Sirius Petroleum Share Discussion Threads

[drrichard] 21/9/2016 11:16

Interesting that in press coverage of the three year extension, the 5 adjacent fields are all mentioned by name, notwithstanding that they are Chevron fields. Was this a heads up?

The field lies in shallow waters offshore Ondo State in water depths ranging between 23ft and 27 ft and it is adjacent to Mina, West Isan, Ewan, Eko and Parabe fields – all of which are operated by Chevron.

[dr rosso] 21/9/2016 11:15

What's an oil hub?





Answer: A major production, collection and processing facility.



Will this be revealed in the forthcoming Oct. NewCo AD or will they still be keeping the lid on Ororo's real function?

[witchywoo] 21/9/2016 11:11

you're a machine doc ;)

[dr rosso] 21/9/2016 10:50

Cue the gravedigger to attempt to bury the post ....

[solarno lopez] 21/9/2016 10:48

Well done Doc up to your usual standard as always

[dr rosso] 21/9/2016 10:45

Now this is where things get interesting. Have a little re-read of Tonye Wokoma's profile showing the work he supervised whilst at Xodus.

"Sirius Petroleum - Ororo Field Development Plan
Principal Process & Facilities Engineer; Oct. 2011 to February 2012
Process & Facilities support to team looking at the optimum field development option for the Ororo development. To optimise a multi-field development based around an Ororo hub (wellhead platform) linking to Chevron Parabe facilities in the South West Niger Delta sector of Nigeria"


"multi-field development based around an Ororo hub" Aha!

Kinda points out what I've suspected for a long time. Ororo is the strategic HUB, a central focus point which links SEVERAL fields, and not just the Parabe field referenced in this month's summary.

One might add to the Exec Summary that a Chevron/NewSirius jv will mean flowing 20k boepd oil/gas in from 8 or 9 smaller outlying fields on OML95 into an Ororo wellhead platform where a FPSO barge will be installed to collect. BTG will sort the offtake.


Just what are they hiding?

[dr rosso] 21/9/2016 10:04

Exec Summary has just been published on website. To move from O1-ST Plan A $20m in July 2014 up to the Havoc TAC's ultra-efficient O2 $32m Plan B in Sept 2016 ... means they MUST KNOW that the increased funding is there, available, otherwise the exercise is pointless.

[1alfi] 21/9/2016 07:53

One step at a time for me from here on.

next step is to see how the share price reacts when the contingent resources are converted to bookable reserves.

Hopefully those reserves will be updated following drilling and be enought to equate to 126 million worth of RBL, therefor giving the potential to develop the field towards maximum profitability.

[drrichard] 20/9/2016 23:03

Fair enough Ruedolf, but I submit that it is this CPR that shows the way forward, as, taken in conjunction with the 3 year licence and the EIA, we now have a firm case to build on for RBL, JV or whatever. Note that it putated a viable case down to an oil price well below from where we now. Anyone interested in funding our project will know well enough what is to be expected in the general area and adjacent assets with regard to risk. Furthermore, I think the monetarisation of the gas might perhaps also have a positive effect. Finally, we are all aware, from the 2015 Corporate Presentation, if not from elsewhere, of other assets, and the relationship with Ondo State that we have. The opportunity to partake in further asset exploitation might weigh favourably on any putative suitor?

[ruedolf] 20/9/2016 22:07

Good overall post by Sherlock re Rockflow analysis.

Don't necessarily agree that the share price is crazily low if anything one could argue its fairly valued for now based on Rockflows low case net present value of $8.5m which is roughly the current market cap. No doubt the share price will move on drilling but alot depends on the drill results as to what Ororo is worth.

The overall impression of Rocklows report is that there is alot of uncertanty as to whats down there and every thing depends on the drill and flow results . Rockflow gives a 50:50 chance that the field will go to full development which is a high enough degree of uncertainty. Its also surprising that the development cost can be as high as $126m even in this low cost environment.

The report explains alot as to why srsp has struggled over the years to raise project finance given the degree of uncertanty as to how much reources are in the field and also the high development costs.

[sherl0ck] 20/9/2016 21:10

DrR. I'd love to say I selfishly researched and wrote this up for the benefit of everyone, but in reality I didn't have a clue about some of the stuff referenced in the CPR summary so thought I better put some effort in, so it's mostly for my own benefit! I was however very pleased with what I read, which included lots of independent expert evaluations of various O&G methods and technologies referenced and not just the 'sales brochures'.

I think just from the few headline paragraphs we can get a sense that we're finally being guided by oil people who genuinely know what they're talking about. Plus with multiple funding options on the table, a completed & positive CPR and a sensible field development plan that demonstrates technical innovation, I still see no reason why this time we won't be able to close on funding. Whilst the market hasn't yet caught on to this one and scepticism is sky high, I remain a buyer at these crazy low levels.

[1sonic] 20/9/2016 21:00

Doc, Docrichard and Sherlock great posts. Sherlock you've taking time on tonight's posts.

[drrichard] 20/9/2016 20:49

Excellent Sherlock. If we cannot make this work with the team we have assembled then no-one can. As DrRosso pointed they appear to have made some savings on the original ideas for their FDP.
Cannot believe that Rockflow would have cited our BoD's plans if they were not confident they could not be implemented.

[sherl0ck] 20/9/2016 20:36

This is what I think the CPR is saying in connection with our proposed development plan:

D1, D2 & D3 reservoirs could be extensive but we need to run some fairly straightforward tests to determine flow rates etc. D4 & D5 are gas. F will be left alone and G will produce oil but only via Ororo 2. It's likely that out of the two oil zones that flowed in 1986 - D3 & G, the latter was the one with the 2k flow rate and may have been chosen as the 'banker' that we know will provide immediate cash-flow, while more appraisal work is required on D1-D3.

G only being targeted by Ororo-2 does seem to infer that it isn't the largest reservoir and D1, D2 & D3 are likely to be potential key target areas for additional Ororo wells if we proceed with full field development.

Oddly there's no mention at all of the deeper sands? Perhaps this was left out for now due to more circumstantial evidence based on other nearby fields and maybe for funding purposes the CPR had to very strictly focus on what can currently be determined. The deeper sands are critical however so I expect to see these figure once we have full details of any drill programme. If we have already secretly evaluated these somehow, I guess the info will only be revealed when the time is right. Rockflow admitted that the CPR was based purely on the data Sirius provided them with.

Dual lateral wells (multilateral) with horizontal bores that can really maximise flow in each reservoir will be utilised for field development rather than single vertical wells. This is essentially one borehole with twin lateral branches that can either target completely separate reservoirs or increase the contact area in the same reservoir. Whilst normally around 1.5x more expensive to drill than a standard well, you'd obviously expect improved overall flow rates and better field economics due to reduced flow lines and surface facilities such as platforms.

Whilst the wording is slightly ambiguous as to whether Ororo-2 will actually be single or multilateral (I'm guessing the latter), it appears that for $31.7m (£25m) we get a well which allows further investigation of D1, D2 & D3 before being drilled deeper for the extended well test and production of oil from G.

We also get what is likely to be Ororo-3, a completely separate well to simultaneously obtain gas production from both D4 & D5. It's not completely clear whether this one will also be a multilateral well with two branches in each D zone or a single well with independent dual casing perforations to allow hydrocarbons to flow into the well from both reservoir areas.

The extended well test (EWT) on G, whilst adding to costs, provides valuable real-time production data ahead of any more permanent facilities. It's typically utilised to reduce uncertainties inherent in marginal fields, better assess reservoir boundaries & characteristics (this is where the extra time afforded by the EWT and the skills of the geologist and their technical analysis of data really comes into play) and help further prove up reserves over a longer test period, which could be anything from a month up to a year.

EWT bridges the gap between traditional appraisal testing from multiple wells and full field development. Often the result of EWT is a reduction in the number of appraisal wells required prior to committing to full field development, so potentially major cost savings.

It's also very useful for cash flow purposes due to the resulting oil off-take, thus immediately helping offset capex - particularly with our preferential cost recovery rates. Whilst it appears that G will produce anyway, the promise of almost immediate revenues would likely help with funding discussions and might specifically underpin the Board's comments about service providers covering upfront costs and clawing these back from resulting revenues. If Ororo-2 was only an appraisal well and production was planned for further down the line, this might be trickier.

Whilst there's no mention at all, it would also seem sensible before or after the EWT to send the drill bit into the deeper sands and evaluate these since it could significantly impact reserves and be crucial to help determine further field development plans. I can't imagine for a second that Ororo-4 & Ororo-5 would be planned to solely target D1-D3 whilst still having done no further evaluation of the deeper sands that have significantly elevated the volumetrics of neighbouring fields.

The use of a conductor supported platform (CSP) appears to be more cost-effective due to it's minimal design, eliminating the need for an expensive jacket structure and more rapid installation (no costly mobilisation of heavy-lift vessels required). As such it's often touted as an ideal solution for shallow water marginal wells. They're normally unmanned and exclude extensive processing facilities, which could just be handled by the barge. It's also a flexible solution as additional conductor legs can be added to aid production capacity should well count increase.

I'm no expert by any stretch of the imagination but overall it seems to me that we're going to get a lot of 'bang for our buck', especially in the current low services cost environment. I really like the principles behind the multilateral wells, EWT and CSP. We seem to be cost effectively using proposed funding in a way that maximises appraisal work whilst also delivering immediate cash & oil flow. The former probably helps mitigate a financier's risk while the latter probably aids our credibility as a technical expert, and potentially a quality operator.

If we're not going to be taken over more imminently or form a JV with a recognised partner, doing a really good job on Ororo will be a crucial stepping stone to unlocking more funding and being allowed to tackle some of the bigger assets.

[bronislav] 20/9/2016 20:09

Would love to have a peep at the real options valuation carried out by the Greek professor.

[dr rosso] 20/9/2016 19:46

Executive Summary
Sirius Petroleum holds a 40% working interest in the Ororo Field Licence in Nigeria, which is located 6km offshore of the western Niger Delta in 25 feet of water. Hydrocarbons were discovered in seven sandstone reservoirs (D1 to D5, F and G) in Ororo-1 drilled by Chevron in 1986. Four of the reservoirs were tested, two produced oil (D3 and G) and two produced gas condensate (D4 and D5). Wireline log analysis indicates the upper part of D1 and D2 contain gas with a possible oil leg below. Although the logs clearly show the presence of gas in the upper D1 and D2, definition of oil legs is less clear due to changes in log character caused by increased clay content. The F sand is considered to be charged with oil. No hydrocarbon-water contacts could be defined as the hydrocarbon columns in each reservoir extend to the base of the sand within Ororo-1.

Sirius is currently planning to drill Ororo-2, where wireline pressure tests and samples will be taken to confirm the presence of an oil leg in D1 and D2. A commingled drill stem test of the D1 to D3 reservoirs will then be run to obtain flow rates for these reservoirs.

The well will subsequently be deepened and an Extended Well Test (EWT) is planned for the G reservoir. An Eclipse model, constructed by Schlumberger, was used to simulate the recoverable volumes of oil and associated gas from the D1, D2, D3, F and G reservoirs.

A development of the field envisages dual lateral wells with 1 to 2 horizontal 500m bores in the D1, D 2 and D3 reservoirs, dependent on confirmation of oil legs in D1 and D2, and oil column heights. Currently the F sand is not considered for development due to limited oil volumes. The G sand will be produced solely by Ororo-2. It is also planned to drill one well to obtain commingled gas production from the D4 and D5 reservoirs.

Sirius will fund all of the testing and development costs for Ororo, and recover costs from production with preference over other partners. As a result of this financing agreement, Sirius’ net entitlement to production will be more than 40% of life of field gross production, and the percentage will be variable depending upon costs, oil prices and production volumes

Sirius has stated that they intend to install a Conductor Supported Platform prior to drilling Ororo-2. Oil from the EWT will be piped from the platform to a barge, where it will be treated and exported via a shuttle tanker. Gas will be exported via a 5km 8” pipeline to Parabe. For Full Field Development, it is envisaged that further platforms will be installed and the barge be upgraded to take the greater volumes produced. Export of hydrocarbons will be using the same routes as the EWT. Recent costs have been obtained from contractors by Sirius for the above development scheme and these have been used in the economic analysis.

Total CAPEX for the EWT has been estimated as US$31.73 million and a full field development between US$99.23 million and US$126.15 million
depending on the size of resource to be developed. OPEX has been estimated around US$10 million per annum. The Ororo field has been awarded under the standard Nigerian Marginal Field Fiscal Terms. In addition, a Royalty is due to the Chevron and Nigerian National Petroleum Corporation under the marginal field farm-out agreement.

[solarno lopez] 20/9/2016 16:18

good man sher

[sherl0ck] 20/9/2016 16:12

I've spent a couple of days trying to get my head around the development plan briefly outlined in the CPR summary. From what I've researched, I like what I see. A lot of sensible thought has gone into the way forward and I've accordingly bought a few more shares today. Will detail my research and thoughts later when I get a chance to write it up.

[dr rosso] 20/9/2016 14:28

Interesting to compare with the recent Exec Summary because it shows how plans have changed under Havoc. Far more cost-efficient despite a higher upfront fee.

[dr rosso] 20/9/2016 14:14

The vessels are scheduled for delivery in 4Q 2016 and 1H 2017. ...... weld-on connectors are ideally suited for extreme service conductor and


The Sept 2014 journal article entries match with separate news items dated Aug 2014 in which Cosco is to supply Maersk with 2 subsea service vessels/ NOV connectors. Nothing to do with Sirius. The bit about 3 development wells is a Sirius rns dated July 2014, which is worth a re-read

[drrichard] 20/9/2016 13:15

This looks interesting my friends. I have been trying to get in to get details but am haveing a little difficulty. Anybody else fancy a go?
Offshore201409 Dl - Scribd

1409OFF_C1 1 9/2/14 3:38 PM ..... plans three development wells on the Ororo feld, which Schlum- ..... support, including the provision of hardware for the training, comes from .... The vessels are scheduled for delivery in 4Q 2016 and 1H 2017. ...... weld-on connectors are ideally suited for extreme service conductor and

Interesting that although two years old it appears bang up to date vis a vis three wells and timescale. Could they have been planning this for two years?

[dr rosso] 20/9/2016 10:09

1m "sell" at 37, followed by 3 "buys" which add up to virtually exactly.. you guessed it