL?

'Loan to be repaid to UKOG by other HHDL partners.

Its all in black and white.. :-)'

Where is this all in black and white - an official source or someone else guessing as I see ir was repea

Rodders

I would read the decision notice - time limits - section 14

14. Within the 3 year period referred to in Condition 12, the site shall be operational in accordance with the phasing timescales set out in Table 4.1 of the Planning Statement and Table 3.1 of the Transport Statement Addendum, copied below:

Phase 1 - 210 days
Phase 2 - 100 days
Phase 3 - 110 days
Phase 4 - 46 days

The applicant shall keep daily records of the time periods for each operational phase which should be made available at all times for inspection by the County Planning Authority

Planning Statement:-

'Phase 1: Appraisal of HH-1 Well'

I come back a few hours later and you still don't get it:

from the 10/10 RNS:- 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 through test separator.

so 2 'sustained' flow periods in 24 hours.......

So you have no idea how long the period of time is..............

There is nothing that matteth says that 'ends the discussion'

he posted: ' They are not telling you the average over 30 days' - that is not true

he posted: 'They are telling you the rate which could be sustained without a decrease' - where?
he posted: 'all we can say is sometimes it flowed 342, sometimes it flowed 771 and sometimes it flowed any amount of rates inbetween.' - many times it has been explained that if it flowed at 771 for any length of time then the way averages work is that it must have flowed at a lower rate.

Please stop pretending that posting a definition of sustained in any way infers any particula

Matteth,

really, but UKOG did tell you it's an average:- The average sustained daily rate over the full test period was 342 bopd.

I don't know what your maths is like but they give a total volume (10248) and number of days (30) and state it's an average in the RNS, only in the heavily disclaimed presentation do they claim it was a specific sustained rate, though when and for how long who knows? Bizarrely 341.6 * 30 = 10248.

As I understand averages it would need to flow at below 342 for some time if it flowed at above that rate and they and you say they did. Funnily enough the 771 is exactly the same number quoted for sustainable flow prior to the 10 October RNS.

As for sustained it seems their periods are quite short - from the 10/10 RNS:- 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 through test separator.

so 2 'sustained' flow periods in 24 hours.......

For starters UKOG on 5 October said:-

'As previously reported, regulatory permissions are in place to drill and flow test the first two new wellbores, HH-1z and HH-2 with a planned early 2019 spud date.'

Can any notice be taken to UKOG guidance on timings?

As a gantt chart has now appeared with a couple of green boxes one of which overlaps a red box when the new well will (?) be drilled and it's taken as gospel that the testing won't end until June 2019.

I just hope that SCC are kept in the loop that UKOG intend to exceed their proposed and agreed testing timetable.

Zoom,

what's to stop any other company applying for the pretty large amount of open acreage in the next onshore round - slide 6 of the latest presentation is a good guide as to how little is licenced at the moment.

you also don't seem to understand the UK rules on shared fields. OGA requires that companies agree a unitisation if the field is shared before applying for FDP approval (ie companies agree on the share of the spoils).

It will be interesting to see what happens with Brockham, especially if they also intend to drill more, probably horizontal, wells in the restricted licence area as Angus will need to demonstrate either they will not be producing oil from surrounding licences, or have in place a unitisation agreement - which will probably be a first for a continuous resource in the UK. The area of drainage of wells will be something that should be understood following the appraisal testing there.

Another couple of endorsements from our favourite man in the bushes...…

********************************************************.

The fool on the hill@Adrianwfire

Penguins MO is sound an honest Joe. Baffle you with b*******t and a few in the mob praise him.

Don't be Fooled.

Shorters.

The Fool on the hill@Adrianwfire

#UKOG Oh look at penguins and the short crew out inforce on LSE tonight . Didn't like that afternoon rise after the pump was off the well did they he he

Stay tuned UKOGERS

Fool News ;)

******************************

I have to ask myself why he concentrates on my posts - draw your own conclusions, think the best part is don't be fooled..............

SSRyan,

It's impossible without all the data to determine if that is good bad or indifferent - though maybe UKOG is proud of it?

Unless you have all the other data it is meaningless (ie initial pressure, flow rates, chokes) but here's some values to compare that value to.

The Top KL3 is at a depth of about 900metres according to the new corporate presentation, and from the diagrams this is probably TVDKB - True vertical Depth below Kelly Bushing.

At that depth the hydrostatic pressure would be in the region of 1295psi if there was a vertical column of water with SG 1.0, salty water (SG 1.025) would be slightly higher. A column of 40 api oil (SG 0.8251) would exert a pressure of about 1070psi - I've added 14 psi for air pressure at surface (1 bar). These figures could be slightly +/- as I used the default value for earths gravity. The fact the well is deviated makes no difference - it's the vertical height of the column that matters.

So the importance of pumping and / or gas in the flowing oil column is obvious if the bottom hole pressure is 800psi which is less than the pressure that would be exerted by the vertical column of liquid in the well.

As I understand it stable just means they have controlled the flow to maintain that pressure - if they allowed the flow to increase the pressure would drop. This may become a problem if they drop below the bubble point, but we don't know what that is and depends on factors we don't know

If you want to come up with your own numbers here's a calculator:

https://www.sensorsone.com/liquid-level-to-pressure-calculator/