Wednesday, June 17, 2015
UKOG INDEPENDENT REPORT OF OIL IN PLACE AT HORSE HILL
UKOG today announced that NUTECH has provided the company with an independent report of the oil in place contained in the 55 square miles covered by Horse Hill licences PEDL 137 and PEDL246. UKOG has a 20.358% interest in the Horse Hill consortium.
The study details that the Horse Hill licences contain a best estimate of oil in place of 9.245 billion barrels.
The above does not include the Portland Sandstones.
This is indeed good news.
My disclosure: I am long UKOG
UKOG ISLES OF WIGHT OFFSHORE LICENCE EXTENSION
UKOG announced that the offshore licence for the Isles of Wight has been extended to January 2017 from January 2016.
This is good news as it gives more time for UKOG to pan their drilling campaign.
My Disclosure: I am long UKOG.
This is good news as it gives more time for UKOG to pan their drilling campaign.
My Disclosure: I am long UKOG.
LGO UPDATE
LGO today announced that a total of 556 feet will be perforated for Wells GY 672, 673 and 674. This works out to an average perforation of 185.3 feet per well.
In December, 2014, Well GY670 was perforated a total of 177 feet and delivered a flow rate of 1,085 bopd. You can roughly do the math yourself. Another factor which will come into play will be the pressure. Stronger the pressure greater the flow rates. I am optimistic however than the combined flow rate from the 3 wells will exceed 1,500 bopd which surpassed my previous estimate of 600 bopd.
LGO has also been granted the approval of 2 x 5,000 barrels tanks at the Goudron field. This will add the storage capacity to 12,750 barrels on site. The construction of the first 5,000 barrels tank will commence soon. Now, if LGO is not planning to increase production to more than 10,000 bopd in the near future, there is no need to increase the storage capacity either.
Meanwhile the new 4" is still pending the approval from other agencies to cross over existing lines. The LACT meter will be delayed until Q4. meanwhile, LGO intends to pump the oil into the exiting pipeline by having a pump facility and a new generator on site which will resolve the issue of bottlenecks.
I see the announcement as both progressive and positive.
My disclosure: I am long LGO.
In December, 2014, Well GY670 was perforated a total of 177 feet and delivered a flow rate of 1,085 bopd. You can roughly do the math yourself. Another factor which will come into play will be the pressure. Stronger the pressure greater the flow rates. I am optimistic however than the combined flow rate from the 3 wells will exceed 1,500 bopd which surpassed my previous estimate of 600 bopd.
LGO has also been granted the approval of 2 x 5,000 barrels tanks at the Goudron field. This will add the storage capacity to 12,750 barrels on site. The construction of the first 5,000 barrels tank will commence soon. Now, if LGO is not planning to increase production to more than 10,000 bopd in the near future, there is no need to increase the storage capacity either.
Meanwhile the new 4" is still pending the approval from other agencies to cross over existing lines. The LACT meter will be delayed until Q4. meanwhile, LGO intends to pump the oil into the exiting pipeline by having a pump facility and a new generator on site which will resolve the issue of bottlenecks.
I see the announcement as both progressive and positive.
My disclosure: I am long LGO.
Monday, June 15, 2015
Thursday, June 11, 2015
ASIAN ECONOMIES ARE GETTING CLOSER TO THE EDGE OF A FINANCIAL CLIFF
In a spate of weeks, Central Banks in New Zealand and South Korea have reduced their interest rates to help overcome a slowdown in their respective economies. Australia and China too have indicated they might have to do the same in order to bolster growth as recent economic indicators have shown continued weakness.
It is indeed an irony because on one hand, there is a need to control the escalation of corporate and consumer debt levels, but now in order to bolster growth the Central Banks are releasing more liquidity into the market by lowering the interest rates to prompt more borrowing and spending. This also runs contrary to the objectives of the various governments to reign in property speculation.
Already, the debt bubble in most Asian economies is at a very dangerous level. And when it burst it can cause great financial damage to the economies concerned. Economic growth cannot be in a straight line, sometimes you have to allow market forces to play their role. Rather than propping up a bubble and inflating it, perhaps it pays to manage the economy towards a soft landing.
My guess? There is a reason why this cannot be done. The bubble has gotten too big to manage.
Let's take a look back into the past and see where we are heading:
1987 Global Recession and the infamous Black Monday
1997 Asia Financial Crisis
2007 US Sub-prime Mortgage Crisis
2017 ????
I am not saying that definitely a major crisis will happen in 2017, but looking at the trends, you have to be vigilant. So it pays to prepare yourself by making the right financial decisions in investments and savings, besides managing your personal debt levels well.
Here's an interesting article:
http://www.bloomberg.com/news/articles/2015-06-11/there-they-go-again-asian-central-banks-cut-rates-spur-bubbles
It is indeed an irony because on one hand, there is a need to control the escalation of corporate and consumer debt levels, but now in order to bolster growth the Central Banks are releasing more liquidity into the market by lowering the interest rates to prompt more borrowing and spending. This also runs contrary to the objectives of the various governments to reign in property speculation.
Already, the debt bubble in most Asian economies is at a very dangerous level. And when it burst it can cause great financial damage to the economies concerned. Economic growth cannot be in a straight line, sometimes you have to allow market forces to play their role. Rather than propping up a bubble and inflating it, perhaps it pays to manage the economy towards a soft landing.
My guess? There is a reason why this cannot be done. The bubble has gotten too big to manage.
Let's take a look back into the past and see where we are heading:
1987 Global Recession and the infamous Black Monday
1997 Asia Financial Crisis
2007 US Sub-prime Mortgage Crisis
2017 ????
I am not saying that definitely a major crisis will happen in 2017, but looking at the trends, you have to be vigilant. So it pays to prepare yourself by making the right financial decisions in investments and savings, besides managing your personal debt levels well.
Here's an interesting article:
http://www.bloomberg.com/news/articles/2015-06-11/there-they-go-again-asian-central-banks-cut-rates-spur-bubbles
PLAYING LGO
In the coming weeks we would have the flow rates for the 3 wells on Pad 4. I would conservatively estimate the production at 600 bopd (200 bopd a well).
The current production is at 1,550 bopd with a value of 2.5 pence in March 2015 prior to the beginning of the drill in Pad 4. This works out to about 1.6 pence per 1,000 bopd. Since then oil price has increased 12%. Applying the 12% increase to our 1.6 pence per 1,000 bopd, the current price should be 1.79 pence per 1,000 bopd.
Therefore 600 bopd will effectively contribute 1.79 x 600/1,000 = 1.07 pence to the current share price.
So it is expected that once Pad 4 begins production, the share price should be at a minimum of 3.97 (Current) + 1.07 (Future) = 5.04 pence. If the combined flow rates rises above 600 bopd, then expect this price to rise as well.
It is expected that the CPR will effect a 50 % - 100% increase in the share price.
Therefore we will have:
5.04 x 150% = 7.56 pence
5.04 x 200% = 10.08 pence
The above are just my own opinion. But I will definitely sell a quarter of my portfolio at 8.00 pence. My BUY call was from a base of 3.60 pence, therefore it will deliver me a profit of 4.40 pence (122%) per share. all within a year's time frame. This will free up some money for me to invest elsewhere (UKOG because flow test will start at the end of summer or PPHM because the Phase III trial will complete recruitment in December 2015).
For the remaining, I will keep for another 12 months because I am confident that LGO could reach 15 pence by then.
I MUST reiterate that this is just my opinion. You should always evaluate your own option(s). Always do your own research because our risk appetite differs.
The current production is at 1,550 bopd with a value of 2.5 pence in March 2015 prior to the beginning of the drill in Pad 4. This works out to about 1.6 pence per 1,000 bopd. Since then oil price has increased 12%. Applying the 12% increase to our 1.6 pence per 1,000 bopd, the current price should be 1.79 pence per 1,000 bopd.
Therefore 600 bopd will effectively contribute 1.79 x 600/1,000 = 1.07 pence to the current share price.
So it is expected that once Pad 4 begins production, the share price should be at a minimum of 3.97 (Current) + 1.07 (Future) = 5.04 pence. If the combined flow rates rises above 600 bopd, then expect this price to rise as well.
It is expected that the CPR will effect a 50 % - 100% increase in the share price.
Therefore we will have:
5.04 x 150% = 7.56 pence
5.04 x 200% = 10.08 pence
The above are just my own opinion. But I will definitely sell a quarter of my portfolio at 8.00 pence. My BUY call was from a base of 3.60 pence, therefore it will deliver me a profit of 4.40 pence (122%) per share. all within a year's time frame. This will free up some money for me to invest elsewhere (UKOG because flow test will start at the end of summer or PPHM because the Phase III trial will complete recruitment in December 2015).
For the remaining, I will keep for another 12 months because I am confident that LGO could reach 15 pence by then.
I MUST reiterate that this is just my opinion. You should always evaluate your own option(s). Always do your own research because our risk appetite differs.
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