Member Info for Slift

"By the way, I notice the absence of PlantedBHA - so does the moniker have meaning or is he driving his truck somewhere with no 4G."
Probably in hospital getting his head checked.

CaptainSwag,

Would have thought that Spirit would continue now that long lead items have been ordered. But yeah with Lincoln extended up until 2022.. and the current downgrades in reserves/resources.. who knows where HUR are with Spirit.
It might even be in Spirit's favour that the Lincoln has been extended (in hopes of oil price recovery).

Hi adoubleuk,
"Following various 'shifts' in the BoD (of a major sort), I take whatever RNS's (especially following the latest one) with huge pinches of salt. I consider the current crew to be nothing other than a 'caretaker government', busy spreading further 'iffy' messages,"

Yup, the RNS provided by HUR is written with NO CONFIDENCE in the company. The "ifs" and "probables" and "likely" and "no final conclusions" and "risk of" and "expects to" are all words whereby anyone can use to defend themselves when they are wrong. I know because I use this a lot.

But I think that this OWC is the biggest downside to any potential news that may come. It's priced in now, the only thing is how big of a downgrade is it?
- If it's enough to completely write off the EPS in the next few months then that's the worst case scenario.
- If it's a small downgrade that allows the EPS to operate for the next 1-2 years with wells 6 and 7z, then that's not too bad and IMO would be priced in. Obviously this would mean that HUR needs new wells to produce over the contract period of the FPSO.

I previously said that I wouldn't hold through September Review, but now I feel like it's been derisked. I'd definitely like to see the 15k production guidance at the September Review.
"Be fearful when others are greedy, and be greedy when others are fearful". - Warren Buffett.

Slift.

Hi Stu255,

I have questioned the following from one of their RNS:
"While no decisions have been made on the nature and timing of future activity on Lancaster, the Company believes that, given the design and procurement lead times likely to be involved coupled with the constraints of the operational weather window West of Shetland during the winter months, any well operations activity at the Lancaster field location would commence late in the first quarter of 2021 at the earliest."

I believed then and still believe that the reason they provided for this was an "excuse".
The RNS was provided in July.

I work in the project management sector and I can 100% say that this statement: "given the design and procurement lead times likely to be involved" - is an excuse that they used to not commit to any wells this year.

During these times, manufacturers of said lead items have a free order book and would have been looking for orders to fund them through the coronavirus crisis. Especially when the CAPEX investment in this sector (oil) have been deferred and/or dropped.

Had HUR placed an order for these long lead items (at say May or earlier), they will likely have been manufactured AND DELIVERED on time (even if this was at an extra cost due to shorter lead times). NOTE: HUR had contracted a rig from April to September for a well (but terminated the contract in July).

What a waste.

Hmmm.

Hi Maths,
"Slift, unfortunately for current holders, there is a gap below 4p that needs filling"
I don't see a gap here, the gap was filled early this morning. I'd appreciate it if you could point this out..

I don't think anyone can be as bad as Swazers, he doesn't even explain the charts to anyone and just had a bunch of indicators and trendlines.

One things for sure, 115m shares traded (most of the liquidity from sellers and even LTHs), yet SP only dropped 17%.
Yes, we may see further downside tomorrow, but on just todays' performance, who's actually bought these shares?

"I hoped the PR disaster was over but it seems like more of the same."

I have an average that we will *hopefully* see again and even then i'm very angry at this RNS.
I can't imagine the betrayal felt by long term holders.

OWC per fracture network will rise with extraction of oil because of cohesive and adhesive forces of the fluids with the fractures due to pressure differentials along the network.

Beverley Smith:
"I am passionate about applying my expertise in strategic leadership, risk management and corporate governance to support organisations as an Executive Director or in a senior leadership role. I am currently exploring further opportunities and welcome conversations through LinkedIn or by email."

Clearly inexperienced to handle the job as a CEO. You don't manage the risks by increasing the risks (i.e. downgrade of reserves).
So far, repeating RNS' and providing negative news' to drag the SP down isn't a healthy start to this career. CEO's are supposed to drive and grow the company. Not kill it.

The misleading ones are the ones I watch out for.
Anyone with a proper facts can deramp and ramp no problem.

See what tomorrow and next week holds for HUR. Would prefer HUR to keep above 5p.

Circa 6% of shares traded today.

PlantedBHA?
mjga876?
sammy18?

Fez125,
I think this share is still susceptible for downside and upside. I still wouldn't consider current share price as priced for bankruptcy.

CaptainSwag,
I agree, it's very bad reporting via RNS. There has to be some motive behind it.
Regarding whether they can afford both wells, I guess we'll find out in a months time.. or less..

WhichWayNow,

I agree. I still believe 15-15.5k bopd production guidance is possible for this year. Next year at best estimates 12-13k bopd, if it's just from well 6 and well 7z.

"And the more they increase production then the quicker the water cut will increase."
I think 17-17.5k bopd is the maximum they can get with current limitations. POTENTIALLY 18k, but that'll likely be unstable.
I wouldn't be surprised if this drops down to 16.5k bopd on restart.

I'd like to believe even with the material downgrade, HUR can produce for at least another year, albeit at much lower rates due to increased watercuts (if it really doesn't stabilise/decrease).

CaptainSwag,

I'm a little baffled. There is little correlation between increase in production options to material downgrade in reserves and resources.. E.g. Why do they need to consider increase in production to downgrade reserves or resources?

Regarding production improvements:
I don't think we should be worried about removing the fluids from the perched water source.. at this stage, it'll likely be too long to be even worthwhile (or that's what I think). I mean of the current 3 year EPS proven reserves of 28.1mmboe, HUR have already produced c. 9mmboe. Sounds kind of pointless to empty the perched water for the potentially remaining 18mmboe. But 7z should still run to ensure maximum production from well 6 can be achieved.

Rig Cost - I think this can be covered with rise in oil price for 2021.. (assuming that production at EPS can be depended upon).

I think there will be Lancaster improvements in 2021. Well 8 i'm hoping. But we will wait until September to find out.
HUR needs to contract a rig soon if they do plan on drilling any wells in the first half of 2021.

Hi Stu255,

Personally, I value a company based on assets and growth.
I think at the current stage, the bottom up approach is very important for the "growth" of this company.
From a top down approach, yeah sure it's all good and well producing 17k bopd and getting revenue in for today, but these assets pose a threat for the future potential cashflows.

SP always trades based on the future prospects. In almost all cases for all companies, both ways of valuation should be considered.

All IMO. Slift.

Hi WhichWayNow,

Referring to page 33, the CPR provides estimates for the EPS.
Yes, you are correct in saying that the low case of 1380m is for the structural closure of the main field. I'd assume EPS falls into here.

The TVDSS of 1600-1700 m is for the full field (of 2C resources).

Or that's how I understand it? Someone can correct me here.

The following from the RNS:
"Consequently, the Company believes there is a risk of a material downgrade to estimated reserves attributable to the Lancaster Early Production System, and that there will also be a material downgrade to estimated contingent resources across the West of Shetland portfolio. This assessment does not take into account any production enhancement options for the Lancaster field which are currently under evaluation."

According to the CPR:
The current estimated reserves of 44.5mmboe is based on a 1597m TVDSS OWC.
At the Low case of 1380m TVDSS OWC, the CPR has estimated the reserves to be c. 33 mmboe.

Since production began, working on a 1597m TVDSS case, the reserves would have now dropped to c. 35mboe.
I don't know exactly which value HUR will be working from, but let's assume worst case and say they'll be working from the already reduced reserves following 1 year of production.

At 1380m TVDSS OWC, and following 1 year of production, the reserve estimate will be c. 24mmboe.

The RNS also states that the reserves may be shallower than the ranges envisaged in the 2017 CPR.
So if there is a downgrade, the reserves attributable to the Lancaster EPS will be less than 24mmboe. (This is including additional volumes from the supposed extension of the EPS from the past).

The statement: "any production enhancement options for the Lancaster field"
Could this be the volumes from the extension of the EPS?
If so, current Lancaster EPS reserves following review is likely to be c. 10mmboe.

Thoughts anyone?

CaptainSwag,

I'm sorry to hear that.

The perched water is probably still true. I don't see how it can't be. This is just trapped water due to the structure of the fractures.
I think the biggest question here (as also posted by garyn) is how much of a downgrade will this be?
But I still believe that the oil reserves will still be available. Just the amount recoverable economically will be reduced.
They did report in a previous RNS that downgrades as a matter of shallow OWC will take into account conservatism.

I hope you do get an opportunity to buy back in when you feel the risk is lower.

Slift.

Thanks Mk111, I'll have a skim through later on.