Member Info for Slift

Hi PlantedBHA,

Say what you want, but I tend to look at the positives and negatives, whether i'm invested or not.
I like to know the risks as well as the positives to the company.

@chesee
The current market cap and the value of this company is based on the uncertainties and the problems (or challenges) that the company is currently facing regarding their assets.
I think you're forgetting the 230m debt in your valuation (would give the 3 fields $200m valuation that way). But ofcourse it's undervalued, but there 3 fields are in question.

Slift.

Tullow already have 27.5% of the votes FOR the sale from their major shareholders (and BOD, yes their whole 0.12% stake).

I want to say muted response SP from vote since circa. 27.5% have already said yes.
But never know what will happen at the shareholders vote.

There's several things that will (or will not) move TLW tomorrow:
- General earnings
- OPEC meeting
- PMO results
- Shareholders vote

Slift.

The question that's been circulating today is:
"Is the Convertible Bond a problem?"

At this stage, no it isn't as HUR will have over $175m in cash at the end of the year (conservative with $40 Brent and contingencies).

But going forward, should we be concerned? I think so.

HUR have deferred their CAPEX for all well activity in Lancaster to 2021, and likely have deferred GWA following the license extensions for their commitments (we will know following the technical review).
That alone will increase CAPEX expenditure for 2021. Whilst it may seem like a good move (in the hope that oil recovers), there's still a lot of uncertainty around production and COVID19/market for 2021.

HUR have definitely bought themselves time in the current pandemic and market downturn to get production back on track. However there's still a lot of uncertainty around this (as discussed on this board).

Whilst 15k bopd average for this year will be good enough, production of 20k bopd is really needed for 2021 (should they be able to generate enough money for all financial commitments in 2022).

I think HUR have a lot of work to do from now and 2021 to solve all (or most) uncertainties (of what they can control) regarding their Lancaster production EPS:
- Water cut
- Production interferences
- Production stabilisation and guidance
- Confirm to theories regarding Lancaster and water production (or provide solid evidence)

Slift.

Okay, I must admit. I have calculated the cashflow incorrectly.

Having gone through the accounts, there's additional costs i've missed.

By my calculations:
Total costs (with a 10% contingency): $185m
Assuming 15k bopd guidance for year, breakeven will be $31-34/barrel.

To the end of June, HUR have approx. $99m in Revenue.
Assuming $40/barrel to the end of the year and 15k bopd, revenue for the next 6 months (Jul-Dec) is approx $110m.

So total free cashflow is likely to be $24m to $41m.
Given HUR had $152m at the end of April, Year end cash balance would be approx. $176m to $193m.

Slift.

PMO's trading update is tomorrow.

Should be interesting, the update will likely affect TLW. In the way that they both operate in similar sectors.

Hi mjga786,

This year, to the end of June, I calculated circa. $40m cashflow after taking into account OPEX and CAPEX costs.
There'll have been expenses incurred as a result of the problems they have had recently (e.g. installation of ESPs, well shut ins etc.) that has not been taken into account.

Assuming 10% for the above, cash flow would be circa $35-36m.

Going forwards, assuming 15k production and $40/barrel Brent until the end of the year:
For the next 6 months, cash flow would be circa. $51m (taking into account 20% contingency for the unknown costs for H2).

So in total for this year, I'd estimate circa. $85-86m cashflow.

Slift.

Hi AquaeSulis01,

"So two points, there is more than one area of perched water with estimates as to the length of the zones, and the word "may" eventually decline is used i.e. may mot drain away."

Technically speaking, let's say that water is drawn from the perched water reservoir by well 7z due to the pressure difference between the oil reservoir and the perched water reservoir - (i.e. due to oil extraction, pressure in the well decreases --> therefore water from the higher pressure perched water reservoir moves to the lower pressure oil reservoir).

Now, since water has entered the oil reservoir, it will most likely have a residence time (time taken for water from entering the oil reservoir to reach the pump) before it is pumped up by the ESP.

Water has more density than oil (i.e. oil floats). By Stokes' Law (engineering law), water will settle to the bottom of the reservoir given enough time to settle. It's very likely that not all the water that is drawn from the perched water reservoir is pumped up.
Best case scenario would be that MOST of the water settles, allowing the oil/water separation to take place - and thus, the ESPs will mostly be exposed to oil.

Having said all that, I honestly don't know how fractured basement would affect the above.

ALL IMO. Slift.

Hi MaverickD,

Yes, member since April 2020.
I envy you having experienced the financial crisis and the other market downturns. I was pretty young with no financial sense or market knowledge in 2008. I suppose not many would at 13 years old lol.

I look forward to your posts today:
"gap filled"
"Up she goes......buyers will be pushing this higher"
"It's is just the MMs taking stops"
"Now the offer goes up and you see all the large orders being filled..."
etc.

The market and the corporate world interests me and I do this as a hobby. I'm not here to argue who's a better investor, as I believe luck plays a big part in it.
I just find your posts annoying and misleading, especially for new members on this board and investors.

Good luck with your investment(s).
Slift.

CaptainSwag,

I believe the market will react as Hurricane provides a production guidance for the year (if they do that is).

"the SP today is less than when that news broke - and we have both wells working and 50% ish more production - plus lincoln approval. So i am not sure the market is reacting according to anything at the moment."
Whether Hurricane has 50% more production, or 100% more production is short term. As per my previous post, without a guidance for the year, there is uncertainty regarding production.

And it's the certainties (e.g. production guidance) and uncertainties (e.g. no production guidance) that affect SP.

Slift.

CaptainSwag,

They also only produced 15.5k average until 15th May. So the shut down of one well isn't the sole reason, imo.

Personally, whilst it's good to have higher production, it comes at a huge risk.
Unless ESPs have reduced the water cut in 7z, I'm against higher production. A stable production at 15k, is better than 10k production on well 6 because they aimed for 20k.
Note: When they shut down the 7z well due to interference, the market was uncertain about even 12k bopd average for the year.

BOD giving us a guidance for the year is confidence from management that they'll be able to achieve that guidance for the year. The market will be reacting accordingly to the guidance going forwards (and hopefully ignoring what happened in H1).

The fact that no production guidance is currently given adds to uncertainty about the operations as well as the management.

Slift.

Thanks CP52.

I'll likely add to my position going forwards, but I don't see any rush at the moment.
Good luck to you.
Keep posting as you have been, as I do read.

Slift.

CaptainSwag,

I'm skeptical about 20k. Mainly because they have suspended production guidance.
Q1 resulted in 14,900 bopd. Q2 resulted in 14,300 bopd.
I want to say that once they have finalised short term production strategy, they'd give an updated production guidance for the year (most likely to be 14-16k).. and if anything, they should really be more conservative about this after H1.

Slift.

My guess would be to reserve 6 months financial commitments.
Depending on burn rate, i'd say that they'd want circa. 500k eur in the bank.

Leaves 9-11 months funding for ongoing operations. But likely to see another placing (or another method of cash raising) before the end of this year.

Slift.

Hi CP52,

I noticed that too. There are two figures in two separate RNS, 1.4m eur and 1.5m eur for end of December. I went with 1.5m eur as it made more sense.

Not an easy mistake at all. But as you say, let's ignore that.
1.5m eur: https://polaris.brighterir.com/public/erris_resources/news/rns/story/w15j79x
1.4m eur: https://polaris.brighterir.com/public/erris_resources/news/rns/story/x5le28r

Whether it's 460k burn or 560k burn, that's 14-17 months from end of June. Whilst as you say it's enough for ongoing operations for several months, I'd imagine the team would want to keep a set figure in the bank.

Slift.

adoubleuk,

I don't think they'll be "playing with things" right now and definitely not the choke size. They are more likely just using variable speed drive to adjust pump rate of ESPs.
Or that's my understanding from the latest RNS when they said "finalising near-term production":
RNS: "continue testing both wells on ESPs for a short period of up to two weeks before finalising its near-term production strategy"

I think the bigger problem that they are (or have been facing) is the water cut (which has limited the production) from 7z.
They are also limited to processing 20k bwpd and 30k bopd and 35k bpd total fluid capabilities.
To me, this makes sense as to why Hurricane has increased production to 15k. This allows the use of the maximum 20k bwpd water processing capability of the Aoka Mizu.
Once they have finalised the near-term production strategy, i'd imagine Hurricane won't be messing around with production. We have seen the water cut to increase, so a 20k bwpd (or 57% water cut margin) would be the "cautious" optimised production, where there are still uncertainties about water cut.

Regarding ESPs - They are centrifugal pumps running on variable speed drive suited for large flows. I think anything around 7-10k barrels/day total flowrate would be good enough for operation. Any lower may cause the motor to trip on overload due to heat produced. Optimum rates are probably like 15k barrels/day for the type and size of pump Hurricane have (all as a best guess).

Slift.

I've had a small stake here for a while now.
I'm thinking of increasing my holding here when gold and silver prices settle down.

At the end of September, Erris had 1.65m eur cash.
At the end of December, Erris had 1.5m eur cash.
At the end of February, Erris had 1.3m eur cash.
At the end of March, Erris had 1.2m eur cash.
In May, 360k eur was raised through placing.
In June, Erris had 1.3m eur cash.

At the above rate, it seems like approx. 100k eur per month. Likely to have around 1.1m eur cash by the end of this month.

I feel like a lot of money has been burned through lockdown. We may see another placing soon to raise more cash. What do people think?

Slift.

Mainly wildcats.

There has only been two oil discoveries in Suriname (both this year). Again, both wildcats and within Apache's block. I think this Apache Block is estimated to contain 1.4 to 1.8 billion barrels, but hasn't been confirmed.
- Maka-1
- Sapakara-1

Slift.

Hi Neversellshell22,

Yes, Tullow has 3 blocks.
Block 47, Block 54 and Block 62.
Tullow is operator and owns 50% of Block 47 (partners Ratio Exploration and Plus Petrol)
Tullow is operator and owns 30% of Block 54 (partners Equinor and Noble Energy).
Tullow is operator and owns 80% of block 62 (partner Pluspetrol).
Here is a map: https://static.seekingalpha.com/uploads/2019/2/11/41325066-15499283370951493_origin.png

The Goliath-Voltsberg North well is in block 47.
Here's a map: https://gyazo.com/a9ead0cc523e0421d30ac5b7030d9b7d

"What has been done so far."
In 2017, Tullow drilled Araku-1 well in Block 54. Well came up dry.

Apache (with partner Total) made big discoveries earlier this year at the Sapakara-1 Well in Block 58 (marked on the map as (6) Apache block).

Slift.

MaverickD,

11,000 posts, and i can imagine at least 98% of them are useless.

"Dr Trice has said before.."
Are you aware that Dr Trice has resigned but will assist the company for the next 6 months? Meaning that come March for CMD, he won't be there. But you keep believing it lol.

Slift.

- Targets for 2021 drilling to be selected by year end
- Drill "at least" two wells in 2021

Two targets in the Cretaceous horizon (Amaila/Kumaka and Iatuk-D) are identified as having in excess of 725 MMBOE each.
- Potential 2 drills for 2021, but i'd imagine they're still identifying targets for high success, rather than barrels.
https://i.gyazo.com/3f11bad84a5ce6d203668e11768bc75e.png

Slift.