Member Info for Penguins

Its changing its status from investment to Operating company

It is already a company that can produce, it's just the company structure will have greater flexibility

It's a metal structure with the sun on it.

Even a road will throw off heat haze in the sun, and maybe the flare is operating anyway.

I may not agree with the analysis that the enthusiasts make of their pictures, but I would be 100% sure they wouldn't doctor a picture.

FK,

The very very first test which was the first KL3 test started with a 1 inch choke - this produced 50/50 water.

The choke changes were not to restrict flow because they didn't want to produce too much oil (could they have requested a higher limit from the OGA anyway) it's because it was necessary firstly to stop the water production and then to keep flow stabilised.

They actually state the second test was choked back to stabilise flow - I didn't make it up.

BTW They choked back to a 32/64 choke (in my view as DL says no formation water was produced) to stop the formation being damaged as the water is trapped in the rock matrix.

The KL4 had a 1 inch choke for both test - and yes no water was produced - as I said in my second post today the two levels have different flow characteristics, maybe the formation is more robust. If choke restriction was holding back production then it would have continued to flow at 900 bopd, it didn't, not only did it reduce it didn't stabilise.

So explain how that was choking back the flow?

Back to see how the discussions going

FK

The KL3 had to be choked back from a 1 inch ckoke to reduce water flow. It then had to be choked back for the second test to stabilise flow. The KL4 declined of it's own accord as both KL4 tests used a one inch choke.

If they needed to reduce production they probably curtailed the length of the tests

Zoom

my post was about the difference between the first and scond test of each layer. You spotted the KL4 test was higher than the KL3, well done. As for connectivity this is what UKOG say:-'The  HH‐1  well  test  data  also  indicate  that  the  fractures  in  KL3  and  KL4  could  be  vertically  connected.'

LEJOGB

Though nothing to do with my post the EY report was based on what uko g told then with no regard to how feasible the plan was, garbage in garbage out.

As for decline the volume of oil produced from the KLs was less than 800bbls (KL4 less than 450bbls, KL3 less than 350bbls). Many posters believe the HH well will prove up billions of barrels of oil so if these small amounts of oil produced a pressure decline it would have suggested the well was connected to tiny volumes of oil.

As for the Portland my post was about the Kimmeridge, but I do note that UKOG choose to mention the Portland second test, but not those in the Kimmeridge.

The lack of water is interesting as all these layers have around 50% water saturation accrding to Nutech and Xodus.

Boyzee,

There are obviously a lot of petroleum engineers on this board only too ready to shout down a post even if it is just a commentary on hard data, and I'm not a PE so I suppose I'll have to leave the forecasts based on the 4 KL test so far to them.

They seem to have access to a lot more data than the company has released to come to such firm conclusions about the long term production performance of the Kimmeridge, that's experts for you.

They also seem pleased that after producing so little oil that if there was any pressure decline it wasn't obvious from the annulus levels (that was in the Portland, no detail for UKOGS thinking for the Kimmeridge pressure not declining), so that's alright then, though if they were depending on annulus levels for a pressure 'reading' it suggests they weren't actually measuring pressure properly.

But to answer you rquestion anyway, you can't produce two layers with a single horizontal (logic not knowledge) and the plan is (was?) to use HH-1 as the donor well for the KL horizontal and HH-2 possibly as an appraisal well for the Portland to check out the Collendean Farm block.

I also don't think they could just co-mingle both KL levels in HH-1 though as they seem to have very different flow characteristics.

Whether there would be any interference from separately producing both would depend on the intervening shales, they 'thought' that maybe there was connectivity after the 2016 tests, again one to be checked out during the ewt.

Moneymunch,

You keep forgetting to give the full list of tests on the Kimmeridge.

Most forgetful of you. But don't worry because here's the missing 2. I have just extracted the flow details because your post is somewhat long winded.

RNS 17/2/2016: Second test of the Lower Kimmeridge Limestone (KL3, first test 7.3 hours at 463 bopd):-

'Flow re-commenced at around 07.45 am GMT yesterday at a steady oil rate in excess of 456 barrels of oil per day over a further 9.5-hour period using a smaller 28/64-inch choke in order to further stabilise the flow. Yesterday's flow consisted of dry oil with zero water'

RNS 02/03/2016: Second test of the Upper Kimmeridge Limestone (KL4, first test 4 hours at 901bopd):-

'the well resumed flowing 100% dry oil from the Upper Kimmeridge Limestone, through a one-inch choke, at an instantaneous rate of 1008 barrels per day ("bopd") and continued to flow for a further 7.5 hours from 2234hrs on 29 February at an average rate of 838 bopd.'

So both KL second tests that UKOG and everyone else don't seem to mention, ever, actually flowed at a lower rate than the first.

This is why the ewt is crucial, proving these, especially in the case of the KL4, are not representative. Declining 7% after a few hours is not what is wanted. Even the KL3 required a smaller choke to maintain stable flow. More than 1% less (the 'in excess of 456' has never been updated but the 'excess' of 900 bopd in the KL4 first test was only uprated to 901) but after a week that would add up.

Apart from these 2 RNS UKOG has never mentioned these second tests - though they seem able to constantly mention the second (higher) test of the Portland and that it was restricted by the pump.

It looks like a YA sell to me.

4,333,000+ 667,000 = 5,000,000

I have no idea why but they started doing these double trades that added up to a round number at the end of May.

23-May 16:27 3033100
23-May 16:27 466900

24-May 16:33 3466400
24-May 16:33 533600

04-Jun 16:33 3466400
04-Jun 16:33 533600

05-Jun 15:50 400200
05-Jun 15:50 2599800

06-Jun 16:25 433550
06-Jun 16:22 2816450

07-Jun 16:20 667000
07-Jun 16:19 4333000

Volumes were a lot lower and it was easier to spot these large double trades that coincided with the conversions

The UKOG twitter picture is not from HH.

To the right of the christmas tree, so also to the right of the stock tanks you can see fencing with trees behind.

If you look at pictures of the stock tanks at HH on twitter there is a high earth embankment behind the stock tanks which continues to the right, and on plans extends the whole way along that boundary. The fence is behind the embankment at HH - so the picture is almost certainly from BB.

Pboo,

How do you know that HHDL didn't tell all their shareholders the information in today's RNS if UKOG had asked for a current status update?

As it's essentially what was said would be happening on 26th June (planned flow testing operations of HH-1 have commenced) the other PLCs might have taken the view they didn't need to issue an RNS based on an update from HHDL that didn't include flow test data etc.

Pboo,

HHDL doesn't put out RNS - it's not a PLC.

You believe what you like, I'd be of the opinion that that is the status of today. If SS doesn't know what is happening today he shouldn't have put this in the document:-

'As reported on 27 June 2018, EWT operations at the Horse Hill site have commenced. As of the date of this Document operations to date have included equipment set-up and the necessary well clean-up process in preparation for the first sequence of the planned Portland flow test programme.'

The date of the document is 13 July

Oilbell,

It seems to me that the BB well only found what Nutech had already factored into their report from wells across the Weald - that the Kimmeridge had fractures that had oil in them across most of UKOG's licences.

Allowing the PEDL 233 licence to lapse suggests that the area to the south of the BB licence area, although within the AOI, was not considered worth keeping for Kimmeridge exploration, was that based on BB findings?

The recent Lidsey Kimmeridge test, which was performed without informing the market, found as at BB, good quality oil in the Kimmeridge which was fractured, but like most layers at BB no mention of flow rate.

Also like BB it was stated by Angus that the Kimmeridge would be better elsewhere.

One problem I have is that the 'better elsewhere' is to do with oil quality based on maturity. As it seems there are fractures in the KLs that have oil in them at all these tested locations it's not oil quality that's the issue with these wells but something else that isn't working that is working at HH, at least for short term tests in the KLs.

So with Balcombe-1, BB and probably Lidsey-1 failing to flow commercial quantities of oil it's essential that the Balcombe-2z test of a horizontal or the Brockham 4z test (either may even take place at the same time as HH KL tests) prove that HH is not unique.

So IMO until another well tests the KLs and they flow commercially the jury will be out as to whether the KLs have any value beyond HH, assuming HH proves commercial.

I think you overestimate the importance of a well flowing up to 475 bopd from a Portland reservoir with a STOIIP of 32 mmbbls of oil, with a current estimate of 1.5mm bbls reserves.

Let's clarify a few things.

BOPD is the amount of oil that would be produced in 24 hours. So at a rate of 323 BOPD in 8.5 hours the well would produce 114 barrels.

A pump rated at 475 bopd will produce a maximum of that in 24 hours.

The water injection may increase recovery by 8 to14% of STOIIP, not necessarily production rates.

Zoom,

That's rubbish. The gas is dissolved in the oil. If it is there it will come out with the oil right from the start.

It is not liquidi, and is not in a separate phase at HH. If there was a separate gas phase it would actually be at the highest point in the trap not the lowest.

Comparing Wytch Farm to the Kimmeridge of the Weald is misleading.

The Kimmeridge that is being tested in the Weald is a fractured micrite (a form of limestone) that will have unpredictable flow characteristics due to the main (possibly only) flow medium being the fractures as the matrix is practically impermeable. The primary porosity and permeability of the Portland is also poor so an element of fracturing seems to be responsible for the flow rate seen.

Wytch Farm mainly produces from the Bridport and Sherwood Sands that are within a defined structure with predictable porosity and permeability and the calculation of reserves for Wytch Farm was fairly simple because of this.

Reserves for the Kimmeridge limestone layers will be restricted to a percentage of contacted oil, a detail often missed when quoting rates of recovery is that this is of ‘contacted oil’ when mentioned in the Nutech report. Hence the statement in the June 27 RNS :- ‘together with a sequence of "choked back"(i.e. reduced) steady-state flow periods necessary to obtain the data required to determine the connected oil volume within each zone.’

The reserves numbers, rather than flow rates, are important as these can be effectively borrowed against and provide fundamental value to a company.

The development of Wytch Farm was in a fairly restricted and secluded area at a time when there was considerably less awareness of, and (probably due to this ) less opposition to oil developments.

The number of wells and sites required to develop the Weald,to 'contact' the oil, if HH doesn't end up being unique or only marginally commercial for Kimmeridge production, will be huge and despite the fact oil production is a safe operation each and every site will be opposed and the government has shown no support for oil production, just gas.

Wrong site:_

http://www.horsehilldevelopments.co.uk/

is the current site, and was OK just now.

Bridges,

I've just done my research and found.

The CPR has 500,000 bbls net resources to UKOG (1.5million gross).

Even if these were proven reserves (1P), and the value of reserves in the ground equalled the OP (they don't) that would give a value of about $40million to UKOG.

If all these resources become reserves (which they might not) following this ewt the book and/or sale value will be considerably less than today's OP-OPEX.

The reason is because any purchaser of assets will want to make a profit and for the book value as well as sale value there will be a wait for a return (not all the oil is produced the next day) and the OP will be different tomorrow let alone 5 years time, and has historically been cyclical.

So in fact the Portland, bigger pump, good flow rates, is an interesting, but not company making, side show to the main events which are the results of the 2 KL flow tests, not just the 'optimised' rates.

Well,

the pictures posted after that show them still working on the well - they wouldn't have a bit of pipe going into the well if they were flowing oil - and shouldn't there be a pump fixed to the wellhead for the Portland test?

Water tanker?

The concept that the Kimmeridge will flow wherever it is drilled in the Weald will not be proven if HH does flow commercially.

However much it is denied BB was going to be long term tested thoroughly and SS was confident to the extent that a production completion was installed, and then removed, but the absence of the production completion was not the reason for failure, nor was the mud, nor was the drilling.and the level that was freshly perforated so the acidising could not be blamed (KL5) also failed to flow oil at a commercial rate.

So 2 out of 3 wells testing the KL failed to flow commercially (Balcombe 1 flowed 50 bopd from KL4), HH flowed at commercial rates for very short periods but posters fail to point out the second tests were at lower rates, in the case of the KL4 without changing the choke, and KL3 reducing the choke fractionally to keep flow stable.

The other issue is that there will be a range of commercial. A hundred barrels a day might be commercial (depending on the OP) but even with a horizontal lifting that 5 times UKOGs share would be 150 bopd (I see Free is still claiming a single horizontal will produce at 5000 to 8000 bopd, ie 3 to 5 times the aggregate flow - he still doesn't realise, or maybe accept, that a horizontal by definition will be in only one layer).

OIlbell,

I'll use excerpts from the recent RNS to demonstrate why there won't be 1500 barrels produced on any single day during the ewt.

Firstly they aren't flowing all the layers together:-

'Testing of each of the KL4 and KL3 oil pools will follow completion of the Portland test sequence.'

The best flow test produced at a stable rate of 901bopd for 4.5 hours (KL4 first test). So very unlikely any single layer will flow 1500 bopd for a whole 24 hours.

So no days with 1500 barrels produced. Apart from this there are reasons the ewt will not consistently be flowing rates as high as those previously seen (except maybe the Portland). Nor will they being flowing constantly.

There will be a short burst rate test ('Each test sequence will include a short, optimised rate test,') but they are actually going to choke back the flow for the longer term tests ('together with a sequence of "choked back"(i.e. reduced) steady-state flow periods necessary to obtain the data required to determine the connected oil volume within each zone.') and although the tests should last 30 to 40 days they are also going to shut in the well for longer periods ('A series of associated long pressure build up tests are also planned.'). So how much of the 30 to 40 days will the well actually be flowing. At Balcombe they are planning 60 days shut in after 7 days of testing.

The Xodus report estimated a production rate of 350bopd (P50) declining at 25% per year for a Portland well, but the main event is the KL testing. There hasn't been any guidance by UKOG on likely stable long term rates so we will have to wait for the testing...…..but bear in mind what Neil Ritson said at the UK Investor Show 2018 (he is Executive Chairman of Solo Oil, 10% owner of HHDL) :-

'Now these are fractured reservoirs and they will have been offloading the oil from the fractures. What we are going back in this year to establish is if you leave them open for a period of time what is the sustainable rate, which you would expect to be down in the 100 to 200 barrels per day range if it's going to be commercial.'