Member Info for Penguins

Ocelot,

It would be useful if UKOG identified what those 'assets' were as the value attributed to producing assets - Horndean and Horse Hill - is less than 10% of that figure.

Of the £32mm of intangible assets they're still carrying £11.4mm of past expenditure at Horse Hill (despite the actual production being worth £0.8mm - still not CPR'd though) - leaving over £20mm as expenditure on other things UKOG presumably hope will come good.

We would all like to see that list.

It would also be helpful to see their 'internally generated depletion curve' for Horse Hill that was used to generate the NPV(3.86) valuation of £0.8mm for HH-1.

Apart from wild claims prior to production and vague claims about production in 2020 UKOG hasn't RNS'd or specified in the annual reports what HH is producing or expected to produce, and remarkably vague about water production.

Just as well the BoD can self determine what their assets are worth.

Ocelot,

those net assets - £32+mm of them are expenditure on 'Exploration & evaluation assets' - £11.4mm of that is what the directors guess HH is worth, whilst the 'Directors determined 'that the net present value of the HH-1 well was £0.8 million' included in the tangible assets of about £3mm. The other £20+mm is money spent on everything else but not specified. This will only be converted to tangible (real) assets if something is successful.

There's this strange statement - they forgot to change it from 2021 (it's exactly the same):-

'UKOG's wholly owned subsidiary UKOG Turkey Ltd signed a participation agreement and joint operating agreement with AME in 2021, to take a 50% non-operated working interest in the 305 km² Resan M47-b1, b2 licence in Turkey. Together with AME, the business is working towards finalising the design and delivery of a successful first appraisal well aimed at establishing the commerciality of the aerially extensive and as yet undeveloped Basur-Resan oil discovery contained within the licence'

Did nobody tell them that Basur-3 failed in mid 2021, and it was already out of date in last year's report?

UKOG is only underpriced if something is successful, otherwise like previous expenditures if wells are failures these intangible assets will be subject to impairment - ie reduced.

I see we have a recycled deluded poster who hates honesty on this board, yawn.

In seems this deluded one doesn't realise that UKOG has failed to achieve any expectation and that's the reason why UKOG's SP is near all time low.

So instead of researching what UKOG claim the post is just UKOG PR - which any sensible investor would see as a starting point in investigating UKOG's projects and financial position and comment on.

Has echoes of this from the March 2021 Final Report, this time the Chief Execs report:-

'Having recently begun construction of the Basur-3 drilling pad, both the Company and AME will now work
towards finalising the design and delivery of a successful first appraisal well, aimed at establishing the
commerciality of the aerially extensive and as yet undeveloped Basur-Resan oil discovery'

High hopes, low results.

As for this:- 'Confirmation that Pinarova contains a commercially viable high quality oil accumulation '

Confirmation - what's the evidence - they haven't published resources, OIP or anything.

The evidence oil in a sandstone layer metres below the surface about 1500metres away, a well that flowed water with an oil cut about 400m away, and some bright spots on seismic that may indicate improved reservoir (channels?) or oil (with a 'sweetness' attribute display in the Pinarova slides which is normally used to identify better reservoir). But they haven't presented any AVO or AVA work to support that the bright spot is due to oil.

Commercially viable in Turkey might be marginal, and high quality oil - not really a major factor in value.

Just more encouragement.

Current value of HH £0.8mm following yet another BoD decided NPV using an astonishingly low discount rate which is favourable to the valuation. Can see why another well might not be worth drilling.

Great to see Avington return with net attributable reserves of 3,000bbls though.

As for Pinarova - resources - tbc - and that's the great hope? Now an outside audit on the figures is needed, something they haven't been so worried about previously.

and for Basur-Resan despite a completely new map where the updip of Basur-1 Basur-3 structure was removed they're still quoting the 2020 Xodus figures 'Xodus June 2020, probabilistic based upon range of recovery factors'. If anything that should ave been 'tbc'.

Loxley, despite the 2C resources (unrisked) of 31BCF that they don't have the funds to drill, is yet to be farmed out despite the pre-planned farm out having been underway for 9 months.

Surprised that only £3.624mm remained in the company at the end of September after £3mm being raised earlier in the month. Presumably the second phase of seismic processing bills will have been paid by now and AME cashcalls for their technical work, the recent work at Horse Hill for monitoring plus the other unavoidable outgoings eg salaries totalling nearly £2mm pa - 6months £1mm - so perhaps a bit over £2mm left with Pinarova to fund soon and HH-2z conversion to pay for - I suspect by end Q2 when the interims are released UKOG's cash will be down to a nervously low level.

Seems that the growth strategy based on Pinarova's success has been replaced by hoping it's successful to avoid a placing - or perhaps hoping they can get a placing away.

SS has presided over the waste of tens of millios of pounds on multiple goose chases rather than spending a fraction of that sum on Horse Hill which was the flagship production site and it seems had no option except to surrender 50% of future earnings to get obligation 3D shot and an obligation well drilled.

Strangely the only upside might be that the 3D writes off further appraisals or the well is rubbish - is that UKOG's expectation.

Ocelot,

earlier you posted that it was' very encouraging David Lenigas has chosen to return to HH to drill HH-3 into the Portland and has helped to put HH back on the map'

Then you post the sort of encouraging words that UKOG also use

whilst actions give a very different narrative:- 'The Kimmeridge therefore remains a potentially viable secondary conventional production target at Horse Hill'

I go by actions, not words.

Generally they were selective over flow rates in the ewt for both levels
In June 2019 they had a report done by RPS about the Kimmeridge at HH they kept quiet about for 21 months - June 2019 until March 2021 (Final Report) - and then only the resources.
Failed to deepen HH-2 through the Kimmeridge (which was after the RPS report)
Quietly dropped mentioning the HH-1 sidetrack (again after the RPS report)
In the 23/12/19 they (as usual) mentioned an initial half hour (!) rate and an average over 5 days (354bopd, average 301bops) that could be interpreted to be a fast decline.
Kept mentioning dual completion after the 28/1/20 'long term shut-in' so obviously didn't mean 3 years.
They then stopped mentioning dual completion.

Information in the PPP farmout RNS illustrates why a total of around 53,000bbls produced from the Kimmeridge is not the good news some thought - more likely an indication that the final Kimmeridge test wasn't that good.

Looking at tweets from January 2020 the pump was off around 13 January - with UKOG returning to commencing Portland testing on 16 January

In the PPP farm in RNS they mention total Kimmeridge production of around 53,000bbls.

The final Kimmeridge test started 18/12/19 - when the Kimmeridge was shut in prior to that on 27/11/19 total Kimmeridge production was 49,276bbls. So final test would have produced about 3750bbls.

In the 5 days to 23/12/19 1500bbls was produced (average 301bopd 18/12 to 23/12) leaving about 2250bbls produced after 23/12/19 up to 13/1/20. This gives an average of about 120bopd down dramatically from the 301 before Xmas.

120bopd might not sound too bad relative to HH-1 Portland production but that's less than a month after resuming testing when the starting 5 day average was 301bopd - it took the Portland 6 months to drop to less than 120bopd average from about 300bopd

Perhaps that's why the Kimmeridge has been left alone.

SR,

a twitter storm about things that might happen between the end of this year and the end of the decade is hope not news.

They aren't so informative about what Pinarova might produce, nor the well it is appraising - limited to that well flowed fluid with an oil cut, and the volumetrics are similar to Basur-4, without mentioning anything about Basur-4 either - but do remember the well is cheap does UKOG see that as a major positive for a risky well?

Did I remember to mention Pinarova is cheap, and there was a seep about 1.5km to the west of the well site.

Otherwise there's the eternally about to happen HH-2z conversion to an injector that according to the numbers in the recent PPP farmout RNS should make the licence level cash flow positive.

Did UKOG delay the publication of the Final Results to the last possible day in the hope they would be able to say the Pinarova well had started?

Reverand,

I hope the herd realise that the Portland gas storage site won't be operational, if it happens, until near the end of this decade - that's a long time to hold for positive cash flow, and in the meantime see UKOG's equity in it wither to near zero, if they haven't sold their interest well before that - I'm not even sure anyone is too keen to hold until next year for a new well on HH or the well on Loxley.

There might be a P&D when Pinarova drilling is RNS'd but on past form I doubt many will hold for the results - and that's probably only a month or so away.

you posted an extract from Alba:-

'... We look forward to hearing of the Operator's plans for enhancing productivity and delivering on the inherent, and to date largely untapped, value of the Horse Hill Oil Field.'

Perhaps George could persaude UKOG to publish all this information that Alba is party to that demonstrates this 'inherent and to date largely untapped value'.

Perhaps it just doesn't exist - UKOG have dodged for nearly 5 years getting a CPR done on their only producing asset, whilst getting one done on Loxley which was based on very little data.

There is a report by RPS on the Kimmeridge that had 1.4mmbbls 2C resources net to UKOG - but they first used the figure in the 2020 to 2021 annual report although the RPS report was done in June 2020, preferring to use the 2 ca10billion barrels OIP figures for September 2019 to September 2020 annual report.

They've also remapped HH since the 2018 CPR but not issued any new volumetrics, just decided themselves a valuation.

But Alba don't sound best pleased that UKOG seem to have undermined that quote - would you give away 49% of all those untapped future earnings for £4.6mm - which doesn't sound like it would cover the 3D seismic and a well so the minority partners will still be up for contributions, perhaps even compelled to as it's obligation work - and that's the good news.

OK if UKOG reckon their net interest in HH-3 will be 43.67% then it looks like they are not gifting all the their direct licence equity to PPP - just 49% of 35%, and 49% of HHDL's 65%.

So direct UKOG will have 17.85% and from HHDL 25.824%, and HHDL will have 33.15% in the licence - gives PPP 49%.

It doesn't change the licence level voting though, or the HHDL structure.

Ibug,

UKOG will still be the majority shareholder in HHDL so determine HHDL'S 'vote' of 51% at licence level - ie in operating committees determining the work programme and also as operator in discussions with NSTA. I'm presuming that UKOG will gift UKOG's costly 35% of the licences to PPP plus 14% of HHDLs 65% equity in the licence - but not gift equity in HHDL as that would be problematic with regard to HH-1 earnings.

The minority shareholders in HHDL will still have no / little say in what happens.

As for DL 'drilling' a Texas well - paying 33% for 18.75% net revenue.

According to previous RNS expected production 100 to 400bopd.

Yeehaa.

Pboo,

Cratering the PPP share price for a few P&Ds based on hope is I suppose fine for UKOG- if it gets that far. Seismic first - then hopefully we'll get to see how definitive the current mapping is as even without new seismic data it has changed radically since the map the 2018 planning permission was based on (ref the balance of 6 wells some posters keep saying are about to be drilled), and HH-2z was drilled on.

The equities in future wells are somewhat irrelevant if those wells fail or are barely profitable

According to UKOG's own recent figures HH production returned a gross profit (presumably YE Sept 2022) of just less than £250,000. With water injection, that should rise to about £500,000 but the licence costs (which I guess includes head office costs, licence fees etc) appear to be nearly £400,000 leaving after water injection a profit of £100,000 once water injection is installed based on those UKOG figures - that's effectively the profit 18 months to 30 months after start of production - I'm struggling to seee how UKOG even have a NPV valuation of nearly £4mm for HH-1 for their 86% - certainly the accounting year that the conversion of HH-2z occurs in won't look that pretty unless the OP saves them.

Blimey ART you'd think that the SP had been rising since the ewt when the SP was well over 2p based on the flow tests and production from the Portland and Kimmeridge. Seems my posting is quite in tune with the market opinion except when there's P&Ds.

I suppose I should take advice from someone who has posted 16 times today, commented about 'petty posting that ruins this board' and then indulges in petty posting commenting on another poster.

You've made many statements today based on misunderstanding or not knowing what has happened at HH, BB and Basur. I'm sure you'd prefer no one pointed those errors out.

As for DL and his pronouncements perhaps he can persuade UKOG to release all this great news about the reservoirs at HH as so far UKOG has avoided releasing any analysis of the ewt or production at HH.

Over the years belief in long term success hasn't served posters very well - I prefer understanding. Perhaps you can tell me what I have posted that is fundamentally wrong about any of the projects that have had reesults - if I do look back and if anything I have been too optimistic. Otherwise like yourself for the current projects I'm expressing my opinion based on the information available.

If I choose to waste time posting here, if not 16 times today, that's my choice. There's others that have been posting for years saying how great every RNS is or how the OP, gas price or any other unrelated to UKOG 'positive' news means that any moment soon the SP will rise to some unrealistic level, and unlike every previous occasion stay there.

Should proof read better, should be isn't in closure:-

'and a Kimmeridge producer that isn't within closure as BB and possibly HH-1 may have demonstrated that without closure it doesn’t work'

Art,

It depends whether the Turkish venture was so good it couldn’t be ignored or UKOG were desperate for any distraction. At the time Turkey was announced UKOG had kept silent that HH-1 was producing water and that they hadn’t decided what they were going to do with HH-2z, though a pump suitable for water injection had been seen on site.

The Basur-3 well was not a ‘near miss’ they couldn’t deviate without a high risk of losing the well – the remaining structure on the phase 1 seismic was a small area around Basur-1 which did test 500bbls before water production stopped the test – and they conjured up a closure for Basur-4 in a gap between dip lines that the phase 2 seismic was meant to confirm – Pinarova is being drilled instead because it is cheap – and close to Kezer-1 which produced water with an oil cut, though flows and OIP haven’t been mentioned by UKOG.

Whilst low production wells can be profitable I suspect that UK drill site, drilling and OPEX costs might result in a negative RRR. Whilst UKOG have been very selective in releasing the ewt flows there was a suggestion the Portland was declining fairly rapidly and the flows at the start of the final test of the Kimmeridge suggested an awful decline rate over 5 days after being shut in for a while.

If the 3D confirms that there is a decent updip closure from HH-1 then there may be hope for another Portland producer, though water filled fractures will remain a threat, and a Kimmeridge producer that is within closure as BB and possibly HH-1 may have demonstrated that without closure it doesn’t work, (note UKOG are targeting the Kimmeridge within mapped closure at Loxley with a 30 to 40% probability of success) – if the 3D doesn’t confirm the current mapped closure there may be no point in drilling further wells.

btw it was HH-2z in the Portland that hit water - the Kimmeridge was what UKOG described as non-commercial.

As for the Portland water there were water producing fractures in te toe and heel of HH-2z, and there seems to be one near HH-1 - suggests they could be numerous.

ART

that 50,000 was produced in extensive testing of the Kimmeridge. UKOG was very careful in RNSing the flow rates during testing and had a report done by RPS in June 2019 that they have never published. Far from the billions, hundreds of millions, even tens of millions of barrels recoverable that report had only 1.5mmbbls 2C resources.

There was a proposal to sidetrack HH-1 into the Kimmeridge horizontally - then dual completion of HH-1 but that has never happened.

ART,

DL has tweeted it isn't decided.

Portland HH-3 was going to be a 'slope' well I suppose because they're worried about repeating HH-2z.

The Kimmeridge appraisal well wasn't going to be horizontal either.

The main problem is that Horse Hill is poorly controlled by seismic. HH-2z was intended to be up dip of HH-1 - it wasn't, and Collendean Farm is mapped (in last published map) as being in the same fault block as HH-1 now rather than in a seperate fault block as previously mapped - and that was without new seismic.

The proposed location of HH-3 was between seismic lines so the updip closure targeted could be wiped out by a change in the loction of the bounding fault.

As for NSTA deadlines I suspect they would prefer to see a successful well drilled on a modern 3D than drill blind and run the risk of failure.

Basur-3 was good example of drilling blind.

Tony,

true, but this suggests otherwise regarding any further drilling:-

'Post Farmout Completion, each Licences participant will bear and pay cash calls pro rata to their respective interest in the Licences' - but where PPP's 49% will come from - no idea.

and it's 49% of HH-3.

ZYX,

it's more complicated than that as HHDL 65% and UKOG 35% are the licencees - Doriemus is just minority a shareholder in HHDL.

So UKOG as main SH in HHDL + their direct 35% interest will still have a majority in the licence. The financial arrangement within the production site will be interesting though.

Wizard,

the other day - it was 27 February:- 'What if a farm in was not just a farm in to Loxley but also included a farm in to develop HH once the supreme court has ruled on the Sarah Finch case'

and unless you can show otherwise I didn't rubbish your farm out of HH - I just stated about the Loxley CPR, then HH:-

'though would a company that has already reviewed it be swayed by a CPR that has several red flags of it's own - and HH is going to save £250,000 a year from water injection - that's not going to rerate the SP, nor fund further wells'

and it isn't in association with a farm out of Loxley.

As for when PPP get their 49% this is what it says:-

'The assignment of the aggregate 49% Licences interest to PPP is subject to PPP providing the necessary funds to drill HH-3 and complete the Farmout Programme within six-months from the completion of the 3D seismic which is at its discretion'

Not after the well is drilled - 'providing the necessary funds to drill HH-3' and the 'farmout programme' is stated in the first 'highlight' in the RNS:- 'PPP to fund 100% of a new crestal infill production well, designated Horse Hill-3 ("HH-3") to be spudded after the completion of a PPP 100% funded ~12 square km high-definition 3D seismic survey (the "Farmout Programme") subject to an aggregate cap of £4.6 million' - so not after drilling the HH-3 well.

Though as usual UKOG draft these things poorly, often equivocally unless you read them carefully.

UKOG keep demonstrating 'finding' oil is a lot different from producing any.

Of the 3 wells UKOG has drilled since HH-1 (and they've also shown HH-1 Kimmeridge to not be worth producing so far) none have been put into production of which 2 - BB and HH-2z 'found' oil and Basur-3 was in the wrong place.

and there is no £4.6mm funding, they can decide not to drill the HH-3 well - just committed to acquiring the 3D seismic - which as Basur has demonstrated might remove any target.