Hurricane Energy (HUR)

[Proselenes]

Scottish oil club

Our event tomorrow night is SOLD OUT with a Wait List. However, if you would like to join us remotely we will be livestreaming the presentation on the following link:-

https://lnkd.in/g62-Ygj


https://twitter.com/scottishoilclub/sta ... 9836376064

EDIT : so that is starting at 6pm on Thursday 28 Nov 2019 (dspp)

[Carcosa]

The Lancaster production data has been uploaded to the Oil and Gas Authority Website

I have taken the data and created the following plots:


The above is self explanatory and more or less aligns with anticipated oil production data. All good stuff.

Of more interest to me is the gas and water ratios. In both instances the data shows these as being stable. It would have been nice to see the water trending down a bit but it has to be remembered the data is is an aggregate of the two wells and we are lead to believe that only one well is producing the vast majority of the (perched) water and due to delays production was a tad delayed. Non-the-less this will be a key piece of data to monitor over the coming months



Hope you find it useful. More data on the OGA website (which will always be three months behind)

[dspp]

https://www.hurricaneenergy.com/investo ... atory-news

RNS Number : 2425V Hurricane Energy PLC 02 December 2019

'Warwick West' 204/30b-4 Well Result & Lancaster Operational Update

Hurricane Energy plc, the UK based oil and gas company focused on hydrocarbon resources in naturally fractured basement reservoirs, reports the results of testing of the 204/30b-4 ("Warwick West") well and provides an update in relation to the Lancaster Early Production System ("Lancaster EPS").

Highlights

Warwick West
o Discovery of light, 43° API oil
o Maximum stable flow rate of 1,300 bopd on natural flow
o Third horizontal well to be drilled and tested in 2019 programme
o Programme currently within time and budget forecasts

Lancaster EPS
o 2.5 million barrels of oil sold across six cargoes to date
o Production in line with guidance for Q4 2019 of ~11,000 bopd

Warwick West Result
The Warwick West well was spudded on 24 September 2019 and was drilled to a total depth of 1,879 m TVDSS. It intersected a 931 m horizontal section of fractured basement reservoir.
The well flowed for a total of 85 hours in a number of flowing periods at variable rates, using both an electric submersible pump ("ESP") and under natural flow, while work continued to clean the well and evaluate reservoir performance. A stable rate using an ESP could not be reliably measured as the well was still in the process of cleaning up. After an extended pressure build-up period, a final flow period was conducted under controlled natural flow conditions which achieved a stable, sustainable rate of 1,300 bopd with evidence of the well having cleaned up further. During this flowing period, less than 0.5% water was produced.
Initial analysis of oil samples indicates a light, 43° API oil. Further technical analysis of PVT fluid samples will now be carried out. This will include comparing the geochemical signature of oil from Warwick West with oils procured from Warwick Deep and Lincoln Crestal.
Warwick West is the third and final well of the 2019 programme on the Greater Warwick Area ("GWA") which has been carried out using the Transocean Leader semi-submersible rig. In accordance with regulatory requirements, the rig will now plug and abandon the well before demobilising.
Hurricane and its joint venture partner on the GWA, Spirit Energy, are currently evaluating the results of the three wells drilled and tested in 2019. Further technical analysis will be required to determine the impact on the potential for the GWA to be a single accumulation, and on volumetrics.

Lancaster EPS Operations
On 14 November the sixth cargo of crude oil from the Lancaster EPS was lifted, taking total oil sales to 2.5 million barrels since First Oil in June 2019. Average production for the remainder of the year is expected to continue to be in-line with guidance for Q4 2019 of approximately 11,000 bopd, constrained by system availability and data gathering requirements.
As part of the data gathering exercise for the Lancaster EPS, the Company has been carrying out periods of production from the 205/21a-6 and 205/21a-7Z wells separately, to assess fluid dynamics and measure reservoir performance without the impact of interference from the other well. An interim update will be made when these flow periods have been completed, which is expected to be later in December 2019.

Dr Robert Trice, Chief Executive of Hurricane, commented:
"We are pleased to have made another discovery with the Warwick West well. The flow test results confirm the presence of light, mobile oil.

"The impact that this well will have on how the Company views the GWA accumulation and its associated volumetrics will require further technical analysis. The GWA joint venture is now assessing the optimal appraisal strategy for the GWA, and Hurricane will provide an update in due course.

"Further progress is also being made in our understanding of the Lancaster reservoir. Uninterrupted vessel uptime combined with good well productivity have allowed us to carry out additional data gathering whilst remaining in line with guidance for Q4 2019. We will provide a further update later in December.

"In 2019 we have generated a wealth of new data from both the GWA and Lancaster and I look forward to presenting our findings in detail at our proposed Capital Markets Day in Q1 2020."

[dspp]

https://www.hurricaneenergy.com/investors/regulatory-news

RNS Number : 2425V Hurricane Energy PLC 02 December 2019

'Warwick West' 204/30b-4 Well Result & Lancaster Operational Update

Hurricane Energy plc, the UK based oil and gas company focused on hydrocarbon resources in naturally fractured basement reservoirs, reports the results of testing of the 204/30b-4 ("Warwick West") well and provides an update in relation to the Lancaster Early Production System ("Lancaster EPS") ...................... etc. "

My initial personal opinion on the results coming in from the three appraisal wells in 2019 from LinWar are that the limited public domain data tends to suggest:

- fundamentally this is one good outcome, one bad outcome, and one weak outcome from the three appraisal wells drilled this year in LinWar;
- repeated 43 API (LinWar) vs 38 API (LanHal) so some oil differentiation. Lighter is generally more 'cooked', i.e. deeper/longer. It also means that the Brynhild Fault would appear to be an effective barrier. However not hugely different from an economic perspective. May need LinWar contacts reinterpretation from a OWC perspective due to gradient differences;
- volumes in LinWar are likely to be considerably reduced;
- productivity in LinWar likely to be reduced, typically towards depth and/or flank/toe based on the limited data so far, which means drillex will go up;
- I will be very interested to see detail presented on the LinWar pre-drill seismic vs the post-drill re-interpretation;
- they have not given indication of whether there was in-situ fracture plugging vs mud-skin plugging vs fewer fractures intersected than expected vs fracture connectivity lower than expected;
- they've not stated what the max pumped flow was, or the PI, but overall it was low enough not to be worth completing as a producer, hence P&A;
- trivial watercut is good news, but some ambiguity on the extent to which that was stable, though mind you that is to be expected;
- I am very glad that HUR farmed-out to Spirit on LinWar as this means HUR's exposure to the downside got massively reduced before this happened;
- I am glad I'm not running the Spirit sale roadshow with these results coming in as Spirit's exposure is fairly high, and they are under time pressure in a way HUR are not so much;
- I don't think there will be quite so much hurry to rush into a development decision on LinWar, and that people will be very keen to have enough productive wellstock in place and flowing before deciding;
- the heterogeneity discussion is well and truly out of the Pandora's box (you will recall this is an observation I have made before) and it has implications for how much appraisal is required around LanHal before making big decisions;
- Rona Ridge may need to be interpreted as something much more akin to Bach Ho than the more optimistic "a hill full of fractures" vision;
- the volumetrics in Lancaster alone are still sufficient to much more than merit the current shareprice + future risk;
- the AM EPS on Lancaster is delivering the data, but we don't know what the data is, though they will now give a December update;
- HUR are clearly running a very tight ship info-wise, well done;
- I do wish a particular cohort of traders would shut up and shove off, taking their lack of understanding (and lack of effort) with them. The sooner HUR moves to main market the better imho as these people really are tiresome and they definitely do not add any value;
- However a move to mainmarket may be slowed by this set of results as the scale & speed of development may reduce;
- more likely that an integrated LinWar + LanHal development strategy is taken forwards vs two full scale full blast independent ones, i.e. tighter integration to manage risk better;
- I'm still holding;
- I'm still smiling, but I do expect to rework my volumetrics in due course, in a way that will reduce the upside. The problem I have is that HUR have not yet released enough data for me to do much more than make very simplistic updates. Since it won't at this stage make that much difference to my investment strategy (because I still see a very substantial upside that is greater than the risk) I'm not rushing to do this publicly (any volumentric offers from the industry posters are welcome, your views will be at least as good as mine);
- OGA will give extra time for reflection, they will see that this is going to need time;
- time of course is not as available as one might like as there are alternatives to O&G coming at scale;
- that's enough for now as I want to digest this some more.

regards, dspp

[PeterGray]

dspp

I agree this is a "weak" result. Though at present I find it hard to know what long terms significance it has. Certainly, were I not already holding in size I'd be thinking of adding on today's move.

They have found the presence of oil in all 3 wells, and the issue has been with flow. We haven't yet had full interpretation of the WD result - and may never till more wells are drilled. But at present we don't really know if the fracture system is simply not developed as expected at depth, is plugged irreversibly, or if the oil from the deep zones may yet prove produceable - to at least some extent.

With WW they have clearly had problems with clean up, which is no great surprise given the issues of drilling into fractures. But we do know that the GLA wells both performed much better on production than they did on initial testing, and the difference is assumed to be due to long term self cleaning. While it would be foolish to hope that the WW well would ever be capable of the same levels of production that the EPS wells are, it certainly seems too early to write down the prospects for Warwick, or the GWA, by a major extent - though clearly development will not be as straightforward as we might have hoped. After 3 more wells and a tie in of the LC we should have a much better view.

Were I am in total agreement is that the sooner HUR gets a full listing the better. The short term traders are a pain!

[Proselenes]

Edison update on HUR:

https://www.edisongroup.com/wp-content/ ... covery.pdf

.

[FabianBjornseth]

Without painting an unnecessarily bleak picture, today's results are a tough blow. Although much valuable data has been gathered, the results of the GWA appraisal campaign are overall clearly on the low side. With a stated goal of ending the year with 3 pre-drilled producers, having only 1 to show for a $180 million investment is not great. At least the free carry from Spirit has paid off handsomely - where would be HUR if they had taken on this risk on their own?

Two wells have now been placed in Warwick, in what we have to believe we're identified as promising areas pre-drill. As none of them were commercial producers, in spite of long horizontal sections, I don't have a good answer to how you make this discovery economical, and for now I would not ascribe much value to Warwick.

The productivity issues could be partially mud/drilling related, as the last well showed signs of cleaning up, but until firm evidence otherwise I would suspect the geology is the main issue. Note that we still don't know the PI of the Lincoln horizontal well. If the GWA program continues with 3 wells in 2020 as previously forecast, I will be very pleasantly surprised.

Lost in the flurry was Carcosa's excellent post, trending the oil, gas and water rates from Lancaster. I would suggest that the trends could just as well be interpreted as a continuously increasing water cut, which I struggle to connect to the perched water explanation. Lancaster is more than ever the backbone of HUR, and I await the December update with great interest.

[dspp]

Lost in the flurry was Carcosa's excellent post, trending the oil, gas and water rates from Lancaster. I would suggest that the trends could just as well be interpreted as a continuously increasing water cut, which I struggle to connect to the perched water explanation. Lancaster is more than ever the backbone of HUR, and I await the December update with great interest.

All fair & good points FB.

I had the same thought on whether or not that was a increasing trendline, but Carcosa's and mine posts crossed over and I figured I'd already posted quite enough and so shouldn't update. The wells shouldn't show a fluctuating GOR either, which gives a feel for the sort of metering accuracy, or something else going on. There is still a lot to learn here, which means a lot of risk.

regards, dspp

[Clitheroekid]

You're not the only one RVF, I'm now around neutral, having bought some in the 20's and then added some in the 40's. But it certainly feels like a big loss.

Anyway, I'm holding on, hoping that the market has over-reacted and that the assets that HUR do have will prove worthwhile in the longer run, but it does show the danger of owning shares in a company / market I really don't understand.

I've read lots of highly knowledgeable posts and understood about 10% of their content, merely reasoning that if people as knowledgeable as this think it's good then who am I to argue? Also, although there's a huge amount of "fill yer boots" type rubbish on the LSE and advfn boards in particular there are also a lot of posters who clearly do understand what's happening.

I'm not blaming any of them - I think it's really my own fault as I simply had no way of independently assessing the risks involved, and there's a natural confirmation bias in believing the optimists (who are nearly always in the majority) and disregarding the pessimists.

Anyway, c'est la vie. At least you had the honesty to admit a loss - I'm sick to death of people who suddenly turn up at times like this thanking their lucky stars they sold out two weeks ago and professing faux sympathy for the poor mugs who didn't!

[OLTB]

I was always aware that my small cap shares were going to be more volatile than the large caps, and therefore only invested what I could afford to. I will keep hold of my HUR shares, as I’m investing for the long term and there are some very knowledgeable industry people here who seem to think that HUR on the right track (with some bumps along the way!). I appreciate that the latest results have been seen by some as negative, but I’m not a trader and won’t be selling myself.

I have a side question to those who may know more - now that HUR are selling oil and may start to accumulate cash, is it likely that they may pay out some of this as dividends, or is it more likely to be reinvested back into the business as it is a capital intensive business at the start up stage.

Cheers, OLTB.

[dspp]

I was always aware that my small cap shares were going to be more volatile than the large caps, and therefore only invested what I could afford to. I will keep hold of my HUR shares, as I’m investing for the long term and there are some very knowledgeable industry people here who seem to think that HUR on the right track (with some bumps along the way!). I appreciate that the latest results have been seen by some as negative, but I’m not a trader and won’t be selling myself.

I have a side question to those who may know more - now that HUR are selling oil and may start to accumulate cash, is it likely that they may pay out some of this as dividends, or is it more likely to be reinvested back into the business as it is a capital intensive business at the start up stage.

Cheers, OLTB.

1. HUR is at a stage and level of risk where there are still some total failure pathways that could cause an investor to lose all of his/her money. Some of the bumps could very well be fatal.

2. In the success case Rona Ridge (which is HUR for now) will have $-bn capex bills coming their way for about a decade or more. Perhaps $20-bn would be a quite reasonable funding requirement. On that basis, even in the success case, it would be unlikely that HUR should contemplate paying a dividend for a decade.

3. Any company choosing to farm-in to any of HUR's acreage would ideally like to do so in a way that keeps HUR's money firmly tied to paying the $-bn capex bills, with HUR's investors fully sharing the risk along all of the journey. Only if there are multiple suitors will HUR be in any position to withstand that "wire-the-hands-to-the-till-in-full-view" pressure and instead pay a dividend early.

A lot of people who are investing here seem to be taking on a lot of risk on the basis that others are too, without a great deal of personal understanding. That sounds like a shoe-shine boy. I have seen these sorts of fields go very badly wrong despite the best efforts of very many clever people.

regards, dspp

[Nimrod103]

is it likely that they may pay out some of this as dividends, or is it more likely to be reinvested back into the business as it is a capital intensive business at the start up stage.

From the example of other small O&G companies, a significant amount will be swallowed up in management emoluments.
I follow the Lancaster field with interest, it's worth watching the water and gas cut like a hawk.

[Dod101]

[A lot of people who are investing here seem to be taking on a lot of risk on the basis that others are too, without a great deal of personal understanding. That sounds like a shoe-shine boy. I have seen these sorts of fields go very badly wrong despite the best efforts of very many clever people.

Absolutely, dspp. Do investors in such fields not understand the risks? I am nowhere near investing (or more accurately speculating) in this sort of company. The trouble is that there is no comfort in sharing your misery with others who have lost out. This sort of investment is really for those who understand the risks and have enough resources that if they lost the lot it does not matter or at least they can recover without difficulty.

Dod

[OLTB]

Thanks all for your responses - dspp: that was very useful information as always, thank you. As mentioned in my post, I have only invested a small amount which if totally lost would be annoying and not critical.

I read posts on ADVFN and, aside from the childish sniping of some, there are others who seem to be ‘betting the farm’ on this company. If true, this seems very risky in my eyes, but perhaps they have more resources than me!

I will just watch from the sidelines to see what develops.

Cheers, OLTB.

[Carcosa]

Did not take long for this board to deteriorate once again from the investing and technical business of HUR to 'boohoo, whoa is me' because the share price went down. That sort of clap trap can be found on all the other investment boards elsewhere.

[Howyoudoin]

Did not take long for this board to deteriorate once again from the investing and technical business of HUR to 'boohoo, whoa is me' because the share price went down. That sort of clap trap can be found on all the other investment boards elsewhere.

I'm confused. Are people not allowed to make comment when the share price drops 20% in 2 days? Isn't that the 'investing' side of the business of HUR?

HYD (LTBH of HUR)

[Dod101]

Did not take long for this board to deteriorate once again from the investing and technical business of HUR to 'boohoo, whoa is me' because the share price went down. That sort of clap trap can be found on all the other investment boards elsewhere.

It is not really claptrap; just human nature I am afraid. I think you are being unfair on inexperienced and possibly ignorant investors. I do not mean ignorant in the derogatory sense but in the sense that they did not realise what they were getting into and to that extent it is their own fault for not doing due diligence. Personally I am well past the stage in my life when I would be tempted to put money into this sort of share and of course ironically I guess I can probably afford it more than many who are but that's life I guess.

Dod

[Dod101]

Did not take long for this board to deteriorate once again from the investing and technical business of HUR to 'boohoo, whoa is me' because the share price went down. That sort of clap trap can be found on all the other investment boards elsewhere.

It is not really claptrap; just human nature I am afraid. I think you are being unfair on inexperienced and possibly ignorant investors. I do not mean ignorant in the derogatory sense but in the sense that they did not realise what they were getting into and to that extent it is their own fault for not doing due diligence. Personally I am well past the stage in my life when I would be tempted to put money into this sort of share and of course ironically I guess I can probably afford it more than many who are but that's life I guess.

Dod

Perhaps off topic, but I'm moved to say, who has hijacked Dod101's account? I'm afraid, talking about myself only here, Dod101, you're light years off target I'm afraid. But thanks, I always have a high regard for your input (but not this time).

RVF.

Fair enough. I have jumped in to the middle of this thread but I took Carcosa's comments at face value. Is that not what he meant?

Dod (and I'm not in the least upset by your comments, RVF)

[pcpaul]

dspp, would be interested in your opinion, if possible, on the following points as you seem to know what you are talking about and objective:

1. A graph was shown a day or two ago showing an increasing water cut on which you commented briefly. Others have suggested that a. the increase was only in line with increasing production and therefore to be expected and b. that is is quite common for the water cut to increase on initial production ( up to several months or longer) and then to decrease as the water is cleared. It does also seem that the water cut increase is indeed in line with production increase almost exactly linearly and would this not suggest that the water is NOT water ingress from below as that would be unlikely to be so in line with production. Would you like to comment on that?

2. If there is an increasing water cut that is not so readily explained away what effect do you think that would have on the GLA story?

3. Since the RNS on Monday Spirit sources still seem quite upbeat on their GWA plans talking of "being pleased" and looking forward to going ahead as operator. What is your take on that?

4. The figures you quote for FFD funding are obviously daunting but they would be staged gradually and each stage would presumably result in significantly increased income ( assuming success but then that success should be very likely if they have accrued sufficient evidence to proceed to a FFD ?). Do you not feel that such a FFD could be self funding with enough income generated by each step to proceed to the next?

5.Do you think that the doubts generated by the GWA well results will affect the GLA FFD plans if all is well with Lancaster results?

6. Halifax seems to be on a back-burner at the moment but there have been suggestions from time to time that HUR may proceed early next year to revisit Halifax . Any thoughts?

Thanksin anticipation for any thoughts that you may be able to offer.

[pcpaul]

Sorry, rude of me not to include in my message to dspp that I would, of course, welcome opinions from anyone else who has thoughts on the topics I raised.

Thanks