HUR currently producing nearly 15000 bpd from well 6 with minimal water cut. I think this is a tremendous performance from a single well. This leads me to assume they will produce the additional 6000 bpd from 7z from end of January onwards. The water produced will be perched water so at 30% they can produce 9000 barrels (30% of which will be water). Seems perfectly reasonable to me to gradually flush the perched water, we should then gradually see the water cut tail off from 7z. As you say the CMD end of March will give us some answers, and as 7z will only produce from the end of this month, I would not expect any data from HUR until two months of production, so end of March is fine with me. There is no point in running 7z at the moment because the company want all the cashflow it can get given the change to the 2020 drilling programme and the need to 100% fund an additional Lancaster production well. Sentiment will quickly improve once the water cut subsides and the price of oil gradually rises in 2020.
My understanding is the guidance has not changed for 2020, which is 20,000 barrels per day. Will they be running the ESP on the 6 well to achieve this in Jan, or have they forgotten to update guidance?
As to the water cut, all we can say at present is that it has been increasing on the 7 well and there is no way of knowing when it will stop increasing. I can see no way of testing this with the 7 well shut in.
Eventually, I agree, the 7 well will drain all the perched water, but how long this will take, days, weeks, months, years who can say.
Ricfle, The ramp up in production to 20,000 bpd is from the end of this month. HUR should be producing in excess of 20,000 bpd going into February. HUR are currently testing the performance of the two Lancaster wells and I would fully expect that part of the testing would involve switching the ESPs on to see how the wells and reservoirs perform.
Here is a quote from the RNS dated the 13 Dec 2019:
day (before operational downtime), to be reviewed as part of the current testing
Where does your from the end of Jan come from?
aha good old fashioned group think eh Ricfle
POO climbing as a result of recent ME unrest
HUR dropping as a result of questions now surrounding the good doctors level of clarity and trust
I did say we would see the 20’s once again and long long long before the group thinks heady 40’s but I suspect that now makes me a bulletin board
I think that makes you correct.
How low do you see this dropping to?
I think they will all be queuing up to sell on CMD, assuming a good result. What other news is there?
From the latest Energy Voice article:
“This well is currently suspended pending review of Lincoln Crestal as a future potential tie-back to the Aoka Mizu, though that now seems to be on hold, at least in the near term, because of the Warwick Deep and West results.”
A vertical appraisal well on Lincoln and Lancaster, maybe a production well on Lancaster and no tie in of Lincoln. Not much to look forward too, no wonder the SP is down the gurglar.
Share price has taken a beating. I think its hard to stay bull now. I mean, realistically is there anything positive to look forward to?..I’m starting to doubt that myself…what do you think?
Thanks to Missdosh and Smoggey79 on LSE:
Share price continues to struggle at around 27p today 14th January. We have no recent news from the company, but we await the 8th lift of oil soon. A poster on another bb has found that HUR are going to charter an anchor handling/survey ship soon. I am hoping it will be hired to find a location and lay anchors ready for another Lancaster production well. Another poster has speculated that the requirement for a Lincoln sub vertical well could be to define the field boundary to establish if the Lincoln field extends into PMOs Solan licence area. As I stated in an earlier post I think the joint venture between HUR and Spirit is unofficially paused pending the sale of Spirit this year. I would be happy to see Spirit leave, it means HURs stake will revert to 100%, I just hope its 100% of something big.
HUR will be producing 20,000 bpd at the end of this month. We know the FPSO is easily capable of handling all the currently produced water that one of the two Lancaster wells is producing so no problems at all as far as I am concerned. There should be an oil lift every third weekend going forward, with two lifts in some months, this should be generating $25 million per offload. I fully expect an oil price in the $70 to $75 range this year which will push each offload to over $30 million.
I really think HUR should give us a corporate update prior the CMD at the end of March.
News as I see it:
Next offload. Cannot see it making any difference to the SP.
2020 Q1 Presentation. Would be nice to know just what HUR and Spirit are actual going to do in 2020, but from reading the EV article they do not seem to know themselves. Could help or hinder the SP.
Rig/drilling news. Cannot see any of the proposed wells giving the SP a boost.
Tie in of Lincoln to FPSO. Looking at the EV article it seems to be on hold, so 2021 at earliest. At a total cost of $187.5m with Spirit paying $140.5m, plus rig costs of up to $52.5m, you can see why Spirit would drag their heels for a well with a PI of 18-20 after already paying $180.5m to drill it.
Offloads at 20,000 barrels per day. Cannot see this making any lasting difference to the SP.
End of year results. Sometimes the market does not take into account the money earned until the end of year results are published. Could benefit SP.
CMD. This is water cut dependent. I believe the water is perched as HUR state, but what no one can say is how large it is. It could start decreasing as soon as they turn the next well on or it could increase for months. Also what was meant by Dr T in the EV article when he dodged the question “But what does constant production currently mean?”. Does the 6-12 months start from late Jan 2020 when they turn the wet well back on?
Has anyone something I have missed or good reasons why the SP will go up, I would like to hear them.
I agree Ricfle,
I also would like to hear any other posters opinions on the SP and where we might be 6 months from now. I feel like the company should give a little more info…all seems pretty vague at the moment. We would really need to see a tie back to LC for any increase in price… However I seriously doubt that will happen 2020 so I agree with your statement on this being 2021. As I say, I am finding it extremely difficult to be bullish on this share now… Even in the mid to long term… Am I right…?.. Who knows, time will tell. Defo not for the faint hearted this one now…
My guess for 6 months from now - 31p
Is that a minus sign?
`The market’ is supposed never to be wrong but HUR was valued (by the market) at almost twice the current price well before there was any certainty about getting commercial production from fractured basement, yet the reality must be far better than envisaged back then as we now have a high oil price and tankers shuttling back and
I guess they balance out, more certainty about the ones flowing but only about half the overall full field left.
Everyone, ie the big boys, knows the plan so I’m assuming all we are likely to get is the current SP, for at least a year anyway.
squinn, 6 months so middle of July. I have no idea what the share price will be then.
However things that might happen between now and then, and I will state them in the positive but they may turn out to be negative.
The Lancaster EPS production ramps up to 20,000 bpd average
The water cut from the 7z well starts to decline, so proving it is perched water
The FPSO modifications and tie back to the WOSP nearly complete to enable it to handle 30,000 bpd
The Lincoln Crestal well is completed and work is being undertaken to tie it back to the FPSO in partnership with Spirit
The Warwick licence, which expires 31/8/2020 is extended for 5 years with a one well drill obligation
The Halifax Licence, which expires 13/11/2020 is extended for 5 years with a two well drill obligation
The sub vertical Lincoln well has completed and been P&Ad and shows Lincoln field is large and does run into PMOs licence area - Solan.
The rig has spudded a third Lancaster production well.
The JV has agreed to drill a second Lincoln production well and it is going to be tied back to the Solan production facility.
The oil price is now consistently at $75 per barrel and HUR is receiving $30 million for every 21 day offload of oil.
The continued success of HURs WOS project leads to media speculation that a major oil company is considering either a farm in or a takeover bid.
Just my rose tinted view
That’s the Spirit!
How could we have got to our present state of general development without such optimistic people in the past deciding to try to see if they could invent a better
In an ideal world we could fund a 4D seismic program.
Here is a link to Crystal Amber’s RNS :
You will note the following statement:
“Cash generation gives Hurricane optionality to explore, invest to increase production, or consider returns to shareholders. At the current share price, the Fund believes that a buyback of shares could be an attractive use of capital in the interest of the company.”
yes I have one Ricfle
funds generally talk through a selfish hole in their ‘bleep’ (you get the picture)
‘‘buyback of shares is an attractive use of capital’’ ?
other than the obvious reduction of shares in circulation WTF does that ever achieve for current long term shareholders as invariably the SP never ever goes up relevant to any decrease in stock as it logically should if one were to assume the MCAP was to remain the same
you just need to look at one of your old favourites GKP to see it does SFA for shareholders given the SP has lost almost a third of its value since they announced and initiated their buyback scheme
funds are the only ones that really gain in this scheme as they can offload large amounts of stock at a time back to the company rather than trying to dump big volumes on the open market to the retail punter
I have also noted from other company buyback schemes it is often followed a few months or perhaps a year later by another round of fundraising to replace the capital they wasted buying the stock back so the end result is you are likely to have the same shares back in circulation at some point
so for me you either spend the free cash in developing and increasing the value of your existing assets or go out into the market and buy some more production thus increasing your immediate cash flow or if their are no immediate opportunities to do either of the above go and pay off some of that debt and as a worse case (rather than buying back stock) they could give some back to shareholders in dividends, however for any young company like this (without exposure to other streams of geographical production and/or income as a protective diversification) whilst still carrying significant levels of debt I don’t really agree with paying dividends just to try and appease shareholders
growing the business by increasing the value of ones underlying assets either through current field production increases or having exposure to other production acreage will IMO surely be more than enough to appease current share
WOW some proper meltdowns happening over on the madhouse
it certainly sounds as if some have got themselves way over invested whilst hoping for that triple digit dream in what is currently (sorry to say) a one trick pony
decades of history will show the alternative market place doesn’t take kindly to prolonged periods of silence and therefore post 13th Dec RNS I cannot imagine why PI’s would expect anything else to occur other than a drift back down and with the CMD still a long way off in terms of market unknowns who knows where it might drift back too yet
but the simple fact is the trumpeted 40p plus plus was never going to happen in the immediate aftermath of the latest drill and its now questionable (field development) results despite what Dr T’s pompous cheerleaders would have you all believe however one thing (amongst the hundreds) I have learnt over my 25+ investor years is that no matter what you might say or how many times you might say it on a blog the market will always decide the price so your energy and time is far better spent trying to work out what that market price might actually be in periods of prolonged news blackouts rather than ranting and raving on a silly blog
so in all seriousness folks it really is very simple
if you believe (in your investment) you believe, however I would also suggest that perhaps some of those people ranting and raving daily on the blogs need to invest a helluva lot less chasing the proverbial get rich quick retirement dream and go and get themselves a bloody