Hurricane Energy (HUR)

[pijoe1212]

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

just a quick thought based on a comment on the looney bin BB (but noting a few posters are actually ok peeps! evening AD!). gas re-injection has been dismissed to date. i understand why. however in a downside case (watery well replaced with 8 well and spirit gone walkabout) and IMV by default HUR is on a lone path to be a c.20K bls producer only as a reuslt..is gas re-injection an option rather than WOSP tiein?

i am not trying to introduce more negatives - i see this as a potential positive to mitigate a negative (water) situation..

[dspp]

just a quick thought based on a comment on the looney bin BB (but noting a few posters are actually ok peeps! evening AD!). gas re-injection has been dismissed to date. i understand why. however in a downside case (watery well replaced with 8 well and spirit gone walkabout) and IMV by default HUR is on a lone path to be a c.20K bls producer only as a reuslt..is gas re-injection an option rather than WOSP tiein?

i am not trying to introduce more negatives - i see this as a potential positive to mitigate a negative (water) situation..

1. I think technically it could be done, dependent on studying some aspects of the seal. The Lancaster casing shoe is pretty shallow.
2. So it would then be a matter of operational & economic considerations.
3. But I think financial considerations trump everything right now. There is a 2022 cash call to meet, one way or another.
4. I think this is influencing a lot of things. Even if Hurricoms say "nothing to see here, move along".

regards, dspp

[pijoe1212]

just a quick thought based on a comment on the looney bin BB (but noting a few posters are actually ok peeps! evening AD!). gas re-injection has been dismissed to date. i understand why. however in a downside case (watery well replaced with 8 well and spirit gone walkabout) and IMV by default HUR is on a lone path to be a c.20K bls producer only as a reuslt..is gas re-injection an option rather than WOSP tiein?

i am not trying to introduce more negatives - i see this as a potential positive to mitigate a negative (water) situation..

1. I think technically it could be done, dependent on studying some aspects of the seal. The Lancaster casing shoe is pretty shallow.
2. So it would then be a matter of operational & economic considerations.
3. But I think financial considerations trump everything right now. There is a 2022 cash call to meet, one way or another.
4. I think this is influencing a lot of things. Even if Hurricoms say "nothing to see here, move along".

regards, dspp

pardon my french..but ..what are you saying?

1. what the seal can not contain the gas in solution...um..done i good job so far imv.
2. you what? is it not more the technical issues that dictate?
3. i have stated very clearly why i think the bond cash has to be available aug 2022. - your point is?
4. what is influencing what matter as you state? what are "Hurricoms" - an IR function who have no legal weight or influence. they are but worthless mouthpieces.

i am disappointed in your response.

please declare your equity (and bond) position. long or short on either or both?

i declare once again i am not short or long equity or bond.

[*** DELETED***]

Moderator Message:
pjoe,
1. All posts on TLF must remain courteous at all times. It is for the Moderators to decide what does or does not pass that test, and Mods are the ones who choose whether/if anything needs to be deleted or edited. For the record I have just deleted a sentence from your post that was inappropriate.

hyd,
2. If there is a post that needs Moderator attention please hit the alert button and move on. Here on TLF that is the system that works as we do not want peer-peer criticism to be a norm. Therefore I've deleted your post.

regards,
dspp

[dspp]

just a quick thought based on a comment on the looney bin BB (but noting a few posters are actually ok peeps! evening AD!). gas re-injection has been dismissed to date. i understand why. however in a downside case (watery well replaced with 8 well and spirit gone walkabout) and IMV by default HUR is on a lone path to be a c.20K bls producer only as a reuslt..is gas re-injection an option rather than WOSP tiein?

i am not trying to introduce more negatives - i see this as a potential positive to mitigate a negative (water) situation..

1. I think technically it could be done, dependent on studying some aspects of the seal. The Lancaster casing shoe is pretty shallow.
2. So it would then be a matter of operational & economic considerations.
3. But I think financial considerations trump everything right now. There is a 2022 cash call to meet, one way or another.
4. I think this is influencing a lot of things. Even if Hurricoms say "nothing to see here, move along".

regards, dspp

pardon my french..but ..what are you saying?

1. what the seal can not contain the gas in solution...um..done i good job so far imv.
2. you what? is it not more the technical issues that dictate?
3. i have stated very clearly why i think the bond cash has to be available aug 2022. - your point is?
4. what is influencing what matter as you state? what are "Hurricoms" - an IR function who have no legal weight or influence. they are but worthless mouthpieces.

i am disappointed in your response.

please declare your equity (and bond) position. long or short on either or both?

i declare once again i am not short or long equity or bond.

[*** DELETED***]

pjoe,

1. You have to inject at a pressure higher than the reservoir pressure to get the gas in. OK, in this instance one might be injecting into a gaping fracture, but nonetheless the concept of needing an overpressure holds true, and the overpressure required will be injection rate dependent. Assuming that is ok then;
2. The operational issues may affect things, and that would largely depend on how much sparing there would be in the injection system, as well as any reservoir monitoring considerations (it is an EPS after all). And in turn that affects economics.
3. I think we agree.
4. Hurricoms may not want to answer questions about the bonds, but that does not mean there are no questions worth asking.

I have no bonds, and you will find if you read around TLF that I am a long-only equity person. My holding in HUR is not something that gets divulged on demand to random internet peoples, so you might want to read what I have to say previously.

regards, dspp

[drillordrop]

1. I think technically it could be done, dependent on studying some aspects of the seal. The Lancaster casing shoe is pretty shallow.
2. So it would then be a matter of operational & economic considerations.
3. But I think financial considerations trump everything right now. There is a 2022 cash call to meet, one way or another.
4. I think this is influencing a lot of things. Even if Hurricoms say "nothing to see here, move along".

regards, dspp

pardon my french..but ..what are you saying?

1. what the seal can not contain the gas in solution...um..done i good job so far imv.
2. you what? is it not more the technical issues that dictate?
3. i have stated very clearly why i think the bond cash has to be available aug 2022. - your point is?
4. what is influencing what matter as you state? what are "Hurricoms" - an IR function who have no legal weight or influence. they are but worthless mouthpieces.

i am disappointed in your response.

please declare your equity (and bond) position. long or short on either or both?

i declare once again i am not short or long equity or bond.

[*** DELETED***]

pjoe,

1. You have to inject at a pressure higher than the reservoir pressure to get the gas in. OK, in this instance one might be injecting into a gaping fracture, but nonetheless the concept of needing an overpressure holds true, and the overpressure required will be injection rate dependent. Assuming that is ok then;
2. The operational issues may affect things, and that would largely depend on how much sparing there would be in the injection system, as well as any reservoir monitoring considerations (it is an EPS after all). And in turn that affects economics.
3. I think we agree.
4. Hurricoms may not want to answer questions about the bonds, but that does not mean there are no questions worth asking.

I have no bonds, and you will find if you read around TLF that I am a long-only equity person. My holding in HUR is not something that gets divulged on demand to random internet peoples, so you might want to read what I have to say previously.

regards, dspp

1. Gas Injection
I think that is a non-starter. Just from a reservoir engineering POV, the two existing producers are crestal, i.e. where gas would normally be injected. Any gas injected elsewhere would need a new well or a sidetrack, i.e. prohibitively expensive. Even if it could be done the gas is so mobile it would race to the nearest pressure sink, i.e. any producer, so it couldn't be in Lancaster. A dedicated gas injection well might be drilled just for disposal into a donor unit, but costs would be extremely high. To respond to the practicalities of gas injection, the seal is not normally considered an issue as the pressures to breach that would be higher than could be delivered, but a completely new dedicated subsea system would need installed. Finally, export compression would be likely much lower pressure than gas injection, so reconfiguration and upgrade there would also be expensive. All in all, if Lancaster was proved to have very large reserves then export as planned would be best, if reserves are low, then there is a potential issue with flaring consent.

2. Financial Liquidity & Debt
Has anyone looked at that yet for various scenarios?

[Tinderboy]

A rather light hearted moment amongst all the carnage recently......

https://www.youtube.com/watch?v=N0SBlkK8pss

[dspp]

A rather light hearted moment amongst all the carnage recently......

https://www.youtube.com/watch?v=N0SBlkK8pss

brilliant

regards, dspp

[pijoe1212]

pardon my french..but ..what are you saying?

1. what the seal can not contain the gas in solution...um..done i good job so far imv.
2. you what? is it not more the technical issues that dictate?
3. i have stated very clearly why i think the bond cash has to be available aug 2022. - your point is?
4. what is influencing what matter as you state? what are "Hurricoms" - an IR function who have no legal weight or influence. they are but worthless mouthpieces.

i am disappointed in your response.

please declare your equity (and bond) position. long or short on either or both?

i declare once again i am not short or long equity or bond.

[*** DELETED***]

pjoe,

1. You have to inject at a pressure higher than the reservoir pressure to get the gas in. OK, in this instance one might be injecting into a gaping fracture, but nonetheless the concept of needing an overpressure holds true, and the overpressure required will be injection rate dependent. Assuming that is ok then;
2. The operational issues may affect things, and that would largely depend on how much sparing there would be in the injection system, as well as any reservoir monitoring considerations (it is an EPS after all). And in turn that affects economics.
3. I think we agree.
4. Hurricoms may not want to answer questions about the bonds, but that does not mean there are no questions worth asking.

I have no bonds, and you will find if you read around TLF that I am a long-only equity person. My holding in HUR is not something that gets divulged on demand to random internet peoples, so you might want to read what I have to say previously.

regards, dspp

1. Gas Injection
I think that is a non-starter. Just from a reservoir engineering POV, the two existing producers are crestal, i.e. where gas would normally be injected. Any gas injected elsewhere would need a new well or a sidetrack, i.e. prohibitively expensive. Even if it could be done the gas is so mobile it would race to the nearest pressure sink, i.e. any producer, so it couldn't be in Lancaster. A dedicated gas injection well might be drilled just for disposal into a donor unit, but costs would be extremely high. To respond to the practicalities of gas injection, the seal is not normally considered an issue as the pressures to breach that would be higher than could be delivered, but a completely new dedicated subsea system would need installed. Finally, export compression would be likely much lower pressure than gas injection, so reconfiguration and upgrade there would also be expensive. All in all, if Lancaster was proved to have very large reserves then export as planned would be best, if reserves are low, then there is a potential issue with flaring consent.

2. Financial Liquidity & Debt
Has anyone looked at that yet for various scenarios?

DSPP - your deletion is accepted as valid, and i aplogise for the inference / statement.

coming back to the point in question i raised - that of gas re-injection.

i am not sure what the specific arrangement is on the AM (recip / centrif machines and recycle cooling) and i cannot find any specific info about its prior duty at ettrick but would assume it was medium / high or indeed the wosp operating pressure (likewise)! but the resi pressure is only some 135 bar which is not high as resi's go. i accept the extra over pressure local to well bore, but does the seal see this pressure? i would suggest the machines / recycle systems may be within the frame capability of the current machines and hence modifiable. if anyone knows either wosp or prior Etrrick export pressure that would be useful to understand if this option is real from a topside perspective. i note i have no idea if the turret has the connections to cope with high pressure gas regardless of topside feasibility. i would note the new fuel gas machine is far lower pressure and flow rate and hence not relevant to this.

on the resi side - i accept DoD comment about crestal wells and cost of dedicated injection well. i assume the bare well design excludes the option to inject at the far end of one current well as there is no real means to effect closing off the near heal bore? my point is re-injection MAY be an option under consideration in the downside case if the wosp's has to be funded by HUR.

[dspp]

pjoe,

Setting aside frictional losses, the compressor exit pressure will actually be lower than the injection bottom hole pressure (IBHP). Why ? Because of the column of liquid/gas in the well.

I don't know about the specifics of the AM, however in shallow formations like Lancaster it might be possible to do injection with modern centrifs, not requiring recips.

However, much as DoD says, I tend to think the gas injection case is unlikely. For it to be attractive the Lancaster (etc) wells would need to be worth flowing at a debottlenecked rate for 6-10 years, but not so much as to be able to pay for a WOSPS tie-in. That has got to be a very small gate to squeeze through.

Personally I think they will - if Lancaster is to have a producing future - need to find the cash to simultaneously retire the bonds (2022); pay for Lancaster #8 (2020); tie-back Lancaster #8 and also maybe Lincoln Crestal (2021); and do the WOSPS tie-in (2021) and associated 40k debottleneck.

I think they need to do all the above to be able to tie in Lincoln Crestal, as they cannot flare that gas. OGA will be asking for both the technical & commercial parts of that Development Plan before being able to give consent. Commercially paying the bonds is no longer a slam dunk, hence, imho the pause. There may also be a concern about flow assurance for the necessary duration in the Lincoln low-flow case, so perhaps also a technical concern. Remember that they have to be able to demonstrate to OGA that even in the bad outcome cases they can tidy the entire trainset away neatly, and fully pay for it. So they need to show that they have long term producers in Lancaster that will keep on producing the $$$, so the watercut really does matter.

I'm with DoD in thinking that there are financial matters that are as worthy of discussing as the technical matters. However HUR are refusing to disclose the bonds details, so we PIs are all stymied. By now the penny must have dropped in HUR that the matters the PIs are raising are also relevant to the IIs, and need to be fully answered. If I was an independent board member of HUR with a reputation of my own to be concerned about (and at least one lady will be) then there are a great many questions that will be asked internally in HUR before moving ahead.

I do wonder how many in-jokes HUR will try to sneak into the CMD. I'll bet it is a non-zero number.

regards, dspp

ps. Apology accepted. We are an independent forum with volunteer mods like me. Don't make it harder than it needs to be. The Ltd Co is just so the owners (who are very much not-for-profit, and I'm not one of them) don't have to put their livelihoods on the line to defend court actions caused by people who get carried away.

[mearnsfool]

Hurricane Energy CFO resigns.

Malcy says "operationally all is going according to existing guidance".

[dspp]

Hurricane Energy CFO resigns.

Malcy says "operationally all is going according to existing guidance".

"Hurricane has announced the resignation of CFO Alistair Stobie ‘by mutual agreement of the board’. He is to be replaced by Head of Finance Richard Chaffe on an acting basis.

It seems that at this challenging time for HUR that Mr Stobie has paid the price demanded by angry shareholders and has died by the sword, so to speak. The company has made it clear that there is no financial, legal or regulatory reason for his departure and that recent weak share price performance I assume has been the trigger for the smoking gun."

https://www.voxmarkets.co.uk/articles/h ... y-4f0ab18/

RNS
https://www.hurricaneenergy.com/applica ... nge_vF.pdf

Clearly Tinderboy's video had consequences

https://www.youtube.com/watch?v=N0SBlkK8pss

[edit: add 10:16] Hypotheses: 1) He supported a low-price exit proposition and was alone. Which made his position untenable. OR 2) His going was the price of a finance deal to get the company through the next two years as I sketched in my cash calls over the next two years last night. OR 3) A combination of both.

regards, dspp

[pijoe1212]

So, Stobie is the sacrificial lamb on account of the share price meltdown? Or is it something more serious?

i personally do not buy the sacrificial lamb for share price fall explanation. i would suggest there are two issues that have driven the sp lower in recent months- water risk and spirit risk. i can not see why AS would be the fall guy for either. i would have expected AS to been in place at least until the full year accounts rns. adds a further risk issue IMV.

[dspp]

So, Stobie is the sacrificial lamb on account of the share price meltdown? Or is it something more serious?

i personally do not buy the sacrificial lamb for share price fall explanation. i would suggest there are two issues that have driven the sp lower in recent months- water risk and spirit risk. i can not see why AS would be the fall guy for either. i would have expected AS to been in place at least until the full year accounts rns. adds a further risk issue IMV.

And (re)financing risk.

Either he didn't want to do it their way, or they didn't want to do it his way.

Arising from the ongoing reservoir risk, imho.

Regards, dspp

[dspp]

1. Various reports that Petro Atlantic will discharge lift #9 of 51,247 mt (385,890 bbls) at Wilhemshaven per BoL info. That is different than the earlier reports that she was booked to lift 61,000 mt (459,330 bbls), which is itself interesting given that she was booked to do the lift on approx 23/2 but actually did it on approx 26/2 after being weathered off. Ordinarily one would expect a later lift to be absolute max possible. One certainly wouldn't expect to implement a beaning in plan prior to reaching a tank level equal to that of a preplanned lift. So that indicates either a well issue, or a production system capacity issue (which can be a reality in heavy weather), or that production was going OK but that lifting got curtailed due to weather. Ordinarily this discrepancy would not be a concern but of course we are all nervous about well issues.

2. I will update spreadsheets, graphs, etc later. Where I am has a terrible internet connection.

3. I cannot directly search for DE-WVN BoL info myself - my internet here really is pants. Also I don't know if one needs to have better shiptracker access than I get (unpaid) to see BoL data. If anyone can have a look, then please see if you can find a record of the actual lifts #6 and/or #7. At present I have no direct info but sized these to fit with the HUR RNS of 13-12-2019.

4. The company almost certainly needs a funding package to be able to deliver on its regulatory committments, and simultaneously continue appraisal and interim development programme, and meet the 2022 bond repayment. If that was to be an equity raise then any new capital would ordinarily insist on a discounted price, diluting existing shareholders and giving them a haircut. If it is to be done by way of a bond rollover/extension then I cannot imagine that they would insist on anything other than a haircut for existing equity shareholders. Either way a haircut will have been in the works for several months now. The last time a big raise was done (the convertibles) the shareprice was walked down in advance of that, giving insiders a fantastic trading opportunity. Watching the shareprice action over the last several months, combined with the trading volumes which are substantial (and the trading pattern which is highly systematic) - but the absence of notifications - then it does seem to me as if the CMD is going to be as much about finance as about technical. If the technical people wanted to keep on rolling the reservoir dice until the last $$$ ran off the clock in 2022, but the finance people were more conservative, then - given that the finance people can walk more easily than the technical people then that may be what happened. It is not a given that all the walkdown news is in the price. Maybe that last bit stuck in the CFO's craw ? Just a thought. What we have been observing will certainly linger long in many PIs memories.

regards, dspp

[AndersonSW]

Very keen to hear some informed commentary on the December OGA figures showing Lancaster water content was down to less than 2%.

[feste]

Hi Anderson SW,

In the 29th Jan RNS, the relevant extract appears to be :

…" During Q4, the 205/21a-7Z well ("7Z Well") was produced on its own for 25 days, including periods at relatively low rates as part of the reservoir evaluation process. This resulted in lower oil production and a higher average water cut than observed during Q3.

The Lancaster 6 Well flowed at an average rate of approximately 12,500 barrels of oil per day from the start of individual well flow period on 20 November 2019 until the latest (eighth) lifting on 22 January 2020. .."

From this, I take it that the 25 days in Q4 that 7Z was producing didn't unfortunately include any days in Dec, because only 6 was producing , individually, over the roughly 60 days from 20 Nov to 22 Jan....

The low water cut applies to production from 6, so the situation re 7Z remains an issue.

ATB

[ammonite]

http://bit.ly/2TfaYEP

[FT paywall, stranded assets risk in hydrocarbons, ......... please don't post paywall stuff as link only, dspp]

[dspp]

Recent OGA and tanker data added to my tracking spreadsheets.

From OGA data either the wet well has turned dry, or was not produced from a great deal in December. As feste points out the evidence in the various RNS's tends towards the latter explanation. So we all watch with interest.

From OGA data we can now see that the RNS of 13 Dec 2019 which said "Total production for the year is expected to be approximately 3.1 million barrels of oil" was an overoptimistic estimate as total production came in at 3.018 mln bbls oil. [edit] That suggests a decision was made after the 13 Dec to not open up the wet well quite so quickly, as otherwise they would have met their prediction. I can't think what might have been on their mind.

From the tanker data we can now see that the RNS of 13 Dec 2019 which said "taking total oil sales for the year to 2.8 million barrels." was likely sightly pessimistic as my best estimates are for 2.844 mln bbls oil lifted (please say if you know better).

regards, dspp

[thehaggistrap]

^ DSPP. With all due respect - the longer term published plan (via RNS) was always to run the 7Z well on its own until the end of January.
Arguably running one well on its own is the best way to gather data? The fact that it's water content is dropping (<2%) after 9 months production is a huge positive for the EPS.

We can all speculate on the 6Z well - however only now will HUR themselves be gathering the data. 6Z was only ever scheduled to come on stream at the start of Feb. HUR have stated they now plan to ramp production up to 20K bopd - which to me suggests they are quite happy with the reservoir performance?

[dspp]

#6 = dryer & higher in the structure
#7z = wetter & lower in the structure

(We are not exactly sure of their relative trajectories. We think the #6 and #7z enter at about the same depth, but that the #6 remains horizontal whilst the #7z droops down deeper. HUR have been very coy about exact trajectories and depths so far.)

regards, dspp