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At the moment it can’t hold a close above the 2hr chart ema200 around 321p, so I’m looking to exit around that level (if we get there!). I’m not sure there’s enough in the tank to push on from there just yet. Expecting more volatility in the oil price during June/July.
Anyone suggesting a comparison between Xcite and HUR immediately raises the eyebrow, but the clincher is this quote - 'However, the cost and complexity to develop HUR's assets is of a magnitude greater than XEL's Bentley oil field ever was'.
After bashing HUR, he then suggests TLW are worthy of investment. Best of luck, I think you will need it.
ADUK,
As you mention, one cannot attribute 'blame' to Hurricane for the current issue - seemingly a consequence of the proximity of the wells to each other. Such issues arise for operators of all scales, and for HUR it's simply bad luck.
Yes, with the EPS there is legislative constraints on the nature of development. Any oil company has to determine, given the financial/legislative constraints and current reservoir model, what target areas give us the largest probability of success. In this case 'success' means production, but also data acquisition with a view to justifying the production case for other similar 'segments' of the reservoir. Hence, they really do need another producer in this area - the water cut/interference issues are steaming up the mirror somewhat.
Thought I would repost my comment from yesterday, as its probably been lost amongst the sea of nonsense.
‘Drake, it’s likely a ‘back pressure’ issue (hate to use that term as its ultimately frictional energy losses). Essentially the wells are likely too close to each other, with production not mutually exclusive. As flow increases in one well, this exerts influence on the flow regime of the other, ‘pulling‘ on its local resource if you like, net result is there is a flow rate sweet spot to be achieved, ultimately governed by the local permeability (as they have discovered)’
Bottom line - this is O&G exploration and such things happen. This is absolutely not a disaster, but it sounds like DrT is understandably frustrated. Probably because he knows they now *need* to drill a new well, preferably a sidetrack, further extending the companies ‘proven reservoir’ timeline into the horizon. This is now the only way to regain the markets confidence - data from a new producer. They could have this drilled and completed by September. Plenty of rigs available, a new generation of LWD resistivity tools to work with, giving far greater depth of investigation into the reservoir. HUR are fortunate in a sense, as many companies do not survive ‘teething’ problems due to the expensive nature of this game. It’s a no brainer - if he really believes in the reservoir model, take the risk with available capital while services are as cheap as they will ever be. Otherwise, trust and patience will just dwindle while the bond repayment date draws closer.
Drake, it’s likely a ‘back pressure’ issue (hate to use that term as its ultimately frictional energy losses). Essentially the wells are likely too close to each other, with production not mutually exclusive. As flow increases in one well, this exerts influence on the flow regime of the other, ‘pulling‘ on its local resource if you like, net result is there is a flow rate sweet spot to be achieved, ultimately governed by the local permeability (as they have discovered)
Time for some decisive action now from Dr T. He can wait and collect data for what will ultimately be his interpretation, hoping that the market still patience. Or they could be proactive - plenty of rigs available locally for hire, plan, drill a sidetrack (with the new breed of resistivity tools in the BHA), gather far greater visibility around the wells and potentially target new sweet spots. These datasets will answer almost all the questions which have dragged this share down. All this could be done with by September.
Have restrained myself from jumping back in (may regret not doing so at 306p this morning!) Have a feeling oil needs to at least test the monthly EMA200 around 33.5p over the next few days. We could probably do with the price staying in the $30-$35 range for a while longer.
It’s a tricky one to predict. I’d be looking for her to breach 316.5, then yes 325 is the next Fibonacci level. However the volume profiles also suggest resistance along the way to 322 area, so it may not ‘zoom’ up to 325... but then it might ;)
Nothing wrong with looking at the charts, even in these extraordinary times. Disagree regards being overbought - on the 5min chart we ended yesterday with an RSI around 58. Far from overbought. Tested the EMA50 today around 61p, good support evident. From the my take on the charts I wouldn’t expect any dip 50-55 to be prolonged, if it happens at all. Overall, the charts are undoubtably bullish. On AIM MM’s frequently test support - it’s how they make their money.