Member Info for Slift

Ngms27,

I wouldn't say he was solely responsible for Pharos.
After all, he was only the COO of Pharos from 2012.

On an operational basis, he's done well at Pharos, wouldn't you agree?

"i see a biggish flare"
Is this HUR firing an huge SOS flare?
Or is it the flare from shorts getting burned?

SpruceGoose2,

"ngms: "Why is it curved like that though given the relationship between pressure and volume?"
Inertia + Viscosity (drag).If your car accelerates from zero to sixty, how far does it travel in the first second? Howfar in the last second?"

I see ngms27 hasn't answered this question. Either because he's incompetent to answer, or couldn't be bothered? Who knows.
I'll answer it for his benefit.

My car (at harsh acceleration) does 0-60mph in 5 seconds, so i'll use that as a basis.
Acceleration is therefore c. 5.3 m/s2.

Distance travelled within first second: 2.65m.
Distance travelled in the last second i.e between 4th and 5th second: 23.9m.

Slift.

Stu,

Yeah, but the static pressure is also visible in that chart (from the point where the wells were shut).
Shows that as at April, the static BHP was between Low and Base case (In line with your chart).

Just another link comparing both exhibits from Edison report:

https://gyazo.com/58d3781d360bf6a5d901c1b0e2aaaa85

I don't like to provide recommendations or advice to others on buying, selling or holding. It's up to the individual to do what they think with their investment. But just thought i'd give my opinions and thoughts of this company, for what it's worth.

I always view stocks conservatively and/or bearishly. My view:
I think the biggest questions here are: "Is this company going to go bust?", "can the CB be managed?", "What's going to happen to assets?" and "Can HUR operate economically in the future to generate profits?".

Admin: Okay so it's clear as today's blue sky that HUR will not go bust (or at least in the next 12+ months). HUR has enough cash and liquidity for financial commitments going forwards for AT LEAST the next 12 months.
But is the share price priced to go bust? No. Not yet. I'd say another 60% downside (from current price of 4.7p) before it is priced to go into admin. Will it get there? Again, probably not at this stage or in the next 12+ months due to the liquidity available to HUR.

Debt: The $230m CB is due in July 2022. HUR will likely have c. $120-170m cash in bank at year end 2020. Some of this will be used for 2021 CAPEX, but some more may also be generated due to production from CAPEX and also due to forecasted rise in oil price. I don't particularly see HUR ending with over $200m cash at YE 2021, but I also don't see HUR ending with less than $75m cash at YE 2021.
Furthermore, I'd like to think that HUR have options to refinance this debt. Whether that's RBL or other credit facility (and or cash raise) following the CPR review in 2021. So as it stands, yes, the CB can be managed.

Assets: So will anyone be surprised if assets are downgraded? Well.. after HUR warning us 3 times, I wouldn't have thought so, but there are some that are very deluded.
Lucky for HUR that the only producing field so far is the Lancaster EPS. The impact of the downgrade would be much more significant if HUR had gone ahead with the FFD and/or other producing fields.
There are challenges going forwards for these assets - some may even have to be written off as a result of the downgrade. But there is still a lot of oil available that can be extracted.
The big question still stands - How much of a downgrade to contingent resources and reserves? And how much of this downgrade is priced in? Right now, we can't answer these, but I can be certain that it's not going to write off entirety of HUR's portfolio.

Economical operation and future:-
As it stands, Lancaster is able to currently produce economically. Going forwards, for the Lancaster EPS lifetime, it needs to produce c. 12-13mmboe between 2021 and 2025 to be economical. I'll take BODs word for that they are "considering production enhancement options" and that it'll somehow improve production.
It's hard to say where HUR's future is at this stage, but as long as HUR is economical going forwards, HUR has a future.

ALL IMO. Slift.

"Arent we expected to make a profit of 35m USD , according to Slift?"
That's not including the costs incurred due to CAPEX (planned and unplanned).
This is a huge unknown. HUR estimated that 2020 CAPEX would be $120m. In April, HUR estimated CAPEX to be $59m between April until end of year (of which likely all been referred). Unplanned CAPEX costs = ?????

"being able to reach BE end of year"
On the planned (and known H1 unplanned) financial commitments/costs, Tullow will break even at $38/barrel. At $45/barrel, Tullow will make a positive FCF.

Slift.

"Armchair oilmen"
Think he's talking about you @PlantedBHA

Q1 "true breakeven" price per barrel: $52.2/barrel
Q2+ "true breakeven" price per barrel: $48.2/barrel

First half realised oil price: $52/barrel

Free Cashflow for H1 (assuming costs are spread): $25.5m
H1 also CAPEX intensive by circa $47.5m

FCF for H1 = (-) $22m (may differ +/- 5-10% due to non-cash royalty takings etc. as well as surplus due to beating production targets)

Going forwards to Q3 and Q4 (and assuming $45 Brent price and 75k bopd average and 90% uptime):
Q3 cashflow: +$24.5m
Q4 cashflow: +$24.5m

Est. circa $30-35m cost for extension of rig, also $Xm due to delays in Ntomme-9 (not sure if Tullow factoring this in for H1 or H2, in this case factored into H2).
H2 Surplus from intensive CAPEX in H1 (circa. $47.5m).

FCF for H2: $61.5m - $Xm (may differ +/- 5-10% due to non-cash royalty takings etc. as well as surplus due to beating production targets)

FCF for YE20: circa. +$39.5m - $Xm

Slift.

"What our next financial even Slift....."

September 9th is interim results. This should provide further information on Ntomme-9, cashflows, liquidity, EBITDA, further information on Tullow's operations and explorations.
Hopefully, Tullow also manages to get Uganda completed before then too.

I believe that they wanted Uganda completed before September (as per circular). Tullow has an upcoming liquidity test with the RBL facility in September. Likely to be passed and reported in the Interim Results.

As at end of H1:
Total borrowings at circa. $3255m
Cash in bank at circa. $255m
Liquidity of circa. $472m of undrawn RBL facility

Slift.

Hi Neversellshell22,

Here's Moody's downgrade from March regarding the corporate credit ratings:
https://www.moodys.com/research/Moodys-downgrades-Tullows-CFR-to-B3-places-ratings-on-review--PR_420645

I'm expecting Moody's to upgrade Tullow's rating following September results when Tullow provides liquidity status, EBITDAX ratios and also completion of Uganda sale.

Slift.

The breakeven is c. $48/barrel.
Also the "forward curve" is $38/barrel.

At $45/barrel Brent price, Tullow should be generating $3-4/barrel free cashflow (assuming no other unplanned costs).

I expect H1 to have negative FCF due to unplanned costs of rig + delays in Ntomme-9 well aswell as the extensive CAPEX requirement in H1.

Slift.

Is it not cheaper and quicker to drill shallower wells?
At least that will work in HUR's favour.

I've personally written off 7z well. By the time the weather window opens, 7z will likely be useless and uneconomical. But there could be an "enhancement option" available for 7z that we are not aware of where HUR are able to implement between now and weather window. Who knows.

ngms27,

Yes, I'm with you on that, people are unrealistic here.

I'm interested to see what the enhancement options are for HUR and how they are going to keep costs low whilst attempting these options.
These enhancement options MAY not be as simple as well 8 or sidetracked 7z.

Who knows, I may even bail out before then.

Slift.

Wow ngms27,

I'm very conservative and always consider the "worst case" scenario when investing.

Whilst your opinion is appreciated, it is very pessimistic. You are pricing this stock in for fail.
I strongly disagree with this:
"Put together even if they carry out remedial work, year 3 onwards looks like a very difficult time for HUR producing from Lancaster in my opinion."

As stupid as HUR BOD are, they sure aren't THAT stupid to spend money for remedial work to keep them going for just one more year. In my opinion, with the remedial work, HUR will be able to produce from Lancaster for the entirety of the EPS, all whilst being economical.

For the entirety of the EPS, they only need circa. 12-13 mmboe reserves to still economically produce from Lancaster until it's expiry in 2025.
I'll agree that it may not be feasible to produce until 2025 with the current set up, but strongly disagree that it's "end of the road" (as that's how i read it in your tone) after 3 years WITH the remedial work.

All IMO.
Slift.

CaptSwag,

What I don't understand is why did they get rid of Trice if they were going to run the company to the ground?
Surely it's better to put the blame on Trice who both made and broke the company.

With the way things are going, Bev and other directors are getting a bad reputation and even if HUR does fail, they will most likely struggle to find another job in a similar position.
I don't see the decline in SP (to the point of admin) being beneficial to the directors, even if they don't hold any shares.

The current BOD had told us that the technical committee is undertaking a technical review which will be released on or before the 11th September.
Since then, they have released:
Shallow OWC "for conservatism" --> "possible" material downgrade in resources --> "reasonable probability" of material downgrade in reserves.

That's 3 updates even before the technical review has been completed. Just constant repetition. Any other company BOD would have kept it quiet and have supplied the shareholders with the problems and issues they have discovered in the review all at once. But they would have also provided possible solutions and their forward strategy to mitigate further damage.

But instead, we have these idiots repeating the problem to us with no solution to it.

Only major shareholders can have a say here, and right now that's Kerogen and AFFM and Crystal Amber. All have probably been informed of the actions HUR plan to take and are probably in constant communication regarding the technical review.

Just my opinion.
Slift.

Quinny29,

I'm the same, but I think i'll wait until the next RNS.
As i've said before, how can you invest in a company where even the BOD aren't confident in the model and company?

Can't wait for another warning of "possible", "probable" and "likely" material downgrade in the next RNS, with no information on "production enhancement options" until the completion of the technical review which they believe is expected "on or before 11th September".

Clueless BOD.

Stu255,

"Points on the grey line are flowing pressure. Edison (wilfully?) misread that."
Yes, but the shut in BHP has decreased from being above high case to being on the low case (and following the trend is probably below the low case now).

"Q to slift: Why does -6 have a greater shut in BHP than the deeper -7z? Check it out yourself."
Generally 7z should have higher pressure than 6 due to hydrostatic pressure.

To reply to your question, I'm not too sure. I don't believe we have enough information to even conclude that the shut in BHP of 6 is greater than 7z. I don't know how or where in the well the BHP is measured.

Slift.

Comparison of Exhibit 1 and Exhibit 2:

https://gyazo.com/58d3781d360bf6a5d901c1b0e2aaaa85

Slift.

API Crude Stock: -4.264m

This is the fourth consecutive draw in crude in the US.
In total, draw from stockpiles of c. 24m in the last 4 weeks. This works out to be 860k barrels/day more demand in crude than supply in the US.