Member Info for Penguins

Gosh, Lidsey 'flowed' oil, but Angus, the coy AIM company seems to have declined to mention how muc and how fast.

Anyone who has actually looked at the Lidsey presentation (20 November 2017) will be aware that the KLs are a fraction of thickness seen in Brockham, even with a comparison that's expanded 4 times (100 metres of Lidsey compared to just under 400 metres of Brockham X4Z).

The 'finding's at both BB and Lidsey seem to be the Kimmeridge will be more mature in the centre of the basin, but what does that really mean. At BB we were told the fractures were oil filled with perfectly respectable oil, and the same goes for Lidsey, so maybe elsewhere the fractures will be filled with slightly lighter oil?

So the margins of the basin are so good that BB didn't seem to want to flow for some reason that wasn't related to the mud or cement job, and the 2 freshly perforated sections in the KL5 and KL1 didn't want to yield their riches either despite not having the excuse of the spent acid or completion fluid being left too long as an excuse.

But then UKOG allows IGAS to let PEDL 233, which is the licence to the south of the Broadford Bridge licence area to lapse when if this Territory is so great they could have taken on Operatorship and had another near 100 sq kms of the Kimmeridge play, but at the same time doing a placing to enable them to increase their position in the Weald.

Something doesn't add up. Here's what was said about PEDL233. Mentioned in the same RNS the corporate status change was announced.

Both UKOG and the licence's operator, IGas Energy Enterprise Limited, concluded that the asset offered low commercial potential together with significant future drilling and production planning consent issues related to its location in the South Downs National Park.

news

Many (most?) of these IGas fields would have been put on production many years ago so not necessarily commercial at their current rates - except that all the costs will now be sunk so little or no CAPEX so as long as the OP is higher than OPEX plus share of company overheads then they are worth producing.

HH-1 cost is now sunk but any future drilling will incur up front cost that has to be justified against future earnings.

Zoom,

You are digging deeper and deeper. HHDL is not a shell company - 'a non-trading company used as a vehicle for various financial manoeuvres or kept dormant for future use in some other capacity.'

It's a fully functioning company - it wouldn't be allowed to operate the HH licence without being so.

If there's no tankers until next Wednesday it won't be because of the change in status.

Why not use the 'watchers aren't there 24/7 gambit', it's much less complicated

Zoom,

You are digging deeper and deeper. HHDL is not a shell company - 'a non-trading company used as a vehicle for various financial manoeuvres or kept dormant for future use in some other capacity.'

It's a fully functioning company - it wouldn't be allowed to operate the HH licence without being so.

If there's no tankers until next Wednesday it won't be because of the change in status.

Why not use the 'watchers aren't there 24/7 gambit', it's much less complicated

Zoom,

UKOG has no oil - it's all HHDLs. They don't dole out the oil to the shareholders to sell, nor do they split the proceeds.

Eventually (hopefully) HHDL will repay the loans and after that there will be dividend distribution.

In the meantime any oil sales will used to fund HHDLs ewt etc and thus reduce the funding required from shareholders

Zoom,

the change is from an investment company to an operating company.

In case you hadn't noticed it is already sharing in production through shareholding's in other companies (HHDL ewt) and equity holdings in subsidiary's (Horndean: UKOG (GB) Ltd)..

Also the oil is being produced by HHDL, so any tax etc will be paid by them, not UKOG, 'investments' or otherwise

Still worried about choke settings.

I would have thought a choke setting when the oil is being pumped is unecessary. It would just mean the velocity through the choke is higher and the pressure drop across it also higher.

Maybe it's to do with the associated gas and a method to stop too much of it coming out of solution before reaching the surface. Excessive gas coming out of solution in the tubing in the well would not be a good thing. Too much fizz not enough liquid.

I think there are quite a few, but only one in the Kimmeridge, Balcombe-2z.

Star bright (?)

Did you read the excerpt from the HHDL Investment Agreement dated 15 September 2014:-

In the event that HHDL requires further working capital, such working capital is to be provided by all of the shareholders of HHDL by way of loan pro rata in proportion to their shareholdings.I'm not sure what you're banging on about but that's pretty clear.

In the UKOG (and Solo and Alba) accounts they have 'loans' to HHDL (haven't looked at any others but its clear all shareholders fund HHDL pro rata.

So yes in the case of HHDL the shareholders have agreed to fund the company.

In terms of tax it's better that HHDL repay loans rather than pay dividends.

ajb,

They wait until it has the cash available to pay presumably.

and then HHDL can pay. There's always the possibility following the CPR/s (if good enough) for HHDL to raise a loan to repay the shareholders.

For the avoidance of doubt the 'creditors' amount is minus 6,708,607 in the accounts ie a debt.

Matthew 7:7: Seek and ye shall find.

The amount of loan outstanding to UKOG was £2.117mm in the 2017 accounts (page 260 admission document).

This was included in the 'Trade and Other Receivables' total £3,785,000 for 2017. In the 2018 March accts that total was £3,960,000, but the amount owed by HHDL wasn't split out - so maybe £175,000 more.

HHDL accounts for 2016 show creditors amounts falling due after one year of £6,708,607 which may be the amount of shareholders loans, but may include other long term loans.

As for repayment:-

From the admission document (I'm sure it's been published elsewhere)

'In the event that HHDL requires further working capital, such working capital is to be provided by all of the shareholders of HHDL by way of loan pro rata in proportion to their shareholdings. Unless determined otherwise, the loans made will accrue interest at a rate equal to the Bank of England base rate from time to time, be repayable on the date falling 30 business days’ after HHDL’s financial year end following such loan being made and all repayments are to be made on a pro rata basis between shareholders'

Presumably they aren't invoking the payment schedule (30 days after HHDLs financial year end) as this would bankrupt HHDL and that could trigger HHDL losing operatorship (insolvency clause in the JOA).

So Gerry,

When someone buys a stake in a company you take on a proportion of any loan that company has?

I don't think so, if you buy the shares off another company the deal is between the 2 of you and if anything as part of the deal you might take on the right to be repayed money the original shareholder had funded (in this case) HHDL, but that's between the 2 of you.

In fact the whole point of setting up a limited company is to have no liability as an owner for the limited company's debts unless otherwise agreed

And no I'm not missing the point.

Eddie's reply inferred that the other consortium members (I assume he meant HHDL shareholders) would be paying back the loan that UKOG has made to HHDL.

This could mean they were responsible for debts incurred by HHDL but UKOG weren't, and in fact UKOG were in a priviledged position whereby their debt was underwritten by the other shareholders

This is what Heid replied o Eddie's behalf.

'His understanding is that on declaration of commerciality the consortium members need to pay up their proportion of the loan to UKOG"

So who are these consortium members that are going to pay back the loan to UKOG if they aren't the shareholders in HHDL.

Hi Boyzee,

I think the photo's are great, but I'm sure those guys don't want praise from me.

But some of the analysis is iffy - BB was a good example, but at least we can make our own minds up about what they show.

But if free is going to offer commentary on my LSE posts on twitter and screen grab responses to my posts made here I think I can respond here.

If free wants to keep my post count down he needs to understand his tweets encourage me to post, though I mostly can't be bothered, just save them up for later.

He probably ensures my posts are more widely read...…...

I see fool now mixes in the rareified company of oilmen...….

#UKOG A friend of mine is in the Oil business. He told me if an Oil company funds Oil they won't tell you everything. They just start buying up land in the area. Before their competitors know what they've got!

Well they sure as hell have tried to keep this one secret. Luckily big dave knows how to keep a secret.

Next onshre il round will be interesting. With all the open acreage available (including PEDL 233) it will be interesting to see the big oil charge.

I see he's also entered into the water saturation debate:
The fool on the hill #UKOG #HORSEHILL

'Give Pingo on LSE BB a glass of water. He is gutted the well is flowing the black Gold Again:) I like this guys reply to him!'

I prefer Xodus:

'Although no water was produced during the well test, it is foreseen that water will break through at some point and ultimate recovery per well could likely be a function of the amount of produced water. No water production profiles have been determined as part of this report.'

Funny free hasn't screengrabbed my post.

Anyway here's a few more of his highly technical posts:

'#Horsehill #UKOG LSE poster and serial deramper Penguins. SS says Portland is producing sweet 36 api Dry Oil. Which bit of the word dry don't you understand Pingo? Dry means zero zilch no Feking water lol... Jeeze. Knows FA!! VIVA!'

LSE #ukog BB don't believe me? Take a look at Pingos history. He is there to smooth talk you in to selling and putting off new buyers. This guy sussed him. Pingo reports me every time I made a new account up . Gets me banned. Ha.Stay strong all you UKOGERS.'

btw not me who reports free - I suspect Craig spots him a mile off, or he gets agitated and starts trash those he doesn't agree with (anyone who doesn't ramp apparently):-

'#ukog #Horsehill this guy penguins is a shorter. Never ramps ukog over the last 5 years.'

#ukog Pingo is a shorter . Caching it a short Squeeze will now happen. RNS out of the blue from SS designed to burn the likes of this scum bag imo.

- the last one was because poster elegance said I was an idiot for suggesting the actual ewt would start mid-July (on June 26th).

Yes I've said it again.

I thought I'd do a bit more reading about fractured reservoirs as the Kimmeridge Limestone is definitely identified as one, and the Portland flowing dry oil seems to be behaving like one.

Because the Portland is flowing dry oil, yet it is stated by Xodus it has throughout the section perforated 50% water saturation it seems to have a dual permeability system, fractures and rock matrix.

This business of water saturation seems to have posters up in arms, teling me I don't understand because the well flowed dry oil so I (and apparently Xodus) must wrong. But the water is there.

What is water saturation. Simply it's the percentage of the fluid present in the porosity of a rock that's water.

Porosity is essentially the percentage of 'hole' in the rock and permeability the ability of a fluid to flow through the rock. A fracture should have excellent permeability. A tight rock has very poor permeability.

Whilst UKOG have unequivocally stated that the KLs have fractures (filled with oil) it has only been hinted at for the Portland.

Here's 2 scenarios, neither might be true but which of these 2 is more likely.

The Portland isn't fractured and the oil and water in this rock which has a log derived porosity of 13.5% (P50) has to be locked in by poor permeability (otherwise the oil would have all migrated upwards leaving a separate water ĺeg and oil leg and the water saturation would be considerably lower at the top than the bottom).

From the Xodus CPR:- The well test was conducted over the entire Portland interval of 100ft. In this zone the water saturation is relatively constant between 40 and 60%.

Somehow this unfractured rock is producing only oil from this tight formation which with these water saturations would be expected to produce water with oil

Or

There are fractures through this poor permeability rock that allows free (relatively) movement of fluids within them. This enables the oil to migrate within the structure so that within the Horse Hill closure the fractures are filled with oil. The rock matrix however still has a mixture of oil and water which, until the pressure in the surrounding fractures drops, can't get out because of the poor permeability.

If you want to understand more about this Google dual permeability (or dual porosity), and you should also read this Crain's article.

https://www.spec2000.net/12-phifrac.htm

If you don't want to understand and just want to tell me I'm wrong, fair enough, just remember I do say at the start that the well is flowing dry oil. What is at issue is that there is water down there not coming out.

If anyone has a better explanation (eg aliens have installed a special sieve in the well) it would be good to share.

FK,

Do you not remember DL telling the world that BB wasn't drilled with oil based mud like HH was?

Yes that's what I said, it flowed at 464 bopd. But why it flowed 50% water with the open choke is unexplained, except by DL saying it wasn't formation water.

I'm not scaremongering, just raising interesting inconsistencies.

Anyway it's late,

G night

MaxHSpringer,

and what does that have to do with a discussion about the choke and whether it was restricting flow.

The pump forces the oil that enters it up to the surface. It then refills and the same happens again. So it's the pump that supplies the pressure seen at the surface.

Fourprinces

I noticed the variation in the choke and this is what I thought (part of an earlier post):-

The choke business is also odd in that is the choke quoted actually restricting flow. The rate of 352bopd quoted as being through the 20/64 choke was being pumped so isn't the pump supplying the pressure at the surface, not the reservoir?

Anyway there is no way if knowing if the choke was actually restricting flow so opening the choke might not achieve greater flow.

One thing to consider is that the first test of the KL3 at HH had a flow of 700bfpd, 50/50 oil/water with a 64/64 choke ie 350 bopd. Reducing the choke to 32/64 acheived a flow of 464bopd.

Of course big Dave L said the water was drilling fluid - he obviously had forgotten the drilling fluid was oil based.

Maybe he's crap at running a company, but seems a good geo.