Member Info for ZYX098

Rats - the LSE character counter lied...

Last sentences should be;
Then will come the results RNS announcement...

It may be a carefully worded dry hole RNS.

Or who knows, they may actually find gas..

I'll bet that there are a number of shareholders who would be happy if the 2p part of his 2p/5p uber-ramping came true...

IMHO, and only if you could afford to loose it; buy after the placing but about 6 -8 weeks before the planned spud of Loxley.

Time it right, and you should be able to get a semi-decent P&D out of the Pin-1 results RNS, before the rest of the AIM crowd realises that their announcement of an oil discovery is very carefully worded to obscure the water production that will accompany it.

Remember, UKOG have still never officially admitted that the Basur-1 DST was halted because it started producing water, never mind put anything as fundamental as potential reserves, a structure map or COS on Pin-1.

The Supreme Court case announcement won't do anything - everyone knows that Sarah and her cohorts will lose and the only excitement will be in the shorts of Rocky's Wife when he sees his beloved Sarah in person (albeit from a distance - probably).

What about HH?
Well the 3D seismic is planned for H2 2023 - which we all know from past performance is UKOG speak for "we might be able to start preparation for our first line on the 31st December".

Might be able to squeese a small P&D out of the RNS announcing the commencement of the line laying & Vibe work, but that's all.

It'll probably be 3 - 4 months after the 3D Seismic is finished shooting before all the processing / re-interpretation work is finished, so May / June 2024 before the results are announced.

The results could enhance the structure, but equally could kill the idea of HH-3 stone dead - hence why PPP have a walk away option at that time.

Why is that important?

Well UKOG will need to issue confetti (and lots of it) to raise funds for Loxley.
The idea that any production from Pin-1 or getting a farminee to pay for it is just laughable - not going to happen.

So when will the placing for Loxley be?

My guess is that UKOG will look at the very early results from the 3D at HH and decide then.
If they look positive, they'll hold on until after the final interpretation and go to the market after the RNS of the 3D results.
If the results don't look promising, they'll go to the market as early as possible, because if the 3D kills the idea of a third Well on their only Operated asset, the floor for the share price is a long way down..

If the 3D looks good enough to go ahead with HH-3, they SHOULD drill HH-3 and Loxley back-to-back to minimise costs.

They'll need all the cash they have left in the bank for HH-3 (£4.6 Million isn't enough to do the 3D and drill HH-3, even if HH-3 is a simple Portland deviated producer), so therefore - more confetti needed for Loxley.

Now, Loxley is big enough that a lot of AIM part time investors will be interested.
In the old days, it used to be buy on spud and sell when the 9 5/8" is set, but many are wiser now - hence buy 6 - 8 weeks before the planned spud.
There will be a ramp up in share price towards spud and the early part of drilling.
Then it will drop back as some people people take their profits.

Then will come the

Share price on 2nd Jan 2023 = 0.06p
Current share price = 0.0585p

Amount of shares bought by the BoD = zero.

21 RNS's issued.
Effect on share price = zero.

Announced plan to drill Pinarova-1 in Turkey
Effect on share price = zero.

CPR for Loxley issued - showing no 2P reserves.
Effect on share price = zero

PPP buy into 3D Seismic and potentially HH-3 for £4.6 Million.
Effect on share price = zero

Worth repeating;
Amount of shares bought by the BoD = zero.

Of course, the problem with that statement is that even if Pinarova could be put on production commercially, it won't help the Companies cash flow in the UK until at least a year later as they'll have to go through at least one year's Company reports in Turkey before and cash can be repatriated.

Placing incoming......

Exploration,

They could have used the shallow seismic techniques that are typically used Offshore for proposed well locations to look for hazards such as shallow gas, mud volcanoes, boulders and potential 'punch-through' spots (for JU Rigs).

Pinarova is just UKOG throwing money at it because they know that they will find some oil and be able to announce so in an RNS, while avoiding nasty questions like "how much water did it produce".....

Vernonya,

Your first paragraph is spot on - the Portland H2 project is of no value to UKOG (and therefore it's shareholders) for at least a decade and quite probably longer.

I doubt we'll see Aircraft (apart from very small, short range commuter types) fuelled by anything other than Kerosene or bio-fuel for the foreseeable future. There are too many issues with H2, not the least of which is getting turbo-fan engines to be able to run on it.

Similarly for ships, they'll be powered by heavy fuel oil for the foreseeable future. There just isn't any technology on the horizon that can replace HFO and be even close to being economic any time soon. LNG & LPG carriers can (and do) augment their consumption by using the boil-off from the cargo, but otherwise, no.

H2 vehicles are already on the roads and have been for decades - including in the UK. I used to regularly refuel at a BP Station on the A 14 back in the 1980's, and it had an H2 fuel pump back then.

The safety issues were sorted out long ago and in virtually every respect, it makes more sense to have a vehicle powered by a hydrogen fuel cell bank than it does to have a battery powered EV.

The vehicle has similar range and power to a conventional car, and - huge advantage over EV's, can be fuelled in the same time as a diesel or petrol car.

There are several other advantages over EV's.
Firstly, you don't need to mine and process the Copper, Cobalt, Nickel, Lithium, Graphite and rare earths in anything like the same amounts as for an EV battery.

Secondly, the fuel cell - which has a design life of 25yrs - can be easily refurbished if it fails, which is nealry always due to the failure of the catalyst.

The damaged part of the fuel cell is removed, the catalyst stripped off (and recycled) a new layer of catalyst applied and then re-installed.

Thirdly, it's much lighter than an EV. Mainly because you don't need to lug a heavy battery around - which results in large savings during design and manufacture, and less brake / tyre wear during use. (The current T3 weighs in at 2,066 kgs!!).

At the moment the main issue is sourcing the H2 - but if the current plans come to fruition, this will primarily be generated by using excess Wind / PV power which would other wise be lost, and saving the UK taxpayer a ton of cash in the process, as we wouldn't have to pay the capacity constraint charge which windfarms (uniquely of all power sources) get..

Well that particular ID didn't last long - but looks like he's back again already.

Maybe he's had too much sauce at lunch, and thinks it's Friday (again..)?

ART 123,

A lot of water has passed under the bridge since that particular update in January 2021.

Namely in their submission to SCC for Loxley, UKOG slipped in a statement that the Kimm is not commercial on either HH or BB, plus they never completed HH-1 as a dual Portland / Kimm producer, despite saying that they would and having had the opportunity to do so during the HH-1 W/O.

After the statement that you posted, the silence from UKOG on the Kimm has been deafening.

They have never stated anything publicly about why they haven't re-completed HH-1 as a dual Completion, or what they saw in the EWT of the Kimm on HH that makes them think it's uneconomic to produce, despite what (on the face of it) were very good test results.

Given his past history (and not just with UKOG), I'd take anything that DL says with a huge pinch of salt. But if he at least gets UKOG to state why they think the Kimm is non-commercial, that would be a start.

Fully agree with your last statement, but I'm pretty sure we haven't seen the last of Adrian or Ells.
If he follows his usual pattern, Adrian will appear on the board either late Thursday night or Friday morning and try and remain civil enough that Admin don't toss him before they go home for the weekend. Then he will relentlessly spam the board and get ever more insulting until Admin toss him on Monday morning.

ART123,

The reason the seismic is needed is to better map the HH structure.

Both HH-1 & HH-2z have shown that their current interpretation is wrong and they need the 3D seismic to get a better definition of the structure.

They can also use the data from the 3D to get a better idea of where the sweet spots might be, plus any locate as yet unmapped faults that may be present (I think they can get down to about 3m throw now - Penguins?).

The 3D will not tell them the location of any fractures in the Kimm - they are way too small.

This is needed, otherwise the positioning of HH-3 will just be a wild guess - and Basur-3 is ample evidence of what can happen if you drill a Well without proper seismic control.

Penguins,

Good point! I'd forgotten that.

But it also depends upon how that voting agreement is as well.

It's unlikely that UKOG's share in HHDL and UKOG itself would be additive - more likely that the HHDL shareholders would agree a position and then that would be put forwards at a Licence Meeting (TCM etc).
And UKOG will be in a minority in HHDL after the agreement has been approved.

Either way, it's a very odd arrangement.

I cannot recall ever working on a project where Wells within the project had different % ownership.

The allocations of sales revenue and costs will be horrendous to work out.

It would be easier to state that – should HH-3 be drilled - PPP will then own 49% of HH, except for HH-1 which will remain 100% HHDL.

That 49% now means that PPP will own more of HH than UKOG and will have very real consequences going forwards.

Remember, the RNS specifically states that “PPP will also earn an aggregate 49% non-operated Licences interest, comprised of an initial 7% on 3D seismic completion and a further 42% interest upon HH-3 completion.”

The agreement with respect to voting rights will be very interesting reading.

Now, DL isn’t listed on the BoD for Doriemus, but I’m willing to bet a Bag of Maltesers that they’ll vote the way he asks them to.

So if say, PPP & Doriemus agree to do something, but UKOG object, the proposed % licence holding means that PPP & Doriemus are over 50% - will the voting agreement mean that they will get their way?

Or will it need three Partners to vote for a motion, irrespective of the actual licence share?

Either way, since you can pretty much guarantee that PPP & Doriemus will vote as a block, it now means that Alba are in the driving seat going forwards - and they will likely be very wary of DL, having seen what happened to Regency Mines.

Also, unless the agreement says otherwise (unlikely – there’s always a clause in the operating agreement which allows the Operator to be changed out), if PPP, Alba & Doriemus all vote together, they can have UKOG removed as Operator.

From an Operational perspective, it could also create issues going forwards - never mind from an accounting perspective, which will be horrendous.

So if there’s an HH-4 etc, PPP will still own (and be liable for the costs of) 49% of that.

Will also be interesting to see if they are going to be liable for 49% of the cost of any expenditure on HH-2z.

When HH-2z is (finally!) converted and put onto injection and they open up HH-1, they could find that the water cut from HH-1 increases to the extent that it overwhelms the surface separation facilities and so has to be cut back – potentially against UKOG’s wishes.

Equally, if they show that production from HH-1 is causing a gas cap to form in the structure (it already appears that the reservoir area around HH-1 is below the bubble point) and this adversely affects production from HH-3, then the licensees could vote to shut HH-1 in permanently.

Then there's the vexatious subject of the Kimm.
UKOG have never revealed why they think it is uneconomic to produce, despite excellent initial flow rates.

So if PPP decide otherwise and bring DOR & Alba along with them, maybe we'll get a Kimm Well drilled and put onto production? Or HH-1 converted to a dual producer, as previously advertised but never done?

Who knows what will happen with DL on board.

It could (could!!) end up being very beneficial for HH & UKOG in the long term.

But I trust DL as far as I could throw him with one arm tied behind my back and the other arm broken in two places...

Adrian,

I also said that the Pin Well will find water as well, so don't try and twist my words..

And I haven't sold my BP shares either.

Cont'd - with point numbering corrected....

5. What exactly will HH-3 target?
Will it just be a Portland producer? If so, will it be horizontal?
Will it also target the Kimm? If so, will that also be a a producer (which means that the Portland won't be horizontal), or will an exploration leg be drilled, the Well plugged back and a horizontal Portland producer drilled?

6. £4.6 Million isn't enough
The RNS states there is a cap of £4.6 Million. This figure isn't enough to both acquire the seismic and drill HH-3, so UKOG will be on the hook for some cash. With the costs of getting the permissions for the Seismic, potential cost for processing, cost for reinterpretation of the structure, cost of site preparation (and re-instatement afterwards), plus the actual cost of drilling - I estimate that UKOG will need to cough up in the order of £1.5 Million for this program. More if there is a Kimm exploration leg included.
Remember, the oil industry has seen a considerable increase in manpower, equipment and consumables costs in the last couple of years.

1. The RNS specifically states 'acquisition of 3D Seismic'.
Now, normally it would be taken as read that that would include post-acqusition processing and interpretation.
But with UKOG we have numerous examples of how carefully they word RNS's.
In any case, as licence Operator UKOG will be on the hook for the cost of getting all the approvals etc.
They will also incur expenditure in the interpretation phase, as they will have to agree the revised mapping, where HH-3 goes and it's objectives.

2. What is the nature of the break clause after the seismic acquisition & interpretation?
What if the results show that this is as good as it gets, and there is no suitable reservoir location for HH-3? Can PPP just walk away, or will they be on the hook for 7% of all future expenditure on HHDL?
The wording would seem to indicate that they can just walk away.

3. Modifications to HH Pad.
The current layout of HH is not suited for bringing a Drilling Rig back in and will need considerable work to get it prepared. This will also include removal of surface pipework and it is likely that production as HH-1 will have to be stopped while this work (and the drilling of the Well) are ongoing.

3. No mention of HH-2z for water injection
The 3D seismic might give them more information as to where the injection water will end up - i.e. will it actually do any good from a reservoir perspective, or is it really just for water disposal.
I suspect that in any case they will now defer re-configuring HH-2z as a water injector until they get the Rig on location. Not just so the Rig can do it in the same work program, but also because it will have to be suspended (as per point 3 above) during Rig operations.
This will mean that the work on HH-2z will also come at a cost to UKOG, as they will have to pick up the HH-2z share of Mob / Demob costs.
Will be interesting to see that if they do that, will UKOG take all the costs of HH-2z as inherited legacy work, or will PPP now have to pick up their 49% share. My money is on the former.

(TBC..)

Got to admit I have very mixed feelings about DL being involved again.

While he was instrumental in pushing HH forward in the early stages, his various (very misleading) pronouncements sucked in a lot of unwary people at the time - compounded with SS's subsequent pronouncements about holidaying in the Bahamas etc..

DL's treatment of Regency Mines (now Corcel) and what he did with Doriemus should both raise red flags.

Indeed, when he gave up all his UK based Directorships at very short notice, the rumour mill was claiming he'd effectively been run out of the City - although I don't believe anything concrete was ever proved?

In the meantime, I'll just leave this snippet from his Wiki entry;
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Corporate Governance Related Criticisms
He has been accused of frequently "promoting a company, pushing up the (price of its) shares, then raising cash by placing new shares — and (thus) diluting the holdings of the early investors",[14] described as "a familiar tale with most companies he promotes".[15] His defence has been that "You can’t build a business on bottle tops.".[16] Furthermore, he has argued that it's not accurate to claim that "all his ventures have turned sour".[17] Although finance commentators have noted that most of the "hundreds" of companies he has been involved in, and "stock promoted" for, have failed to generate any successful shareholder returns.[18]

In 2009 he was one of a group of claimants, claiming that he had been libelled when an investment publication in South Africa had described the group of executives of one of Lenigas' ventures as "cynically and greedily indulged in self-enrichment at the expense of, and contrary to the interests of, shareholders."[19] The High Court of Justice of the United Kingdom rejected Lenigas', and the other claimants' libel claim, and found in favour of the publisher.[20]

Have you forgotten already Ells?

I work in the Oil Industry for a living, so dealing with this sort of stuff is indeed my day job. :)

But I see that my prediction about your reply was correct in all aspects.

Ocelot,

I suppose it could be claimed that only £1 is technically needed to start the project!

But by the time all the planning hurdles have eventually been overcome, access infrastructure set up and the first ell drilled, I'm willing to bet a Bag of Maltesers that around £1 Billion will have been spent before the first cavity is completed.

Ells;
You said; "I have no idea what you are talking about ".
Correct - it's very clear that you have no idea what you are talking about when it comes to UKOG. Or, for that matter, RR.

"Sadly it will produce oil, the reservoir is shallow and easy to drill. Nice quick income generation."
So why don't you enlighten us as to why it will not produce any water, when both the shot hole and Kezer-1 did?

"Stable volumes".
Again, why don't you enlighten us as to why you think so - either in reserves or production, since UKOG have made no announcement concerning either.

The HH bore hole sample program value = zero.
It's a planning condition to be filled before they can commence water injection.
Once they actually manage to start doing so, the water injection value = £250k pa (according to UKOG, who have never, ever, ever, ever been wrong in their forecasts....), or about 0.001p on the share price.

Loxley gas CPR value = zero.
Because there are no 2P reserves, only 2C.

Portland H2 value = zero.
Because nobody will lend UKOG (a minnow with an abysmal track record of keeping to the announced work schedule and budget) the £1 Billion necessary to even commence the project.

Drill further Wells on the Portland - current value = zero.
If they thought drilling another Well would add value, they'd have done it a long time ago (as they've had permission to do so) instead of going off on the wild goose chase that is Turkey.

If any of the above actual had "value" as you claim, they would have been reflected in the share price already.

But since the share price has done nothing, it shows exactly what value the market thinks they add to UKOG - zero.

The UKOG BoD also think so, otherwise they'd be buying UKOG shares. Instead of which SS stopped buying his derisory £1k pcm just as soon as he could.

BTW, can you prove the "millions in the bank" claim? No? Thought not.

I look forward to your ill-thought out reply, which will be bereft of any facts or logic, but which will (in all likelihood) contain cheap insults.

The early news reports are saying "200 Bbls of Reservoir Fluid".

If that's correct, then at the current water cut 200 bbls works out to less than 10 bbls of oil.

(Current production = c. 14k BOPD oil and 350k BWPD)