Member Info for ZYX098

Ocelot,

True enough, but the question has to be asked, why have they gone for Turkey when they are so confident (and have approval for) Kimm production at HH?

Far, far better to get production onstream from a known asset and at least cover your overheads than go for an Exploration program in a different Country (especially when you don't have the cash), which even if successful will not provide any cash flow until at least 2023.

So they are basically saying nothing more will be done on HH this year?

Ignoring the bird in the hand in favour of a bird that may or may not be in a different bush? That's a very foolish way to run a Company.

Wizard,
Wytch Farm is in the Wessex Basin, HH is in the Weald Basin, so the two are not comparable.

Wytch Farm produces primarily from the Sherwood, with some additional production from the Bridport. HH produces from the Portland, with some from the Kimm during the EWT.

So even if the two were in the same basin, they are producing from different formations.
So again, the two are not comparable.

From the above, it should be clear that quoting production & reserves figures from Tawke (or any other field in Kurdistan / Iraq) is utterly irrelevant the the AME / UKOG block in Turkey.

Reserves are irrelevant because of the above mentioned points, but just for grins; Wytch Farm (the largest Onshore Field in Europe) 382 Million bbls, HH reserves; 31.4 Million bbls (Xodus CPR June 2018).

And as a final comparison; Wytch Farm peak production 110,000 BOPD, HH FORECAST peak production; 3,000 BOPD

Note that Xodus declined to assign any reserves to the Kimm due to a lack of information. The Kimm EWT was over by November 2018, so they have had 2 1/2 YEARS to produce a CPR for the Kimm (and an updated one for the Portland) and have failed to do so.

While various people have thrown around "billions" of bbls of oil being present in the Kimm, the billions refers to the entire basin, not one field. Just because oil is present doesn't mean it can be produced.
Remember, so far both Angus and UKOG have failed to do anything other than test - with two conspicuous failures.

At first glance, the EWT on the Kimm in HH was a great success.
But if so, why haven't they put it on production - they've had several opportunities to do so?
Even more important, why haven't they issued an updated CPR?

The CPR is EVERYTHING. Vague figures quoted in an RNS mean nothing to the market.

Just remember, according to UKOG’s last Corporate presentation (as opposed to RNS), they said that:
HH would be on production from six wells before the end of 2020 (FAILED)
Arreton -3 would be drilled by Q1 2020 (FAILED)
Godley Bridge (Loxley) would be drilled, cored & tested in Q2 2020 (FAILED)
Broadford Bridge sidetrack would be drilled by Q3 2020 (FAILED)

I'll be happier when;

A) Some of the BoD actually show faith by buying shares in the Company.
B) UKOG states why they did not re-complete HH-1 as a dual Portland / Kimm producer like they stated they would.
C) SS actually holds a meeting in which shareholders can ask questions
D) UKOG states what the current and forecast production for HH-1 is (rather than PI's relying on OGA information months later) production.
E) UKOG update their £/bbl operating costs to include water disposal costs.
F) UKOG state why they haven't produced a CPR for the Portland & Kimm at HH.
G) UKOG state what their plans are for the Kimm at HH.
H) UKOG issue the placing that we know is coming.

Wizard,

Tawke is in a different depositional basin and in any case is producing from a different formation to that prognosed for the AME / UKOG licence.

In that respect, there is absolutely no connection between them.

It's like comparing Wytch Farm with HH.

Doesn't anyone find it strange that that one prolific ramper suddenly goes quiet, only to be immediately replaced by another prolific ramper?

Gibbs' rule No. 39!

They do seem to take a relatively constant 45 days or so to reach TD and at least run some basic logs.

Perhaps on the ES-3 Well, they had to wait for the ESP and surface electrical gear before they could put it on production?

If they stick to their announced schedule (only heavy rain can really mess with the site construction schedule now), then look to spud in early June, reach TD in mid July with an announcement on the results in the 4th week in July.

The RNS will have to be very carefully scrutinised, as I predict it will announce that 'oil has been encountered'.
They are highly likely to see oil shows, but whether or not that actually translates into a genuine discovery is something else altogether...

And why should that surprise you Mirasol?

Don't you find it strange that that one prolific ramper suddenly goes quiet, only to be immediately replaced by another prolific ramper.

Gibbs' rule No. 39!

RollingInit,

AME have not operated in Iraq 'for decades' - they aren't in there at all.

Otherwise they'd know that Kirkuk and Tawke are not on the same trend - they don't even produce from the same production horizons.

The area they are drilling in isn't actually in the same geological basin as the Kurdistan fields, so you cannot extrapolate those fields and their production characteristics over to the area that AME/UKOG are now in.

As for 'drilling in an area that is historically under-explored', normally there is a reason for that - especially if there are numerous fields in the general vicinity and production has been ongoing for decades.

It's because Companies have looked at that particular area and decided that there isn't anything worth drilling - just ask a Company based in Edinburgh about their recent Mexico project.....

As one of many LTH's who are c. 90% down on their original investment, I really hope that the Turkey project is successful.

However, the actual offset information indicates that any discoveries initially produce maybe 1,000 BOPD due to flush production from the fractures, but that headline ("WallStreet") rate declines rapidly to perhaps 20% of that as the long term rate from fracture replenishment kicks in.

The offset information also shows that a relatively high number of 'production' wells don't actually find anything either. This indicates quite a complex geology and given the area they are in, it is likely that any potential reservoir is significantly compartmentalised due to faulting.

So could it be cash generative for UKOG? Yes (but not until at least 2023, so no help for their stated plans for UK Operations).

But will it be "transformational"? No.

Penguins, you are wasting your time.

The Rampers aren't interested in facts or answering awkward questions.

RollingInit,

If a Company waits until the last year of a licence to do their work program, then they have already decided that it's not worthwhile and are just spending to fulfil their commitments.

Normally the first part of a licence period is taken up with shooting, processing (or reprocessing existing) seismic, interpreting the results and then picking a drilling location. The second part is taken up by getting the well drilled and the final part is used to interpret the drilling results and update the geological model.

Unless you are operating in a well known area with lots of seismic coverage, it is a struggle to get all that done within the licence period.

Besides, you are using the term 'land banking' in the wrong context.

Land banking refers to the practice of developers buying up tracts of land and then sitting on the for long period of time before they submit a planning application - it does not refer to the period after they have planning approval.

RollingInit: "It doesn't concern me that AME have sat on licences for years, before developing them, or 'licence banking', in the same way that property developers 'land bank' to develop at a later date."

No, 'land banking' in the way that you imply does not happen in the oil industry.

When the initial licence is granted by the Govt, it is for a set period of time (usually 3 or 5 years) for a defined work programme (seismic and/or drilling) to be performed in that licence period.

If the exploration program is not successful, at the end of the licence period you can apply for an extension (again with further work commitments) or give up the licence.

If the exploration program is successful, depending upon the regulatory regime in place, you normally have to give up a % of the licence area and commit to a further work program for appraisal (more seismic / wells) in a set time frame (normally 3 years) and then you have to commit to either developing what you have found (i.e. FID)or giving up the licence altogether.

The only way a Company can hang onto a license area after that is if the Country is desperate for production and nobody else is interested in the license area...

Mirasol,

Depends on their starting point - a well without planning permission etc could easily cost £5-£6 million to drill, as you'd also need to include the site construction costs.

The same well with planning permission and an existing wellsite (i.e. an infill well), £3 Million should be in the ball park.

Given their lockdown, can the French still travel to Turkey ;)?

Mirasol,

Work always slows down during this period, and will essentially stop for the daily Iftar. In addition, they won't get much (if anything) done during the Eid.

Their quoted timing leads me to think that before Eid, they will try and get the site construction to a stage where they can at least move the Rig in, break for the Eid and then move the Rig in & finish the well location after Eid.

Ocelot,

Yes, much sooner than in the UK.

But as I said, the cash flow will have to be reinvested into Turkey.

So not only do UKOG have to raise cash to finance the rest of the initial drilling operation, they will then have to find the cash to put it into production.

In the meantime, they also have to find cash to convert HH-2 into a water injector. They also stated the intent to drill a third well at HH this year, so will need more cash for that.

Can they get the cash for all that from a single placing? I just don't see it - it would amount to around 50% - 60% of the current market value of the Company.

There will be a placing to get funding for their outstanding Turkey commitments and I suspect that they hope that a discovery in Turkey will give enough of a bump in the share price to get another placing in for cash for the HH work program.

Penguins,

I agree on your point (last night) about the water production being much sooner and much larger than would normally be expected for a Weald field.

But in addition to your points, don't forget the now deafening silence from UKOG on production from the Kimmeridge, which was what the majority of the LTH's originally bought in on.

As far as I can recall, we've had a brief statement that the EWT had been completed and was still producing dry oil (I forget the rate) and since then - nothing. Not even a statement after the recent HH-1z W/O, which was originally proposed to be to install a dual completion assembly to allow simultaneous production from the Kimm and the Portland.

Stockraiser,

1. We don't know how much of a cut the Directors have taken. Given UKOG's history, I'm willing to bet that it's at the lower end of the range. We also don't know how long the cut is/was for and that they haven't re-instated their full salaries a few months later and just 'forgot' to tell anyone - like wot the Execs at The Guardian did..

2. That $13/bbl operating cost was before the water breakthrough. With the reduction in production and water disposal costs to now account for, I suspect it's now in the $30 - $35/bbl range.

3. UKOG do not produce enough for the POO to make enough of a difference - the lack of movement in the share price in relation to the increase in POO shows that.

4. Once UKOG get permission (which I think should be a formality), they still have to pay for the surface & downhole equipment and work required to recomplete HH-2 as a water injector. I doubt they'd see any change from £1 Million for that work. Even after that, it is not correct to say that there will be no more disposal costs. They will still have additional fuel costs to run the additional surface equipment to separate, store and then pump the water downhole, plus ongoing chemical treatment costs on the produced water (scale inhibitor, O2 scavenger etc).

5. There will be no money left from the next placing for Loxley - it will go towards Turkey and HH.

6. Speculation is just that - speculation. UKOG like to quote production figures from a field that isn't the nearest offset and the quoted "indicative 2,000 bbl/day flow test" was only for six hours and cut short due to water production.
Give the nature of the area that they are drilling in, I predict that UKOG will announce that oil has been found. However, the RNS will have to be scrutinised VERY carefully to see if it's actually only 'oil shows' or a genuine discovery.
Let's assume it is a discovery, then they will have to stump up more cash for the completion and production equipment to be purchased and installed.
The earliest I can see this producing any cash flow (presuming it is a good discovery) is Q4 2021. Also, don't forget that any cash flow will have to be reinvested in Turkey to fund their ongoing seismic & drilling commitments, so no cash will be repatriated to the UK until 2023 at the earliest.

7. What is your basis for stating that money is being 'parked' in UKOG? Until the (delayed) annual accounts are published, we don't know what their current cash status really is. Even if the Directors took a 50% pay cut and that it's still in force, the current production from HH doesn't appear to cover both the operating costs AND the UKOG Overheads.

Ocelot,

Ramadan is coming on the 12th or 13th April though....

IBug / Mirasol.

What are you doing by bringing facts and logic to this board?

You know that won't go down well with TH2 and his alter egos Nico869, SR123 & MasksNewNorm!

Ahhh Penguins, using facts and logic again.

You know that won't work against TH2 and his alter ego's , Nico 869, SR123 and MasksNewNorm