Hurricane Energy (HUR)

[dspp]

:o

Shetland finds may contain much less oil and gas than hoped for

https://www.heraldscotland.com/business ... gas-hoped/

RVF

- quite

The sustained anti-dspp hysteria on some other sites in the last couple of days has been quite something. I actually had to ask for some stuff in other places to get taken down as being plain false as well as defamatory/libellous.

The real question some of those folks need to be asking is what governance processes were (or were not) in place in the last 18-months, that should have prevented the company making unbalanced statements that they were confident that this was perched water, when remarkably little evidence has actually been put forwards in support of that hypothesis. It is all very well ticking the cornflake-packet boxes for LSE Main Board inclusion, but it is irrelevant if the real governance and professional integrity is not in place and demonstrated in public. Furthermore they need to ask who knew what, and when - and who benefitted, and how by way of this unbalanced view that was being proposed by the company.

This is not to say that one day evidence may come to light that confirms this is after all perched water, rather than aquifer water; however on the basis of the evidence that has actually been disclosed so far the very high probability is on the side of the high-set aquifer hypothesis (and the concomitant massive pending reserves reduction).

I for one, despite my oft-expressed concerns regarding the technical conclusions to be drawn, took the view that the company surely had very solid evidence that they simply were not putting into the public domain. I could not believe that the professional integrity of the senior people would allow them to act otherwise. It was only when it became apparent that this did not exist (for surely by then it would have been revealed), that I exited. I most certainly would have exited earlier if a balanced presentation of the data had been made at all times.

It is a funny old world.

regards, dspp

[ammonite]

dspp
I am not qualified to technically dispute with you, and have to say that as time has passed your doubts have appeared more founded. Most investors here, like me, will have based their assessments on RT's professional integrity. I have no doubts about his personal integrity, but there are others at the company, both at Bod level and below, who have consistently backe his interpretations. I know institutional pressures can influence these things, and mb that is what happened. But RT is not known as someone who finds intellectual challenge unwelcome, tho I believe he is impatient with the unschooled or slow witted. My point is, his view will have faced some challenge, both from inside HUR, from consultants like Schlumberger, and from CPR providers, all of whom have reputational risk to consider.

So, is he right, still, or not? We cannot know. He was still insisting, as far as I can see, right up to his departure, that he was right. You make a powerful case that he was not. If I were Erwin Schrodinger, I think i would put this in a box labelled "cat" and open it next year.

[FabianBjornseth]

I found the comments to the post below interesting (hope LinkedIn links are okay):

https://www.linkedin.com/posts/ciaran-nolan-540b4947_hurricane-energy-chief-departs-after-share-activity-6675725431460659200-WEWk

[Nimrod103]

I found the comments to the post below interesting (hope LinkedIn links are okay):

https://www.linkedin.com/posts/ciaran-nolan-540b4947_hurricane-energy-chief-departs-after-share-activity-6675725431460659200-WEWk

Don’t know Thierry Pujol, but he certainly identified one of the big mistakes in the technical work.

[dspp]

I found the comments to the post below interesting (hope LinkedIn links are okay):

https://www.linkedin.com/posts/ciaran-nolan-540b4947_hurricane-energy-chief-departs-after-share-activity-6675725431460659200-WEWk

Don’t know Thierry Pujol, but he certainly identified one of the big mistakes in the technical work.

And to be fair, so did you about three years ago.

Regards, dspp

[Nimrod103]

I found the comments to the post below interesting (hope LinkedIn links are okay):

https://www.linkedin.com/posts/ciaran-nolan-540b4947_hurricane-energy-chief-departs-after-share-activity-6675725431460659200-WEWk

Don’t know Thierry Pujol, but he certainly identified one of the big mistakes in the technical work.

And to be fair, so did you about three years ago.

Regards, dspp

Yes sorry to keep banging on about it, but it has upset me considerably. I saw the problems as soon as I read the first CPR, and never invested myself. Trouble is it makes investors generally reluctant to invest, and better projects will suffer. I can handle failure if all the risks are well described up front. But in this case ignoring that the data was flashing red, was just crass. On a par with the incompetence of BP and Transocean over Macondo.

[Foritza]

Nimrod, I've seen your me crop up from here from time to time and noticed you were pessimistic on the hur concept. I've tried searching your posts for your main rationale on the issues with RT's Lancaster model but to no avail. Can you point me in the right direction please?

[dspp]

Nimrod, I've seen your me crop up from here from time to time and noticed you were pessimistic on the hur concept. I've tried searching your posts for your main rationale on the issues with RT's Lancaster model but to no avail. Can you point me in the right direction please?

See

Re: Hurricane Energy (HUR)
#41759Postby Nimrod103 » March 27th, 2017, 10:32 pm

viewtopic.php?p=41759#p41759

and adjacent posts where Nimrod quite clearly signalled his concern re the OWC depth and commercial recovery etc

regards, dspp

[Foritza]

Thank you, much appreciated....

[Proselenes]

Bad news in my book.

Well 6 water cut is increasing. Well 7Z has gone.

In maybe 6 months time well 6 very likely to be same as 7Z now, with water cut over 50%.

So maybe 5K from 6 and 2K from 7Z in 6 months time ?

Looking increasing bad......I would expect lots and lots of selling in the days and weeks ahead as the big boys pile out as much as they can before the next RNS.

[dspp]

Bad news in my book.

Well 6 water cut is increasing. Well 7Z has gone.

In maybe 6 months time well 6 very likely to be same as 7Z now, with water cut over 50%.

So maybe 5K from 6 and 2K from 7Z in 6 months time ?

Looking increasing bad......I would expect lots and lots of selling in the days and weeks ahead as the big boys pile out as much as they can before the next RNS.

Yes this seems likely, 53% is not good and will likely rise higher in both wells. Unfortunately.

RNS is here : https://www.hurricaneenergy.com/applica ... ate_vF.pdf

regards, dspp

[dspp]

I suspect the 7z well is acting rather like an interceptor well, pulling the water out before it reaches the 6 well. Hence the ability of the 6 well to flow stably without slugging now (i.e. it is being indirectly supported by 7z).

That suggests that the slugging previously seen in the 6 well was caused by increasing watercut (it is after all the normal reason), even though they did not report that in the previous wc figures for the 6 well.

Given that the 7z well is below the 6 well this is further evidence in support of the hypothesis that the water is entering from below (i.e. the normal place). Whilst that does not definitively mean it must be aquifer water rather than perched water, it does tend in that direction. Until the co publish their analysis of the cone height through the fractures we cannot be sure how high up the OWC is, but it is not good news.

If these wcs increase much more than they will be approaching the design water handling capacity of the AM FPSO. And if the 6 well wc increases much more they will likely have to switch its ESP on.

I would be interested to see an analysis of how many horizontals one could set in Lancaster that are higher than the 6 well. I seem to recall that both 6 and 7z are almost as high as one can get in the structure and still stay inside the structure. Directionally there are real concerns about the reserves figures given this.

I'm not tempted to buy back in on the basis of this RNS.

regards, dspp

[Proselenes]

As expected, its so bad they have to give a warning out now that its going to be really bad when they announce the results of the review.

Pumping at 17K is a distraction as is the shutdown. Short term gain is long term pain here, the more they pump it now, the more and the quicker the water cut will increase.

Notice the absence of the water cut info today............ says it all for me.

[dspp]

RNS = https://www.hurricaneenergy.com/applica ... ate_vF.pdf
Technical Review Update
As announced on 8 June 2020, a Technical Committee of Hurricane’s Board was established to reexamine
the full range of possible geological and reservoir models for the Lancaster field (the
“Technical Review”).
The Technical Review is ongoing and final conclusions have not yet been made. However, as a result
of the review and analysis performed to date, which has incorporated both existing and new data,
Hurricane’s Technical Committee has concluded that there is a reasonable probability that the oil
water contact in the Lancaster field is shallower than the range of oil water contacts envisaged in the
2017 Competent Person’s Report by RPS Energy.
Consequently, the Company believes there is a risk of a material downgrade to estimated reserves
attributable to the Lancaster Early Production System, and that there will also be a material
downgrade to estimated contingent resources across the West of Shetland portfolio. This assessment
does not take into account any production enhancement options for the Lancaster field which are
currently under evaluation.
Completion of the Technical Review is expected on or before the Company’s interim 2020 results on
11 September 2020, at which point the Company expects to be in a position to notify management
estimates of reserves and resources for the Lancaster field, prepared in accordance with the Society
of Petroleum Engineers’ Guidelines for the Evaluation of Petroleum Reserves and Resources.
Operational Update
On 2 August 2020, the Aoka Mizu FPSO underwent a controlled shutdown to undertake an inspection.
The inspection identified necessary repairs which have been ongoing in recent days, with production
expected to restart imminently. Immediately prior to the shutdown, the field was producing at a gross
rate of c.17,000 bopd.

=====

As we expected this is aquifer not perched. And watercut is the data that dare not be spoken. But they can say, "gross". My underline.

At this rate they'll be lucky to be pumping any oil at all by the end of next year. Or this.

regards, dspp

[FabianBjornseth]

As we expected this is aquifer not perched. And watercut is the data that dare not be spoken. But they can say, "gross". My underline.

At this rate they'll be lucky to be pumping any oil at all by the end of next year. Or this.

regards, dspp

Any details omitted in previous RNS's have turned out to be bad news, so it's tough to give any benefit of doubt. It would be interesting to see back of the envelope- calculations for what oil volumes and oil prices are required to meet the future obligations. Probably a very long shot given the share price.

[Tinderboy]

Todays RNS was a line in the sand drawn by the current temporary CEO with respect to the old CEO, without doubt this was an opportunistic attempt to protect her/their reputation, the RNS didn't miss anyone, particularly the 2017 Competent Person's Report by RPS Energy and ultimately Dr T's judgement, its not often names are named, i found it rather ruthless but nonetheless iminent.
It does look like a different ball game now, I do believe a reckoning will come soon rather than later with respect to the performance of the Lancaster field and short-term investment in drilling another Lancaster well, ultimately these two results will be pivotal to any future field development.

[mearnsfool]

How likely is it that the share holders will come up with the money to drill another well in a different part of the field after what has happened here.

Malcy on his Blog is suggesting that it will be good in the end. Does anyone here think that. I suggest not.

[MrContrarian]

Malcy on his Blog is suggesting that it will be good in the end. Does anyone here think that?

I doubt Malcy thinks that!

MrC

[dspp]

Todays RNS was a line in the sand drawn by the current temporary CEO with respect to the old CEO, without doubt this was an opportunistic attempt to protect her/their reputation, the RNS didn't miss anyone, particularly the 2017 Competent Person's Report by RPS Energy and ultimately Dr T's judgement, its not often names are named, i found it rather ruthless but nonetheless iminent.
It does look like a different ball game now, I do believe a reckoning will come soon rather than later with respect to the performance of the Lancaster field and short-term investment in drilling another Lancaster well, ultimately these two results will be pivotal to any future field development.

Indeed, the phrase in the RNS,

"As announced on 8 June 2020, a Technical Committee of Hurricane’s Board was established to reexamine the full range of possible geological and reservoir models for the Lancaster field (the “Technical Review”)."

is another way of saying,

"the new board doesn't trust the previous work and so we as a Technical Committee will form a new conclusion"

regards, dspp

[Foritza]

"the new board doesn't trust the previous work and so we as a Technical Committee will form a new conclusion"

Something along the lines as to the REAL reason why R Arnott left all those years ago. The chickens are coming home to roost..