Urals Energy Share Discussion Threads

[tone the bone1] 13/11/2017 16:21

Urals still seems to have a pulse !

i'll drink to that !

[martyn9] 13/11/2017 15:57

Good grief BLUE.

[djmoggy] 13/11/2017 15:32

Chav - for South Dagi - they are looking at sometime in 2018 after the approval of the field development plan which is a prerequisite. I presume the plan will be submitted post successful completion of the first well drilling and testing (Jan/Feb 2018). Can't be more concrete then that... Everything happens at a snails pace in Russia so when in 2018 the Plan is approved by the relevant authorities is anyone's guess...South Dagi oil will initially be transported by road freight- I guess this will need to be reviewed once/if prod is ramped up to their near term 2000bopd target.

[chavitravi2] 13/11/2017 15:07

Moggy, did they say at all how soon they are going to go into these wells again?
Is there a problem of getting the oil away for refining or storage that is a hold back?

[chavitravi2] 13/11/2017 15:01

Thanks DJM, once again I say you put Allenby to shame.

[djmoggy] 13/11/2017 14:21

Sorry forgot to add - strategy now is to partner up with an established oil services company with the aim of carrying out a multi well drilling program at Komi. The oil services company will be incentivised on drilling success given they have a vested interest. This both reduces risk and cost to Urals whilst helping accelerate the timeline....Obviously very little in terms of detail could be shared on the above at the meeting as both negotiations continue and due to the price sensitive nature of the information.

[djmoggy] 13/11/2017 13:35

Komi was entirely the 3rd party contractors fault...

They were (allegedly) slow and used bad/negligent practices which actually resulted in an underground cave-in / subsidence which almost resulted in the sinking and loss of the drill rig.

The 3rd party was sacked and UEN management are currently going through litigation to recover all costs (and they are confident they have a good case).

I did stress at the investor presentation that this level of detail was not available in the RNS and would have helped with investor reaction. For example it was only when I asked the question of why was drilling not completed when so near target depth and decision made to pull the plug when all that the RNSs stated was slow contractor performance... It was only after this question that the whole picture was painted and the fact that continuation was just not possible.

There have been a number of successful wells previously drilled at South Dagi and Komi which flowed freely and then capped in anticipation of future development plan approvals - I can't remember off the top of my head the actual rates - however you could feel from at the meeting that there is a lot of confidence of the potential

[amargosa] 13/11/2017 13:02

djmoggy - thanks, appreciate your reply. Was there any hint of what went wrong at Komi? Also, they did reveal that on purchase of the assets there was some actual drilling results/information, which they refused to reveal to the market; their enthusiasm for these assets will in part be based on that info - we the minority shareholders don't have it, though I guess the major shareholder does.

[djmoggy] 13/11/2017 12:21

Amargosa - in a nutshell yes.Petrosakh drilling failures down to a combination of 1. Poor drilling ops team perf at one well resulting in failure. Addressed and lessons learnt..2. Low porosity in pay zone at latest drill location resulting in very low daily output and low expected life of well. Not much that could have been done to anticipate this.You have to remember that the field at Petrosakh is very mature and in decline. There is an increased chance of issues or poor flow rates which come part and parcel with drilling at this location.At South Dagi the following gives confidence for better performanceNew rig delivered (rather then using ageing existing rig)Drill team has been trained (or currently in the process) by rig supplier... This will address any bad practices or potential mistakesSouth Dagi the opposite of Petrosakh - I.e. Relatively young and unexploited so has potential to ramp up production easily - no guarantees obviously but far more confident of a successful drill there than at Petrosakh

[chavitravi2] 13/11/2017 10:20

After all they did go to some expense to find out where the sweet spots are!

[amargosa] 13/11/2017 08:46

Did any of you guys at the meeting get the impression they were getting a grip of the reasons behind the operational failures? Did they provide any measure of confidence they understood what was has been going wrong and had put measures in place to reduce the (systemic) failure rate? It's good to hear that the share price will go up if we drill successful wells in the future, but given what's been happening operationally they need to break this run of bad luck or whatever it is.

[chavitravi2] 09/11/2017 12:19

Short and sweet rns.

[calmtrader] 09/11/2017 10:34

Hi All some great posts from Moggy and Tone from the meeting..nothing much more to add except:

they will be posting a new updated presentation on the website very soon and hopefully the RNS's will be "singing" alot more.

I'm convinced the market just wants to see Urals can drill and this share price will take off and a decent reserves report which will highlight the value of the new acquisitions

lets also hope Putin gets re-elected and changes the MET to a profit related tax

and as stated by Mog we will receive 10% distribution of the EBITDA which should grwo massively in the next couple of years

[martyn9] 09/11/2017 10:23

I wonder if they might fly to cyprus in a private jet registered in the isle of man in a couple of years time? i personally hope so as the company must be booming!! dream on you never know.

[wanna brew] 09/11/2017 09:51

Tone Cyprus 2 hours ahead. Meeting should be over now and have have retired to the smoking lounge where Schvets lights up a huge Havana !!!

[tone the bone1] 09/11/2017 09:22

AGM today 11am Nicosia.

Andrew Shrager to remain a director! Dividend approved! Vodka tasting! Not necessarily in that order.

[neftanik] 07/11/2017 16:10

Thanks moggy

[djmoggy] 07/11/2017 11:51

Hi Neft -Truck initially which obviously isn't ideal but then will review longer term depending on prod ramp up. Management are looking for a 2000bopd target from S.Dagi short/medium term (which I read as within 2 years)

[neftanik] 07/11/2017 11:38

How will South Dagi get its production to market? Will they truck it or tie-in to existing pipeline infrastructure?

[martyn9] 07/11/2017 11:12

Moggy lets hope at south dagi the drilling team get it right for once!! as as we know not a good track history on drilling in the past.Only saving grace atm is we are now shipping two tankers a year.

[djmoggy] 07/11/2017 10:53

Greg that's fair enough - there is leeway within the tax bands to benefit from increased oil price and there are ways to actually benefit positively from the tax system through timing.

For example for the current shipment Urals have already paid tax based on a $45 oil price - whilst they will be receiving revenue based on a $60+ price. (Taxes paid c2 months in advance of shipping). This will result in a very healthy Gross Profit for this shipment.

Whilst I wouldn't try to change your stance I would say that the Russian tax system is already (more then) priced into Urals shareprice and the price is further depressed due to lack of operational success -so IMHO it wouldn't take much to propel the share-price.

A successful drill at South Dagi with flow rates announced in late Jan with anything from 250-700 bopd would have a material shareprice impact IMHO. This would be underpinned quickly by a publication of a development plan including approval to bring online the 4 shut-in wells at the South Dagi field and then further drilling afterwards.

If Urals manage to increase daily production cost effectively via South Dagi then EBITA will rise considerably as a consequence. Urals management have a strategy to pay 10 percent of EBITA via dividends. A potential yield rise to 10-15% on current shareprice will make the market sit up and take notice (and attract a few buyers).

No guarantees but personally I think South Dagi drilling is a potential game changer. The Petrosakh field is old and in constant decline (and Arcticneft has been largely neglected). South Dagi presents Urals with the first new alternative production opportunity in 10 years (on a much younger undeveloped field). New rig, proper training, proven drilling and prior decent flow rates from previous exploration wells, less cost to get the oil out and lower costs to keep flow rate constant... All point to better economics and underlying profit potential.... It could all go wrong but I think at current price the upside is significant if they do things right.

[gregpeck7] 07/11/2017 10:11

Topic Was going to top up yesterday but sitting on my hands. The way the tax works as you say and I am now aware makes this a defensive not an aggressive play . I want to leverage the higher oil price environment and unfortunately this will not facilitate this. Gp

[topicel] 07/11/2017 08:53

Yes, most educational Moggs, thanks.

But if what you say is true about the price of oil being largely offset by tax implications up or down, then the fact remains that we are not benefiting from the increases in oil price.

As we know UEN have a long record of being unable, it seems, or perhaps unwilling, to improve their production or cut costs significantly we are still stuck with an uncertain future for this as a growth stock.

Unless they pull their finger out, and, from some meeting reports the prospects seem slim that they can do this quickly either because of the same Russian internal issues that prevent them getting things done. Red tape, backhanders, what you will, the premise for investing here is losing its appeal without a major increase in production and/or cost cutting...

Hopefully I've got it all wrong.

Topicel

[tone the bone1] 07/11/2017 08:53

Topicel,Calm said he will be in Bruge till Wednesday.I am sure he will post on his return