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Hurricane Energy (HUR)

Biffadog
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Re: Hurricane Energy (HUR)

#275290

Postby Biffadog » January 5th, 2020, 1:12 pm

dspp,

That certainly is a bleak view of HUR’s prospects and to be frank, I’ve amazed that you continue to hold the stock. However, on closer examination I would have to suggest that some of your observations are somewhat misleading and a couple are just plain incorrect.

I also note your propensity to state some things as fact, when they are not proven as such, but are merely your opinion. Not a great trait for one supposedly expressing a balanced view. It’s fine to state facts as facts, just not opinions as facts.

It’s worth highlighting that the rider with HUR has always been that the EPS must be proven to be a success over a period of time (6-12 months), otherwise the investment case for HUR is fatally flawed. That has always been the case and is nothing new. It’s funny that you now choose to refer to HUR’s finances as “hanging by a delicate thread” when previously you were more than happy to band about pie in the sky figures for HUR’s assets and production. How times have changed.

I’ll start with the easy stuff. You say “or to prove up aquifer ingress (which of course cannot be reversed)”. Not true. Coning (water produced from the aquifer) is reversible. Fact. Whilst we all would agree it is not desirable in any shape or form, it can be reversed by simply shutting in the well for a period of time and allowing the water/oil equilibrium to reestablish itself.

You mention disappointing results from the EPS and the 2019 drilling campaign and state categorically that both models are plain “wrong”.

All reservoir models are developed over time and it might be more appropriate to say that the model used needs further refining rather than being confined to the bin. In actual fact, HUR have had considerable success with drilling FB WOS. They have two successful horizontal drills on Lancaster and although the results at Warwick were poor, they hit significant oil with the Lincoln Crestal drill, producing 9.8k bopd (likely to increase after further cleaning up of the well). Even in sandstone reservoirs drilling and models are not an exact science and in the early stages of field development, unsuccessful wells are drilled regularly, so all in all, not too bad for a model that is “wrong”.

As for the EPS, I don’t see how you can possible say it is anything other than successful at this moment in time (and that’s all we can go on as nobody can foresee the future performance). HUR have two wells on Lancaster, which when run individually, are producing at 14.7k and 9.4k respectively without the aid of the ESPs and have so far delivered up 2.8M barrels of oil ($165M revenue), giving an average of 13.3k bopd since hydrocarbons were introduced back in May 2019. More importantly, HUR expect to be flowing both wells simultaneously from the end of January at 20k bopd (giving 18k bopd with an expected 90% availability). Not bad at all and hardly the result a “wrong” model would deliver. Perched water was always part of the equation and whilst now higher than the base case forecast, was nevertheless an expected outcome.

“The results of the individual well tests have surpassed our expectations.” (HUR TOU 13th Dec)

To address the water cut issue, I think the best bet is to look at the facts, figures and statements given by HUR themselves. I note your penchant for using out of date OGA data that doesn’t break down production between wells, and as such, is pretty useless for the purpose of dissecting the water cut issue. Whilst your graphs look pretty and give an air of superior knowledge, they are rather meaningless, and in any case, you might be better off using the more recent data supplied by HUR, that does at last break things down on an individual well basis.


So here are some important statements from the company themselves.

“Notwithstanding the instant communication between the two wells, and that the wells are effectively acting as a single well bore, the bottom hole pressure response observed to date gives the Company sufficient confidence to reiterate 2020 guidance of 20,000 barrels of oil per day, before operational downtime.” (HUR TOU 13th Dec).

So it would appear that HUR are not concerned about the AM’s ability to handle the associated water to produce 20k bopd (18k bopd net) of oil throughout 2020. I also note that you have not provided any concrete information on how the water produced is handled by the AM and what the handling capacities actually are, before casting dispersion on it’s ability to cope with an increased water cut (if that were indeed to happen). It’s worth noting that some of the older North Sea operations have a water cut in the range of 60-80%. The idea that HUR are trying to hide the water cut by using a different terminal to Rotterdam is frankly ludicrous, especially given that they have just given the most recent water/oil production figures in the December TOU.

“The Company is confident that the water cut observed is related to perched/stranded water, based on temperature data, lack of rate-dependency, and water production behaviour after shut-in periods.” (HUR TOU 13th Dec).

HUR have given concrete reasons why they believe the water is perched and you either believe that the company is telling the truth, or you think that the company is lying (worst case) or deliberately choosing to mislead investors (nearly as bad). If you think the BOD is lying then it’s probably time to sell up and move on.

Perched/stranded water will vary from time to time over the life cycle of each well by it’s very nature (trapped pockets of water in a fissure). For anybody wanting more detailed information on this, the 11th July CMD on HUR’s website covers this subject in depth and explains why the company does “not expect to see coned aquifer water during the lifetime of the EPS”.

Having said the the water cut on 7z has risen from 7.5% to 25-30% since FOIL and any increase in water cut is not a good thing. In an ideal world, the water cut would be zero but as long as it is not from the aquifer and does not substantially increase, then an aggregate water cut of 15% is doing no harm whatsoever and that’s where we are at this moment in time.

The CMD on the 25th March 2020 is a very important day indeed.

On to the finances and paying back the Convertible Bonds ($230M) by 24th July 2022, I’m not sure why you feel HUR have a problem here. Year end there is $150M unrestricted cash and assuming $60 oil and 18k bopd (net), HUR will generate a further $262M p.a or just over $400M before the 24th July 2022. On that basis, there is plenty of free cash available to pay down the CBs leaving $320M to fund the Capex as outlined in the current plan. This is obviously on the proviso that the EPS continues to perform, but I covered that off at the beginning of my post and if you don’t believe that will happen, I’m surprised you have bothered to read this far.

It worth noting that at this point in time Kerogen have not sold down further after covering their position on HUR with the 17th July 2019 sale of approximately 25% of their holding. They have been eligible to sell further shares since mid November. Going forward it will be telling if they sell further shares but at this moment in time they have not done so.

As for Spirit being “taken to the cleaners, professionally”, I’m not entirely sure what you mean. Are you suggesting the HUR board lied to Spirit because that’s what it sounds like. Spirit will have had access to the full facts and made a decision to farm-in to HUR on that basis. There are no guarantees in the oil business. However, it looked like a good deal for Spirit given the potential reward balanced against the initial financial commitment on their part. Don’t forget they have come up trumps with Lincoln even if Warwick disappointed.

Hopefully my post will provide food for thought and I hope it will also provide some balance to your rather bleak view of HUR’s position. Only time will tell but I don’t think things are half as bad as you would have people believe.

I think that covers everything but for the avoidance of any doubt, all opinions are my own and should not be taken as investment advice.

TTFN
Biffadog

dspp
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Re: Hurricane Energy (HUR)

#275292

Postby dspp » January 5th, 2020, 1:32 pm

Biffadog wrote:dspp,

That certainly is a bleak view of HUR’s prospects and to be frank, I’ve amazed that you continue to hold the stock. However, on closer examination I would have to suggest that some of your observations are misleading and a couple are plain incorrect.

TTFN
Biffadog


biffa,

Please excuse me but I have to go to work now (I realise it is Sun lunchtime, but my work is not 9-5) and I won't be available enough to reply properly for a couple of days. Can I please make some brief points before I dash. Firstly once water breakthrough occurs it is not normally possible just to 'suck less' and revert to the status quo ante. This is because of how the water & oil are organised and reorganised at the microscopic level in the pores/fractures. That is why one does not 'just' produce until you see water breakthrough and then back off a bit. It is instead better to never get a cone in the first place (see https://www.slb.com/-/media/files/oilfi ... 61-english for some background). In a reservoir like Lancaster I think the description of cone is likely to be misleading, but the same concept applies. Similarly doing a water shut off in a massively fractured reservoir is tricksy. Secondly one can choose to ignore tanker offtake data if one wishes, but then one is just reliant on the 3m lagging OGA data. Or one can try and integrate the two sets of data as well as one can (which is what I have been doing), accepting the rather fuzzier nature of the tanker data as being a bigger error bar, and try to understand a more up to date picture. Since we have to invest in real time, not with the benefit of 3m hindsight, that seems the wiser approach. Thirdly, financially, if HUR are going to go down the DIY path then they need to have funds, and one cannot presume that these wells will keep flowing oil - indeed if there is a very strong water aquifer then flow will be good, but at some point it will be 99% water and 1% oil. That is possible to produce (I've done it) but it is iffy economics. At the end of the day the market is looking at all these many factors and has dialed the share price down for reasons that include these points, like it or not. So we need to understand it, and invest as wisely as we can, not hide from it.

Anyway if you don't like my analysis please do your own, and put it here for others to see. That is how we collectively improve our understanding.

By the way that perched water paper that Fabian linked to was interesting reading. It may be as applicable to the whole tilted OWC debate for Halifax as the perched water debate in Lancaster. Thanks Fabian :)

I really must dash now.

regards, dspp

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Re: Hurricane Energy (HUR)

#275362

Postby FabianBjornseth » January 5th, 2020, 7:21 pm

Biffadog wrote:As for the EPS, I don’t see how you can possible say it is anything other than successful at this moment in time (and that’s all we can go on as nobody can foresee the future performance). HUR have two wells on Lancaster, which when run individually, are producing at 14.7k and 9.4k respectively without the aid of the ESPs and have so far delivered up 2.8M barrels of oil ($165M revenue), giving an average of 13.3k bopd since hydrocarbons were introduced back in May 2019. More importantly, HUR expect to be flowing both wells simultaneously from the end of January at 20k bopd (giving 18k bopd with an expected 90% availability). Not bad at all and hardly the result a “wrong” model would deliver. Perched water was always part of the equation and whilst now higher than the base case forecast, was nevertheless an expected outcome.


As discussed in a previous post (viewtopic.php?p=271896#p271896), the company view after observing a highly connected fracture network was that perched water was "far less likely". The reservoir model used to produce production forecasts indeed assumes no perched water, as they had no way of distributing it in the grid. The potential problem is not that the water cut of one well is 25-30% right now, but that the water cut is uniformly increasing. One can of course hope that the trend flattens out or reverses, but it seems to be beyond the company's control, as the water cut is not rate-dependent.

Source:
2016 - Enabling Geological Scale Dynamic Modelling of a Fractured Basement Reservoir
https://www.hurricaneenergy.com/downloa ... ce/117/258

Biffadog wrote:“Notwithstanding the instant communication between the two wells, and that the wells are effectively acting as a single well bore, the bottom hole pressure response observed to date gives the Company sufficient confidence to reiterate 2020 guidance of 20,000 barrels of oil per day, before operational downtime.” (HUR TOU 13th Dec).

So it would appear that HUR are not concerned about the AM’s ability to handle the associated water to produce 20k bopd (18k bopd net) of oil throughout 2020. I also note that you have not provided any concrete information on how the water produced is handled by the AM and what the handling capacities actually are, before casting dispersion on it’s ability to cope with an increased water cut (if that were indeed to happen). It’s worth noting that some of the older North Sea operations have a water cut in the range of 60-80%.


A potentially important caveat is the next line from the RNS:

"This will be kept under review as the data acquisition programme continues."

From the 2017 CPR (my bold):

The Aoka Mizu FPSO has a total fluids capacity (oil plus water) of 35,000 bpd. Produced water is not expected during the EPS, however should early water breakthrough occur, provision exists within the topsides facilities for surface treatment of up to 20,000 bw/d using hydrocyclones and a degasserprior to discharge overboard.


If the plateau of 20'000 bopd is to be maintained, the maximum manageable water cut is ~43%. So far, the commingled water cut is comfortably lower than that, and can be controlled by choke optimization. However, if the -6 well was to produce water at similar rates as the -7 well currently is, there would not be a lot of margin left. For two wells that are otherwise "acting as one wellbore", there's a chance of that happening.

This isn't to say that all looks bleak - there are still both very rosy and very dark outcomes possible. But the risk seems to have increased based on the new information available.

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Re: Hurricane Energy (HUR)

#275680

Postby Biffadog » January 7th, 2020, 10:18 am

"What we don't know at present is the extent to which the AM's prod water system is fully functional and commissioned. If it is not yet fully functional & commissioned then they have the ability (which a platform, or land facility does not ordinarily have) to offload to other vessels. By offloading to a shuttle tanker at the same time as an oil offload they could (if they wished) conceal what was going on. Especially if they were not to discharge at Rotterdam because they know that the shipwatchers (i.e. Amaja in this instance) would get the data." (dspp on Jan 2nd at 3:59pm. Apologies as I don't know how to work the fancy quote facility on LF).

I've very recently contacted HUR, as you obviously hadn't bothered to and found out the following.

The AM has a total liquids handling capacity of 35k bbl/d and when producing 20k bbl/d of oil this leaves 15k bbl/d of spare capacity which can be used to process and treat the water for overboard discharge. Any produced water that is not immediately cleaned up can be stored in the slop tanks. HUR are not using tankers to offload the water and the total liquid handling capacity will be increased (TBA) as part of the debottlenecking work.

At a 15% aggregate water cut (assuming 50/50 split between wells 6 and 7z) you have circa 3.5k bbl/p of water to process (3.5/23.5 total volume gives a 15% water cut), so you can see that the current situation is well within current limits and is not restricting production or incurring additional costs.

So that's that particular theory debunked.

I notice that you have also climbed down from your statement that coning cannot be reversed “or to prove up aquifer ingress (which of course cannot be reversed)” and are now simply saying that it is possible but it's tricky. Nobody suggested it was either desirable, or necessarily easy to reverse, but the fact of the matter is that it can be.

I'll leave others to decide if your original statement was made with the deliberate intention to mislead or was a simple mistake that came about by lack of knowledge on the subject.

I think combining all of this with the the impending doom of Brexit, indyref2 and a meteor strike that you have previously mentioned and some might say you have overplayed your hand somewhat. That's for others to decide but I can certainly see your cards.

TTFN
Biffadog.

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Re: Hurricane Energy (HUR)

#275684

Postby Proselenes » January 7th, 2020, 10:21 am

If you want some bedtime reading, read this from a Mr Robert Trice from a few months ago on Fractured Basement plays.........

PDF file in the link

https://ufile.io/txbemylq


.

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Re: Hurricane Energy (HUR)

#275702

Postby dspp » January 7th, 2020, 11:10 am

Biffadog wrote:
I think combining all of this with the the impending doom of Brexit, indyref2 and a meteor strike that you have previously mentioned and some might say you have overplayed your hand somewhat. That's for others to decide but I can certainly see your cards.

TTFN
Biffadog.


Biffa,

Please could I gently ask you depersonalise things here. This is TLF, and this is a venue for serious investment discussions to be conducted in a polite manner, and this is the HUR thread. It is not a venue for personal flame wars. For avoidance of doubt I am saying that in my capacity as a Moderator as ordinarily some of the language in your post below could cause a post to be deleted. I am not doing so, as I am aware this is a sensitive point, but that is not to say that another Mod might not do so. Please please please keep discourse civil here.

Turning to the substantive information in your last post, if I understand you correctly, HUR have responded to you that no prod water is being lifted by vessels. If so that is good news as it means we can eliminate that set of possibilities from the limited analysis we can do as observers. Well done for getting that clarification from them. That in turn means that any of the significant differences in tanker offloads that observers are concluding from the basis of draught marks, must be ascribable to either fore/aft trim, or ballasting, or (less likely) errors in bridge AIS draught inputs (at least that is the three I can think of), and that we can rule out prod water. That in turn means that tanker offtake data deduced from AIS is pretty useless for the PI as we don't know the quantum at all. So except when it goes to a port such as Rotterdam when Amaja et al can verify the quantity we are very much in the dark. Oh well, a shame.

I'm now back from some travels, and I've looked at the other stuff in your various posts and I am struggling to get my head around what you are saying. That you can hold a different opinion about the probability of success of the various HUR assets and their possible scale is absolutely fine - it is a free market and all that. However I am struggling to figure out if there is a particular piece of data that you are in disagreement over. Could you please be clear so I or others can comment meaningfully - that is if anyone wishes to do so. It is entirely up to you, but you might want to indicate whether you have any oilfield experience, as that might affect the effort people put in - and like I say, that is entirely up to you.

regards, dspp

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Re: Hurricane Energy (HUR)

#275720

Postby dspp » January 7th, 2020, 11:44 am

Energyvoice article courtesy missdosh,

https://www.energyvoice.com/oilandgas/2 ... er-course/

Basically a pseudo-RNS explanation for HUR.

Includes this Lincoln PI snippet,

"Moving on to Lincoln Crestal, the lowest risk of the 2019 programme, because it was in the same block and structure as the Lincoln discovery well. It encountered oil and flowed at 9,800 barrels with electric submersible pump assist.
The productivity index (PI) of 18-20 was lower than on Lancaster but still commensurate with commercially productive fields in the North Sea."


and re the PBLJ

"With this in mind, on December 13, Hurricane said it was in talks with Spirit for the potential use of the already hired Transocean Paul B Lloyd Junior rig to accelerate the drilling of a third horizontal production well on Lancaster.
This would achieve two things: the rig spends less time idle and a successful well would, subject to OGA approval, be rapidly prepped as a tie-back to Aoka Mizu with first commercial oil expected before the end of 2021."


Do I detect some bet-hedging in this, or am I being overly sensitive ? my bold,

"Mr Trice is holding to the opinion that Hurricane will need six months to a year’s-worth of constant production from the early production system aboard Aoka Mizu before the company is sufficiently confident that Lancaster is a solid candidate for full-field development."

Some more insight into the Lancaster well behaviours, my bold

"In mid-December, one well was being naturally flowed successfully at 14,700bpd with minimal water cut. This individual test will run until late January. Prior to that and again in a solus test and without pump assist, the other well flowed at about 9,400bpd with a stable water cut within a range of between 25-30%."

If that last bit re stability is correct, combined with the other statements they have made in that last RNS, then it may indeed increase the probability of the perched hypothesis rather than aquifer influx. However it would indicate a fairly largish area, and that in turn would adversely affect volumetrics etc.

regards, dspp

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Re: Hurricane Energy (HUR)

#275730

Postby PeterGray » January 7th, 2020, 12:15 pm

Biffadog wrote:I'll leave others to decide if your original statement was made with the deliberate intention to mislead or was a simple mistake that came about by lack of knowledge on the subject.

I think combining all of this with the the impending doom of Brexit, indyref2 and a meteor strike that you have previously mentioned and some might say you have overplayed your hand somewhat. That's for others to decide but I can certainly see your cards.

TTFN
Biffadog.


Biffadog, thanks for you posts, getting clarification for HUR that no water is being exported from the AM by tankers, as some have suggested, is clearly useful to know.

However, I find the tone at the end of your post far less so. I don't share dspp's concerns about WC (or at least not the extent he appears to), but that doesn't mean that his analysis is not something I read with interest, and attach value to. Clearly there is risk associated with the GLA development. That has always been clear and the company have certainly never suggested otherwise. Anyone who holds HUR thinking otherwise has not considered the situation fully.

The EPS is intended exactly to find out more about the productivity of the field and issues like possible WC issues. There can be no doubt that those at HUR will be paying a lot of attention to exactly those questions. And that as private investors we will only hear their conclusions sometime after they may have been made internally. Therefore anyone who spends time trying to analyse what information is in the public domain and to try and narrow down the keys issues is surely to be welcomed. That doesn't mean we all have to agree, but I would assume anyone putting money at risk on a company like HUR would be open to all sources of information that might shed light on the assocaiated risks.

There can be no doubt that the WC from the 7 well is up (or at least was up). And that many prior to the EPS have raised concerns about WC. It therefore makes a lot of sense to look at the issue closely - even if it's impossible for PIs to be able to come to a definitive answer. Personally, I remain invested (as does dspp, at the time of his last, recent, declaration on the issue) and I'm happy for now to accept the view of the company that they are looking at perched water. But I would be being extremely foolish if I pretended that I have no concerns there, or that there is no reason for concern. For me the risk of the interpretation being wrong is small enough that I'm prepeared to risk capital against what I see as the more likely outcome, of gains if and when the CMD gives a contining positive interpretation of EPS performance.

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Re: Hurricane Energy (HUR)

#275734

Postby OLTB » January 7th, 2020, 12:18 pm

Afternoon all.

I hold a lowly 6,981 shares but I see from the HL website that at 11.22 this morning, someone has bought 3,000,000 shares for a total of £918,000 :shock:

Cheers, OLTB.

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Re: Hurricane Energy (HUR)

#275751

Postby StepOne » January 7th, 2020, 1:21 pm

OLTB wrote:Afternoon all.

I hold a lowly 6,981 shares but I see from the HL website that at 11.22 this morning, someone has bought 3,000,000 shares for a total of £918,000 :shock:

Cheers, OLTB.


Doesn't that also mean that someone must have sold them .... :|

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Re: Hurricane Energy (HUR)

#275759

Postby OLTB » January 7th, 2020, 1:51 pm

StepOne wrote:
OLTB wrote:Afternoon all.

I hold a lowly 6,981 shares but I see from the HL website that at 11.22 this morning, someone has bought 3,000,000 shares for a total of £918,000 :shock:

Cheers, OLTB.


Doesn't that also mean that someone must have sold them .... :|


Yes, but my confirmation bias thinks that the seller(s) are wrong :D

I know nothing of the technical details for O&G industries, unlike many on this board that both bamboozle and delight me with their knowledge, but in my simple mind, it would be extreme to gamble £918k without some extremely in-depth knowledge or study of the HUR business.

Although I may be incorrect (damn biases!). Maybe it's Crystal Amber topping up with more shares only to off-load them when prices increase.

Cheers, OLTB.

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Re: Hurricane Energy (HUR)

#275837

Postby Tinderboy » January 7th, 2020, 7:33 pm

I think the torrent of abuse towards DSPP is way over the top, the level of discussion on other lower echelon boards is almost Neanderthal.

The fact that someone invented a reply from HUR from an imaginary friend to try and discredit DSPP was tasteless and Reaked of desperation...

The current SP is pretty accurate where we are IMHO, nothing more, nothing less.

Lets take a breathe:

(1) Well 6 (The good one) is producing around 14700 barrel per day un-assisted - This is being monitored.....
(2) Well (7) is not producing at the moment, but after stop-start-up-down-shake it all around it has a 30% cut of water........
(3) The idea is to run both Wells at the end of January - circa - 20k barrel per day.....
(4) LC - 4500 barrels per day will not now be realised until a later date........
(5) HUR appear to be controlling the produced water by whatever means IMO...
(6) The recent EV interview with Dr Trice was rather downbeat and in fact realistic, this quite clearly dampened the SP to where it is at the moment.

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Re: Hurricane Energy (HUR)

#277400

Postby Tinderboy » January 14th, 2020, 3:32 pm

It’s a pretty bleak day all round with HUR capitulating, the company looks to be rudderless, any other decent company would have put a share price monitoring extension to attain a level of protection, but they just let the Dyce roll, quite appalling really!
I don’t think this is in anyway finished yet, I think there is more pain to come!
Lots of very angry PI’s looking to blame someone, anyone, when the only one to blame is themselves for not reading the warning signs!

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Re: Hurricane Energy (HUR)

#277446

Postby PeterGray » January 14th, 2020, 5:50 pm

It’s a pretty bleak day all round with HUR capitulating, the company looks to be rudderless, any other decent company would have put a share price monitoring extension to attain a level of protection

What??

Companies don't put price monitoring extensions in place - the market does.

What exactly should HUR be doing? Expectations that the company should "step in" to "do something" about the share price are nonsense. Their job is to build the underlying business - in this case by bringing the oil in the EPS to market and proving up the concept. It's not currently obvious that they are doing anything other than doing that well.

They issued a TU a month ago giving their views at the time - EPS performing ahead of expectations, water ingress is from perched water. There is no reason for them to keep issuing TUs unless something significant has changed in their view, or what's happened.

There has been a discussion here about water cut. It's perfectly soundly based, and it's a valid issue to worry about, but either you think the company are lying, or hiding the truth - in which case you should be a long way from invested here, or the WC is not currently seen as a major issue. That doesn't mean it couldn't become one, the whole and very well advertised point of the EPS is to examine issues like that. But at present, while there is clearly perceived risk - or HUR would no longer be operating the GLA or GWA, it would have been taken over - investors have to let the company get on with what they have said they are doing - proving up the FB productivity of the Rona Ridge. Railing against them for short term price moves shows a serious lack of understanding.

Lots of very angry PI’s looking to blame someone, anyone

You seem to fit that bill!

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Re: Hurricane Energy (HUR)

#277449

Postby PeterGray » January 14th, 2020, 6:01 pm

Tinderboy wrote:The current SP is pretty accurate where we are IMHO, nothing more, nothing less.

Lets take a breathe:

(1) Well 6 (The good one) is producing around 14700 barrel per day un-assisted - This is being monitored.....
(2) Well (7) is not producing at the moment, but after stop-start-up-down-shake it all around it has a 30% cut of water........
(3) The idea is to run both Wells at the end of January - circa - 20k barrel per day.....
(4) LC - 4500 barrels per day will not now be realised until a later date........
(5) HUR appear to be controlling the produced water by whatever means IMO...
(6) The recent EV interview with Dr Trice was rather downbeat and in fact realistic, this quite clearly dampened the SP to where it is at the moment.


So you regard the current SP as "pretty accurate" for a company producing above expectations, and expected to increase production over the next year. Over this year they have proved up a potential producer in Lincoln, and proved that Warwick is oil charged. Certainly bringing Lincoln onto production looks like it may be delayed from expectations earlier in the year, and further work is required before the productivity of Warwick can be established. However, we are well ahead of where we were 12 months ago. And the fact that the CEO is "realistic" is somehow a negative?

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Re: Hurricane Energy (HUR)

#277462

Postby Tinderboy » January 14th, 2020, 7:42 pm

I won't go over old ground so we agree to disagree on most of the points.

Im particularly interested when you say "we are well ahead of where we were 12 months ago" - Can you clarify your position? Are you HUR COMS? PI? Other? Apologies if these requests are not appropriate.

You seem to be very noble defending the company, can you advise why the market has clearly lost confidence in HUR?

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Re: Hurricane Energy (HUR)

#277483

Postby PeterGray » January 14th, 2020, 9:35 pm

How are we well ahead of 12 months ago?

12 months ago

- The AM was not commissioned, it and the subsea infrastructure have operated beyond expectations
- There had been no production from the FB at Rona, now production is ahead of expectations at this time
- Plans now exist for a gas tie back, with funding, that did not exist
- There is now a potential producer on Lincoln, 10kbopd on pump doesn't match the Lancaster wells, but it's commercial, and we know the Lancaster wells are both now producing well above expectations from the DSTs
- There is confirmation Warwick is oil filled. True more work is needed to produce from there, but that is what E&P cos do. Was Anyone foolish enough to imagine 12 months ago that the Warwick development would be a walk in the park?
- Yes there is a higher than predicted WC from one Lancaster producer, or at least was in October. Not enough to have a major impact at those levels, but yes a concern, and a risk factor - but anyone who 12 months ago thought there wa sno significant WC risk from Lancaster production should not have been investing.

And no I am not HC comms! Or even very noble! I'm just interested in a sensible reflection on where we actually are now, particularly in comparsion to a year ago. And "the market has lost confidence" comes some way down the list for me in deciding that. What could be better than a stock in which the market has lost confidence but which is fundamentally sound?

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Re: Hurricane Energy (HUR)

#277496

Postby Sorcery » January 14th, 2020, 10:56 pm

Tinderboy wrote:I won't go over old ground so we agree to disagree on most of the points.

Im particularly interested when you say "we are well ahead of where we were 12 months ago" - Can you clarify your position? Are you HUR COMS? PI? Other? Apologies if these requests are not appropriate.

You seem to be very noble defending the company, can you advise why the market has clearly lost confidence in HUR?


Newboy, Not sure everyone understands what a contextless COMS or PI means!
PeterGray has been around for at least 20 years on this and it's predecessor forum TMF. He's sound.
Are there any points you would like to discuss that you disagree with?

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Re: Hurricane Energy (HUR)

#277497

Postby Thesasquatch » January 14th, 2020, 11:09 pm

In my opinion you completely misrepresent the situation, in simplistic terms this is what I see having occurred, from

High case - 100 - probability 33%
Mid case - 50 - p33
Low case - 25 - p33

Now we are at, again in simplistic terms :
High case - 75 - p15
Mid case - 35 - p40
Low case - 10 - p45

So the size, and probability of the high case have reduced. To suggest otherwise is to ignore the facts.

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Re: Hurricane Energy (HUR)

#277528

Postby PeterGray » January 15th, 2020, 8:50 am

Not at all clear what those figures are supposed to represent?

However, I would agree that the probability of the highest possible outcome has reduced somewhat over the past 12 months, WC questions and lack of immediate Warwick productivity are the obvious contributors.

But equally the lowest case outcome probabilities are reduced following successful commissioning and higher than expected initial productivity.

In effect that’s what you might reasonably expect to happen during the initial stages - a narrowing of the range of outcomes.

Since the mid case valuation is significantly above the current sp I’m more than happy to hold, and to argue HUR are in a better position than 12 months ago.


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