George Frangeskides, Chairman at ALBA, explains why the Pilbara Lithium option ‘was too good to miss’. Watch the video here.
Today has obviously been disappointing. The 2 fundamentals underpinning a fractured basement reservoir are hydrocarbons and interconnected fractures. The second of those was obviously lacking in the Warwick results. This has implications and you can find them in the CPRs on the HE website. In particular, lack of interconnected fractures below structural closure has potential implications for resource volumes (1C vs 2C) and performance of the EPS. No HUR well has convincingly flowed from these depths. This is not my opinion, it is independent informed analysis.
None of it is certain. We need to hear what RT has to say. It is disappointing he has not been interviewed today in order to reassure. In fairness, he probably has much thinking and analysis to do. The CMD looks like a really big day and the RNS that day will be really important.
The 2C resource base is huge. However, the Warwick results imply we may need to look at the 1C figures which is around a 75% reduction according to the CPR.
We’ve had a 20% uptick in the space of a week. I agree sentiment has changed and that will hopefully translate into the SP over the next few weeks. In particular, today’s RNS was very positive on the outlook and market opportunity.
.....a poorly connected section of the fracture network within the oil column. .....
Oil but limited fractures. Interesting to understand how much data they had on the target location.
The web page below is a couple of years old but it gives some idea of the size of the prize. If oil is found, and irrespective of whether we have to wait for it to be properly cleaned up to flow, then at 935 million bboe Warwick alone is up there in the top 10 oilfields ever found in the entire North Sea. Top 10, whole North Sea, Ever. Obviously at this stage it is a big if, but I really do think a few posters both on here but on the other BBs, need to get real. If there is oil discovered, and the logging indicates a fracture structure similar to Lancaster then this is huge, irrespective of whether we flow it now or in the future.
Hoping for an RNS tomorrow - and I will be up to read it!
GLA
https://www.offshore-technology.com/features/featurethe-biggest-oil-fields-in-the-north-sea-4836046/
Good to see this now looking resolved following the G20.
Caught up with results and video interview. Further boost next week from Investors Chronicle is likely. Good news!
WW
The ‘nominal losses’ you refer toduring drilling can have other explanations than lack of fractures. From the Halifax CPR:
Hurricane has hypothesised that the ‘granite paste’ observed on the core guns, combined with drill cuttings, has blocked some of the fracture network in the well, creating a large skin. This is supported by the lack of drilling losses observed while drilling.
I suspect that some of the pessimism regarding the lack of a flare may be overdone. Whilst that would be the icing on the cake I think the RNS could state something along the lines of:
Discovery of Oil column
Geology analogous to Lancaster
Expectation of 935million barrels, one of the biggest recent discoveries in U.K. waters
Suspended as a future producer subject to a workover at that time to clean the well up
TL moves to Lincoln for appraisal well
I think the pessimism expressed here will soon fade if this turns out to be the case. AIMHO.
WW
I agree with ADUK that ‘no oil’ would not have required a 2 month drill to ascertain. Why do you think this is the case?
As I understand the fines are from drilling. It is likely that they varied the mud on this drill to overcome the problem, but when drilling a discovery well there is a requirement to over-pressure the well to protect against unexpected high pressures down hole. It may be the over-pressure is the primary cause and not the mud chemistry. This all assumes that it is the same issue as Halifax which is only a premise.
Regarding oil, it can hopefully be taken from any of the 3 planned wells. There is a distance 'limit' as wax will form as the oil cools. However, the drill sites are pretty close to the AM.
From the CPR for Halifax. Instructive of what we might get. If so, not perfect, but not the end of the world.
Well Test
Hurricane conducted a single DST on 205/23-3A across the interval 1,242 – 2,050 m MD (1,179 – 1,801.2 m TVDSS). Prior to testing, the well was displaced to clean completion brine with density of 1.11 – 1.12 g/cc.
Despite attempting to lift the well, initially with base oil and subsequently with two nitrogen lifts, the well did not flow sufficiently to conduct a full test20.
Large drawdowns induced by the nitrogen lifts were insufficient to lift the well. Hurricane has hypothesised that the ‘granite paste’ observed on the core guns, combined with drill cuttings, has blocked some of the fracture network in the well, creating a large skin. This is supported by the lack of drilling losses observed while drilling. Furthermore, attempts to bullhead the well with base oil prior to lifting with nitrogen may have further exacerbated this issue.
In addition, fluid recovered from circulating the string appeared to include a mixture of brine, base oil, formation oil, fine granite particles (similar to the paste seen on the core guns) and something potentially related to mud additives. Evidence from both the VSP and UBI fluid velocity measurements (Figure 7.27) show a higher velocity in the deeper section 130 m, indicative of a more dense fluid in the bottom of the hole, possibly composed of the paste seen on the core guns.
If these samples are representative of the fluid in the bottom of the wellbore, then this, combined with the high skin induced by blocked fractures, would make it very difficult for the well to flow due to the thick paste accumulated during drilling in the bottom 130 m of the well.
As a result of these issues, the well has been suspended, pending further investigation, to allow for the possibility of re-entering the well to conduct additional testing.
Have a look at the 2017 presentation on the HE website. It has a good image of a Halifax core sample ‘compromised’ by rock fines. It forms a thick mud and HUR theorised that it prevented the well flowing.
Given the lack of information we have at the moment then this seems the most plausible explanation to me. If it is the case then hopefully they will return at some point and take some more time to clean up the well.
AIMHO
Great news. And on time!
They over-promised and are under-delivering following the surprise placing. We are now effectively 'mid-year' 2019 and how much of the RNS'd work plan have they achieved. The intent was:
From now through mid-year an aggregate of at least 10 workovers in Puesto Flores (oil), Estancia Vieja (oil/gas), Puesto Prado (oil) and Las Bases (gas) will be carried out. The rig is currently being mobilised to the first well location
· By end of May, the renovation and commissioning of the oil treatment plant in Puesto Prado. The commencement of deliveries of oil from the field direct to local refineries will give enhanced margins (current production 150 bopd from this area)
· From end of May through to November the first phase repair, upgrading and commissioning of the multi-million dollar value gas plant in Las Bases in order for it to have the capacity to handle initially up to 250,000 m of gas of President's own gas per day by end of October. The pipeline is already transporting approximately 20,000 m per day of third party gas for which a tariff is payable to President
· In any event by mid-year gas flow will commence to the market from the Las Bases and Estancia Vieja fields through temporary facilities
PPC has promise, but lost trust with the placing and are not winning it back quickly enough with the work. AIMHO.
I agree that RAs purchase is a significant message. I think it means expectations set out earlier in the year have at least been met, and hopefully surpassed. If so, hugely positive for the SP.
From the results RNS:
Outlook
· Payment platform growth: End User Spend through Bango Platform expected to grow in excess of 100% in 2019 with growth from established and new routes
· Expanded opportunity: New revenue stream from app developers buying from Bango Marketplace. Payment providers will benefit by upgrading to Bango
· Audiens CDP growth: Initial success of Audiens CDP in Italy expanding to other countries and continuing growth established in 2018
· Thriving ecosystem: Large and strategically valuable opportunity to enable prosperity by linking $50bn/yr app marketing industry with global payment infrastructure
· Investment in future: Increased investment in the data opportunity, alongside growth and profitability of the payment business, is expected to drive revenue and profit from 2020 onwards. 2019 is projected to be profitable, but at a lower level than previously forecast
· Bango expects to generate sufficient cash to cover both the operational costs of the business and the continued investment in product development in the coming year
Timing worked well and I was lucky enough to reduce here following FOil and increase my holding in RBD prior to WN results. However, I've reversed that today. RBD looks great, but I think success at Warwick Deep and the planned CMD means that in the short term I should re-balance towards HUR. Hoping for a flare over the next week and for positive reservoir indications in a couple of weeks.
GLA
I agree. Likely to boost the SP significantly. As we start earning revenue this will hopefully be one focus of the expected CMD.
Just be careful of the SP predictions none of us know so precisely where it will be. IMHO such a large placing takes longer than a few weeks to bed in. Have a look at other such large placings (eg SXX Stage 1 financing and HUR in 2017) and draw your own conclusions.
Dadean
I think you’re probably referring to the opening auction.
https://aim-watch.com/articles/lse-auctions-explained/