Hurricane Energy (HUR)

[JonnyT]

Given the well was shut in for 6 weeks I’d expect it to produce more strongly initially with the water then becoming an issue.

We also don’t know for certain that they are operating both wells as they said intent to and subject to certain provisions.

Given these points it maybe too early to RNS any issue if indeed there was one.

[feste]

Hi all,

Like RVF, … (trying to look on the RIGHT side of life)….. Good Freudian slip, if that is what it was …;->

I gather, from a source I'm not to disclose , that HUR's next offload -weather- permitting - is destined for Wilhelmshafen, where the Petroatlantic is booked to offload 61k tonnes / ca. 460,000 barrels around 21st Feb....

Obv. any delay will play havoc with per - day calcs.

HTH and ATB

[FabianBjornseth]

Spirit Energy WOS Limited, which holds Spirit Energy's GWA assets, appears to have applied to be stuck off the register and dissolved:

https://beta.companieshouse.gov.uk/company/11485916/filing-history

Upon the Company's dissolution, all property and rights vested in, or held in trust for, the Company are deemed to be bona vacantia, and will belong to the Crown.

Interesting news, or just an organizational formality?

[dspp]

organizational formality?

more likely this, otherwise HUR would have RNS'd it.

regards, dspp

[dspp]

In case anyone is unaware there is a parallel HUR bonds thread re the (HURCOVNT) bonds on the bonds board.

viewtopic.php?f=52&t=21856

In the case where might be a need to thread a delicate path for two years between one extreme scenario where the #6, #7z, and #8 wells are going terribly; and the other one of them performing tremendously, the details of the convertible Ts & Cs could matter very much.

Given the observed price action that has followed Ker's selling a significant stake, which has in turn been followed by poor results from the three 2019 LinWar wells; and the disappointing watercut news so far from Lancaster, it is important to understand what are the likely trading strategies of the HUR bondholders, and who they might be. Again the details of the convertible Ts & Cs could matter very much.

It is disappointing that HUR have not published these Ts & Cs details. It seems odd to those on the bonds board that they are not published & public.

Does anyone have any insight into the actual price action on these bonds ? And on who holds them ?

regards, dspp

[pijoe1212]

Spirit Energy WOS Limited, which holds Spirit Energy's GWA assets, appears to have applied to be stuck off the register and dissolved:

https://beta.companieshouse.gov.uk/company/11485916/filing-history

Upon the Company's dissolution, all property and rights vested in, or held in trust for, the Company are deemed to be bona vacantia, and will belong to the Crown.

Interesting news, or just an organizational formality?

normal corporate stuff IMV.. i read nothing into to it of value to understanding the investment case for HUR.

[drillordrop]

Given the well was shut in for 6 weeks I’d expect it to produce more strongly initially with the water then becoming an issue.

We also don’t know for certain that they are operating both wells as they said intent to and subject to certain provisions.

Given these points it maybe too early to RNS any issue if indeed there was one.

It is my understanding that they are flowing both wells together to achieve 20kbopd. If that is the case they will presumably flow the 6 well in preference to 7z to minimise water handling. TBH the well delivery rates are clearly not a problem so I’m less interested in what they achieve and simply focused on the watercut development.

Regarding the bond, I tried to get the prospectus from a bond data provider and they couldn’t find it so I think we will simply need to rely on the public data as they explained to dspp.

Returning to the wct, the OGA data will be interesting but it won’t allow us to monitor the wct development in 6 vs 7z. And that’s crucial, we will need to rely on their promise to RNS changes, but with commingled production a suspicious person could see a situation where the wells are balanced to seemingly show stable wct, but in fact 7z is dialed back as 6 increases. It is possible to demonstrate that. If I get time I’ll have a go.

[Mikjjo]

Returning to the wct, the OGA data will be interesting but it won’t allow us to monitor the wct development in 6 vs 7z. And that’s crucial, we will need to rely on their promise to RNS changes, but with commingled production a suspicious person could see a situation where the wells are balanced to seemingly show stable wct, but in fact 7z is dialed back as 6 increases. It is possible to demonstrate that. If I get time I’ll have a go.

Each well can & will be tested regularly for water cut regardless of rate and therefore HUR will know exactly what is happening with 7z throughout.(water handling should not be an issue) Any significant changes in either, once data analysed will be RNS'd.

If I was suspicious that they would try and conceal the water cut by playing about with rates...or changing offload ports!! I would be out of here. HUR do not strike me as a co that are Machiavellian in their approach. note. the RNS to dampen rumors on 8th Nov is a case in point.

[dspp]

Returning to the wct, the OGA data will be interesting but it won’t allow us to monitor the wct development in 6 vs 7z. And that’s crucial, we will need to rely on their promise to RNS changes, but with commingled production a suspicious person could see a situation where the wells are balanced to seemingly show stable wct, but in fact 7z is dialed back as 6 increases. It is possible to demonstrate that. If I get time I’ll have a go.

Each well can & will be tested regularly for water cut regardless of rate and therefore HUR will know exactly what is happening with 7z throughout.(water handling should not be an issue) Any significant changes in either, once data analysed will be RNS'd.

If I was suspicious that they would try and conceal the water cut by playing about with rates...or changing offload ports!! I would be out of here. HUR do not strike me as a co that are Machiavellian in their approach. note. the RNS to dampen rumors on 8th Nov is a case in point.

HUR now have form in delaying public announcements of operational performance until the last possible moment. A case in point is the timing of the 13 Dec 2019 RNS which gave the unwelcome news of the increase in watercut to 25-30%. That is news the company had been sitting on since approx 10-weeks earlier. They were forced to release the RNS on that date because they only had two weeks left before the OGA data release put it into the public domain, and they needed to get the news out before the holiday season.

HUR are not babes in arms. They are competent professionals who are using all of the levers at their disposal, and sitting on key information is a well understood lever.

If you don't believe me I suggest you try asking HUR for details of the convertible bond, particularly the provisions regarding change of control, delisting, default & indebtedness.

Something to bear in mind is that immediately the RNS/etc for the CMD is released, all the 'insider information' shareholders, including Kerogen, are cleared to act in the market. Quite frequently, by the time one gets to a CMD, a whole load of buy/sells have been pre-packaged within ringfenced CA/NDAs and they go live immediately on the 'outing' of all the previously 'inside' information. The CMD should be highly interesting.

regards, dspp

[Mikjjo]

I am very much aware they will have known information that they will not release. My point is they will analyse the data thoroughly before releasing it. They have been consistent in their minimalism of info until they can present them as facts imo and I do not think they have used smoke and mirrors to disguise whats going on.

I agree the big boys will move faster than us pi's but that seems to be the case the city over.

The CMD will indeed be interesting.

[dspp]

This is what water breakthrough in a fractured reservoir with middling-to-good aquifer support looks like:



There is a reason folks are worried.
dspp

[Foritza]

Sorry dspp, a poor graph that shows nothing without an explanation.

[dspp]

Sorry dspp, a poor graph that shows nothing without an explanation.

Pale green is oil. Pale purple is water. This is real data for production from a fractured reservoir, in this case Zechstein carbonate overlaying Rotliegend sandtstone. The presence of porosity means that it is a better reservoir than the FB in Rona.

The thing to note is the trivial duration of plateau production. So prolific initial oil production, but not for long. This is the problem if you get water breakthrough to the wells in a fractured field with good aquifer support. You get a lot of (gross liquids) production, but very quickly the water is the dominant liquid !

regards, dspp

[dealtn]

Sorry dspp, a poor graph that shows nothing without an explanation.

Pale green is oil. Pale purple is water. This is real data for production from a fractured reservoir, in this case Zechstein carbonate overlaying Rotliegend sandtstone. The presence of porosity means that it is a better reservoir than the FB in Rona.

The thing to note is the trivial duration of plateau production. So prolific initial oil production, but not for long. This is the problem if you get water breakthrough to the wells in a fractured field with good aquifer support. You get a lot of (gross liquids) production, but very quickly the water is the dominant liquid !

regards, dspp

At the risk of asking a stupid question...

Obviously 100% oil is better but if it is such a "poor" well why was it kept for 12 years? Presumably it was still economic, albeit less so than one without any water.

How does it compare to HUR, in that case?

[feste]

Hi dspp,

A picture worth a thousand words....

Do you mind sharing which field this was taken from ?

Many thanks

[dspp]

Hi dspp,

A picture worth a thousand words....

Do you mind sharing which field this was taken from ?

Many thanks

This was Auk in the UKCS and it is OGA data. It is a similar light oil and a similar GOR to Lancaster. I was wracking my brains trying to think of a field with a relatively thin layer of fractured reservoir above a decent aquifer, and this was the best I could come up with. Feel free to offer other suggestions for analogous fields - one doesn't need to always cite Bach Ho.

I don't get too stressed about the fact that Auk also had production from the porosity in the limestone, or the porosity in the sandstones - they meant that the Auk tail-production stretched out in a way that Rona FB would be less likely to do. That is why Auk could stay in operation for so many years as it did have that tail of low rate production, and being a platform with fixed wells was cheaper to operate than a floating production unit, and cheaper to access/intervene/etc the wells that by using mobile (floating) drilling rigs. That is why Auk had a long field life. In contrast Rona, if done from floaters, would have more challenging economics.

The key issue is how thick is the good quality FB in Rona, and how much of it is oil filled vs water filled.

regards, dspp

[WessexMario]

"a field with a relatively thin layer of fractured reservoir above a decent aquifer"
That does NOT correlate to the Lancaster reservoir - since when is a kilometre deep reservoir "relatively thin"?

"Auk also had production from the porosity in the limestone, or the porosity in the sandstones"
Again that does NOT correlate to Lancaster, there is a good seal above the basement, otherwise the oil would have migrated into the sandstones above.
Fractured BASEMENT is a completely different geology and reservoir type to fractured sandstone.

It might be a pretty chart, but what relevance does it have to the Lancaster EPS?

[dspp]

"a field with a relatively thin layer of fractured reservoir above a decent aquifer"
That does NOT correlate to the Lancaster reservoir - since when is a kilometre deep reservoir "relatively thin"?

"Auk also had production from the porosity in the limestone, or the porosity in the sandstones"
Again that does NOT correlate to Lancaster, there is a good seal above the basement, otherwise the oil would have migrated into the sandstones above.
Fractured BASEMENT is a completely different geology to fractured sandstone.

It might be a pretty chart, but what relevance does it have to the Lancaster EPS?

WM,

At present the evidence for the depth of the oil column in Lancaster is rather tentative. Initially HUR postulated 600m or so, and no water production. Unfortunately the very substantial water production from a depth that would appear to be only 300m or so below reservoir top is causing concern. So the effective ('workable') oil column may only be of the order of 300m deep.

Add in the not very good flow from deeper in the Lincoln & Warwick reservoirs and one begins to wonder at the quality of the deeper reservoir. Then look at the relatively poor PI in Lincoln Crestal. By the way the Bach Ho model has indications of this, but it does at least appear to be workable (developable) down to deeper than we have seen so far in any of the Rona.

This all tends to make me wonder about whether there is a layer of usable fractured basement on the top/outside of the Rona structures, but not deeper. So I was wracking my brains for where I know of a relatively thin fractured field overlaying less good stuff, with a decent aquifer. And Auk popped into my mind. As an analogue it is also comparable viscosity and GOR so that makes the fluid flow implications comparable. However I wouldn't want to stretch the analogue too far, these things are never quite like that. Nevertheless that production history graph may give those with little understanding of the implications of cutting water (but still being productive) a better understanding of what could be in store for the future. Hence the concerns.

regards, dspp

[pijoe1212]

"a field with a relatively thin layer of fractured reservoir above a decent aquifer"
That does NOT correlate to the Lancaster reservoir - since when is a kilometre deep reservoir "relatively thin"?

"Auk also had production from the porosity in the limestone, or the porosity in the sandstones"
Again that does NOT correlate to Lancaster, there is a good seal above the basement, otherwise the oil would have migrated into the sandstones above.
Fractured BASEMENT is a completely different geology to fractured sandstone.

It might be a pretty chart, but what relevance does it have to the Lancaster EPS?

WM,

At present the evidence for the depth of the oil column in Lancaster is rather tentative. Initially HUR postulated 600m or so, and no water production. Unfortunately the very substantial water production from a depth that would appear to be only 300m or so below reservoir top is causing concern. So the effective ('workable') oil column may only be of the order of 300m deep.

Add in the not very good flow from deeper in the Lincoln & Warwick reservoirs and one begins to wonder at the quality of the deeper reservoir. Then look at the relatively poor PI in Lincoln Crestal. By the way the Bach Ho model has indications of this, but it does at least appear to be workable (developable) down to deeper than we have seen so far in any of the Rona.

This all tends to make me wonder about whether there is a layer of usable fractured basement on the top/outside of the Rona structures, but not deeper. So I was wracking my brains for where I know of a relatively thin fractured field overlaying less good stuff, with a decent aquifer. And Auk popped into my mind. As an analogue it is also comparable viscosity and GOR so that makes the fluid flow implications comparable. However I wouldn't want to stretch the analogue too far, these things are never quite like that. Nevertheless that production history graph may give those with little understanding of the implications of cutting water (but still being productive) a better understanding of what could be in store for the future. Hence the concerns.

regards, dspp

i do not have the documentary evidence any longer, nor can i recall the detail, but i think you will find comparables in Zeit bay. not sure what was published at the time or after. i worked to operator provided well data, which was reviewed and processed for process facility engineering input (around 86-88 time period).

[dspp]

"a field with a relatively thin layer of fractured reservoir above a decent aquifer"
That does NOT correlate to the Lancaster reservoir - since when is a kilometre deep reservoir "relatively thin"?

"Auk also had production from the porosity in the limestone, or the porosity in the sandstones"
Again that does NOT correlate to Lancaster, there is a good seal above the basement, otherwise the oil would have migrated into the sandstones above.
Fractured BASEMENT is a completely different geology to fractured sandstone.

It might be a pretty chart, but what relevance does it have to the Lancaster EPS?

WM,

At present the evidence for the depth of the oil column in Lancaster is rather tentative. Initially HUR postulated 600m or so, and no water production. Unfortunately the very substantial water production from a depth that would appear to be only 300m or so below reservoir top is causing concern. So the effective ('workable') oil column may only be of the order of 300m deep.

Add in the not very good flow from deeper in the Lincoln & Warwick reservoirs and one begins to wonder at the quality of the deeper reservoir. Then look at the relatively poor PI in Lincoln Crestal. By the way the Bach Ho model has indications of this, but it does at least appear to be workable (developable) down to deeper than we have seen so far in any of the Rona.

This all tends to make me wonder about whether there is a layer of usable fractured basement on the top/outside of the Rona structures, but not deeper. So I was wracking my brains for where I know of a relatively thin fractured field overlaying less good stuff, with a decent aquifer. And Auk popped into my mind. As an analogue it is also comparable viscosity and GOR so that makes the fluid flow implications comparable. However I wouldn't want to stretch the analogue too far, these things are never quite like that. Nevertheless that production history graph may give those with little understanding of the implications of cutting water (but still being productive) a better understanding of what could be in store for the future. Hence the concerns.

regards, dspp

i do not have the documentary evidence any longer, nor can i recall the detail, but i think you will find comparables in Zeit bay. not sure what was published at the time or after. i worked to operator provided well data, which was reviewed and processed for process facility engineering input (around 86-88 time period).

Thanks PJ.

I'm very much open to all suggestions of relevant analogues, whether FB or from any other setting (as other settings can still have relevant lessons).

What would be good is if HUR could drag all the analogues out of the cupboard, obtain access to all the relevant published papers etc, and post them up on the HUR website. It ought not to be a bunch of PIs scraping around on the internet. HUR need to get onto the front foot and realise that they need to sell their story to a by-now increasingly sceptical audience. Or else the train set will not be in their hands indefinitely.

regards, dspp