ADI - Adelphi Energy

[Sean K]

I mean like 140 pages for a co which has gone from 20 to 60c in 2 years. It certainly must have done something right to make its shareholders so loyal.

Actually, it's gone from 30 cents to 50 cents in 3 years, which is a 30% return. Not bad for 3 years: 10% a year, not much under the average for the market, which is around 12% isn't it?

This descending triangle is looking tenuous to me.

Descending Triangle (Continuation)

The descending triangle is a bearish formation that usually forms during a downtrend as a continuation pattern. There are instances when descending triangles form as reversal patterns at the end of an uptrend, but they are typically continuation patterns. Regardless of where they form, descending triangles are bearish patterns that indicate distribution.

 

[Agentm]

Agentm, ADI is only involved in Sugerloaf isn't it, which is the 20K acres?

The 200K is Sugerkane, and isn't that Aurora's?

And, how much of Sugarloaf does ADI own? Isn't it just 20%? So, 20% of 20K is 4K? And, this is just 'potential' isn't it?

The quarterly didn't sound too great for success here. Can you clarrify it, or say why it's encouraging? Perhaps recent anns overide this.

Cheers,
kennas

hey kennas

i dont concur with what you say,, i feel you have it slightly wrong.

the total acreages that is currently given by TCEI/ conocophillips as being
the sugarloaf play is 200,000 acres.

there is a JVP that adi is in with

TCEI
ADI
AUT
EKA
EME (uk)
and various unnamed partners

that is what your looking at 20,000 acres in this JVP, so 10% of the total sugarkane play.


AUT has gone out and purchased smallacreages south of and north east of the 20,000 acres. called ipiama and longhorn.. i could go further into who named it and what its targets are etc ,but i wont..

on zone 1 TCEi has said sugarkane is potentially

>3 TCF and ~500mmbbls in​

upper Chalk zone only

our jvp called sugarloaf AMI has said that just on the 20,000 acres the potential for "one zone only" the ZONE 1 region, is potentially

600 bcf.

Upside of ~1TCFE if other Chalk zones factored in.​

regarding the quarterly, ADI are not talking this play up deliberately as they dont want a gdn senario, as this play is totally unique, and far from traditional austin chalks plays, they will not talk it up unless the play is confirmed. A few days ago we got the confirmation that the chalks are able to produce on our acreages, as the testing of zone 3 at SL1 well showed the well suddenly came on after being written of by the masses.

currently conocophillips are sitting on horizontal well, kunde 3 (sugarkane) to be fraced next week, directional well kunde 2 (all three zones awaiting permit to produce from zone 1 sugarkane) awaiting frac shortly after, and drilling baker 1 horizontal (sugarkane), currently drilling and last night reported shows, all wells are showing potential.


We have kennedy 1H horizontal being logged right now, all zone 1 sugarkane. and Sl1 flow testing zone 3 chalks.

so the 600bcf is able to be increased if zone 3 comes good, then theres zone 2 which imho is superior to both the others on the logs i have seen.

hope that helps..​

 

[Agentm]

Actually, it's gone from 30 cents to 50 cents in 3 years, which is a 30% return. Not bad for 3 years: 10% a year, not much under the average for the market, which is around 12% isn't it?

This descending triangle is looking tenuous to me.

re the charts, i have to say i dont follow them kennas. i admire people like you that do, and i find it difficult to translate it.. for instance you could have the same tenuos graph for BUR two days ago, then yesterday, all hell broke loose as they announced the wells returns.. in terms of ADi that senario can equally happen imho.

you say tenuos, i would say its just a share that reacts to news from the various jvp's announcements. imho the announcement yesterday from eme will generate confidence in the buy side of the aussie jvps today... when the share was .60 they announced zone 3 was not going to happen, the share dropped on that... its news driven by and large imho kennas..


baker is coming good, and many understand the history there and feel that well was drilled not primarily to get a target but more perhaps because of leasing requirement, so to see a well basically understood to be a dartboard type well, very hit and miss perhaps, looking the goods makes the 200,000 acres very enticing..

imho there will be a massive forward drilling program to follow in the near term..

 

[Sean K]

Hi AM,

that is what your looking at 20,000 acres in this JVP, so 10% of the total sugarkane play.

From my understanding ADI have NIL of the 'Sugarkane play', but have a 20% interest in Sugarloaf.

Can you explain why you are referring to ADI having an interest in the total Sugakane area.

Sorry, I may be way off track here, but from my basic reading it doesn't seem to add up.

I'm fairly green with O&G.

kennas

 

[doctorj]

Ok, so without reading too much more than what's posted here, 600bcf is likely the p5 number for this play. For comparison, PPP, Tap & Apache recently drilled at Maitland and there's the potential for 880bcf there with plenty of upside given they're yet to find the edge of the field.

 

[Sean K]

re the charts, i have to say i dont follow them kennas. i admire people like you that do, and i find it difficult to translate it.. for instance you could have the same tenuos graph for BUR two days ago, then yesterday, all hell broke loose as they announced the wells returns.. in terms of ADi that senario can equally happen imho. .

Yes, I absolutely agree, charts can be shot to pieces. Normally the ones I draw.

They are just probabilities, a nice disclaimer for chartists, especially EW'ers who can only decifer a chart after the fact.

A significant strike anywhere for an O&G'er will blow any charting out of the well!

 

[barney]

Hi all,
The thing that I keep remembering is the Exec Directors comment in the Annual Report which stated …… “We believe we have discovered a new play in this part of Texas” …………. This comment was made prior to “Kennedy” and without testing SL1 (Testing that we punters know about anyway )
For the company to make statements like this, they must be fairly confident about what they have in SL, ………. If not, the comment could be considered irresponsible. I guess at this stage, it comes down to whether you believe what they say or not ………….. an act of faith no less.
The chart is obviously not pretty, but there has been some steady accumulation whenever the 50 cent region is tested …………. Plenty of 50,000 share orders slipping through here and there.
Many have decided to bail out, but I suspect, if Kennedy hits anything substantial, the already thin sell side could evaporate in the blink of an eye ….. I’ll continue to hold for future results ………….. I personally think we are just at the beginning of the Sugarloaf story …. There will probably be lots more ups and downs, but we need to remember that these first wells are testing the formation to work out where to drill future wells for the best results …………… The proess is slow, but the potential of a “new play in Texas” should be kept in mind imo. Cheers.

 

[Agentm]

Hi AM,



From my understanding ADI have NIL of the 'Sugerkane play', but have a 20% interest in Sugarloaf.

Can you explain why you are referring to ADI having an interest in the total Sugakane area.

Sorry, I may be way off track here, but from my basic reading it doesn't seem to add up.

I'm faily green with O&G.

kennas

we absolutely have the sugarkane.. we have all three austin chalks zones.

ok kennas, this is where it gets more complex..

our area is called sugarloaf AMI, because of operational reasons,

1/ AUT has had to secure more acreages, but was previously not allowed to disclose locations.
2/ EME has a deal on wells with TCEi conocophilips, and cant even name the true well names.
3/ the well was named suagrloaf 1 the AMI was named after the well.

the play is 3 zones of high matrix porosity overpressurised chalks.

ZONE 1

its called sugarkane, its named by conocphillips whom discovered it, its officially named in the rrc.

ZONE 2

unnamed potentially equal or better size to zone 1

ZONE 3

unnamed, recently (this week) put on flow test at SL1. potentially equal or better to suagrkane ZONE 1..


We have rights to all zones all regions all depths in the 20,000 acres.

this is from the UK,, froma guy called ed.. he is explainignthe wells from EME perspective, JV-3 is baker horizontal.. jv-1 is kunde 3


They may have stopped short as they encountered a change in lithology or perhaps zone 1-3 were slightly higher in Kennedy-1, impossible to say without the logs. Either way SL-1 has produced from zone 3. I had written that one off. Gas and condensate is positive. I reckon the wellbore reservoir interface is damaged from the previous failed frac attempt giving the poor flows at this point. Kennedy will be the real tester of this zone. If the reservoir is highly compartmentalised then it will be the horizontal well that breaches the compartments in the payable zone and with more communication with the reservoir should come increased premeability and sustainable flows as well as a much bigger pay section exposed to the hole. Carbonates are much more robust than sandstones so horizontals should be easier to complete. We know from previous logs that the main austins are a slight mix of sandstone, but high very % carbonates. Liquids are much more valuable than gas still so the more condensate and higher flows the better for the value to EME.

I reckon it'll all happen from alternative wells, SL-1 was drilled to test the hosston, the Austins were a bonus. They'll probably test zones one and two but do the horizontal testing from Kennedy only. We could be onto a gas and liquids find at block A and B now. Still not convinced by the size and pressures until we get monster well production (possibly JV-1 fingers crossed).

I still reckon that SL-1 is only scratching the surface of possible production potential, at least we know we have a viable reservoir for gas and condensate flow at present, although we still need a long-term test. A horizontal production test well at Kennedy or JV-1 will make or break this one as a big find or only a modest find. Well damage in SL-1 may not be giving the entire picture at present.

JV-3 well with 185ft gas column is good news, ten times above background sounds very good too. I would imagine that it will respond similarly to the other Kunde wells when tested. All looking good all wells coming in gas +ve from the appraisals of Kunde. Its all pointing in the right direction for a big find now with lots more wells to be drilled. We still need those horizontal well test results, sounds like Tom is keen to get those done and dusted too which is a good sign. Plenty more wells to come and plenty of wells to be tested so we are going to be busy (don't forget Bondi in the middle of all this action).

 

[jtb]

Agentm, ADI is only involved in Sugerloaf isn't it, which is the 20K acres?

The 200K is Sugerkane, and isn't that Aurora's?

And, how much of Sugarloaf does ADI own? Isn't it just 20%? So, 20% of 20K is 4K? And, this is just 'potential' isn't it?

The quarterly didn't sound too great for success here. Can you clarrify it, or say why it's encouraging? Perhaps recent anns overide this.

Cheers,
kennas

Thanks K, thats where I was coming from- I keep coming back to look at this mainly due your relentless optimism AgentM
About due for another run to 75c maybe............

 

[prawn_86]

It keeps reminding me of another oiler AKK.

They continually were updating the market saying they have 'encouraging' results and 'excellent potential' and 'new leases with lots of pay', but each time the announcements were disappointing.

Point being, co's like to use these words to keep shareholder interest and the ASX doesnt seem to pull them up on it.

 

[Sean K]

AM,

we absolutely have the sugarkane.. we have all three austin chalks zones.

ok kennas, this is where it gets more complex..

our area is called sugarloaf AMI, because of operational reasons,

1/ AUT has had to secure more acreages, but was previously not allowed to disclose locations.
2/ EME has a deal on wells with TCEi conocophilips, and cant even name the true well names.
3/ the well was named suagrloaf 1 the AMI was named after the well.

the play is 3 zones of high matrix porosity overpressurised chalks.

ZONE 1

its called sugarkane, its named by conocphillips whom discovered it, its officially named in the rrc.

ZONE 2

unnamed potentially equal or better size to zone 1

ZONE 3

unnamed, recently (this week) put on flow test at SL1. potentially equal or better to suagrkane ZONE 1..


We have rights to all zones all regions all depths in the 20,000 acres.

this is from the UK,, froma guy called ed.. he is explainignthe wells from EME perspective, JV-3 is baker horizontal..

[FONT='Tahoma','sans-serif']Hi Saf,

They may have stopped short as they encountered a change in lithology or perhaps zone 1-3 were slightly higher in Kennedy-1, impossible to say without the logs. Either way SL-1 has produced from zone 3. I had written that one off. Gas and condensate is positive. I reckon the wellbore reservoir interface is damaged from the previous failed frac attempt giving the poor flows at this point. Kennedy will be the real tester of this zone. If the reservoir is highly compartmentalised then it will be the horizontal well that breaches the compartments in the payable zone and with more communication with the reservoir should come increased premeability and sustainable flows as well as a much bigger pay section exposed to the hole. Carbonates are much more robust than sandstones so horizontals should be easier to complete. We know from previous logs that the main austins are a slight mix of sandstone, but high very % carbonates. Liquids are much more valuable than gas still so the more condensate and higher flows the better for the value to EME.

I reckon it'll all happen from alternative wells, SL-1 was drilled to test the hosston, the Austins were a bonus. They'll probably test zones one and two but do the horizontal testing from Kennedy only. We could be onto a gas and liquids find at block A and B now. Still not convinced by the size and pressures until we get monster well production (possibly JV-1 fingers crossed).

I still reckon that SL-1 is only scratching the surface of possible production potential, at least we know we have a viable reservoir for gas and condensate flow at present, although we still need a long-term test. A horizontal production test well at Kennedy or JV-1 will make or break this one as a big find or only a modest find. Well damage in SL-1 may not be giving the entire picture at present.

JV-3 well with 185ft gas column is good news, ten times above background sounds very good too. I would imagine that it will respond similarly to the other Kunde wells when tested. All looking good all wells coming in gas +ve from the appraisals of Kunde. Its all pointing in the right direction for a big find now with lots more wells to be drilled. We still need those horizontal well test results, sounds like Tom is keen to get those done and dusted too which is a good sign. Plenty more wells to come and plenty of wells to be tested so we are going to be busy (don't forget Bondi in the middle of all this action).

Regards,
Ed.

[/FONT]

OK, who is Saf and a who is Ed and how is that related to anything I have just asked?

'Operational reasons', is this a classified Defence operation?

ADI confirmed to have all rights to 20K acres, but they only own 20% of this? This is not the surrounding 200K acres, correct?

I'm still a little lost. I will go back through the anns to try and make heads and tails of this.

Cheers, kennas

 

[Broadside]

It keeps reminding me of another oiler AKK.

They continually were updating the market saying they have 'encouraging' results and 'excellent potential' and 'new leases with lots of pay', but each time the announcements were disappointing.

Point being, co's like to use these words to keep shareholder interest and the ASX doesnt seem to pull them up on it.

If anything, from what I have seen since holding these (and EKAO) they prefer to take the "glass half empty" route and not hype...this has protected punters from excessive spikes (alright, we got to a dollar but compare the volatility of GDN as how not to announce things to the market)....the fact zone 3 flows (on a vertical well) after seeming a duster 2 weeks ago is testament to the fact they don't "talk it up" without justification.

 

[Agentm]

AM,

OK, who is Saf and a who is Ed and how is that related to anything I have just asked?

'Operational reasons', is this a classified Defence operation?

ADI confirmed to have all rights to 20K acres, but they only own 20% of this? This is not the surrounding 200K acres, correct?

I'm still a little lost. I will go back through the anns to try and make heads and tails of this.

Cheers, kennas

so much interest kennas, will try to help here,

OK, who is Saf and a who is Ed and how is that related to anything I have just asked?

saf and ed post on advfn and other sites, ed is from the oil industry, he comes through with a lot of good insights into the geology and the operations. take it or leasve it i guess..

'Operational reasons', is this a classified Defence operation?

not at all, just a highly secrective play being explored and developed by TCEI, our jvp and conocophillips,

ADI confirmed to have all rights to 20K acres, but they only own 20% of this? This is not the surrounding 200K acres, correct?

correct, the sugarloaf ami that adi is in has rights only to the 20,000 acres..

kennas,, i can assure you as you go through this you will find more questions than answers..

good luck in your journey!!

 

[Sean K]

Thanks K, thats where I was coming from- I keep coming back to look at this mainly due your relentless optimism AgentM
About due for another run to 75c maybe............

Hi jtb,

Not due, IMO, but I would be watching closely for a break up out of this trading range. Descending triangles, as mentioned, are generally bearish, but a break up from these changes the picture. Still, if you were a technical trader this is a low probability set up for an entry before any break.

Having said that, the funnymentals need to be clear, and I am struggling to see the high probability upside right now, considering the information presented.

I do abosolutley agree that O&G ers can change direction VERY quickly (up and down), so that needs to be taken into consideration.

I look forward to some more facts and figures that I can make heads and tails of....

All the best to ADI believers!

 

[Agentm]

It keeps reminding me of another oiler AKK.

They continually were updating the market saying they have 'encouraging' results and 'excellent potential' and 'new leases with lots of pay', but each time the announcements were disappointing.

Point being, co's like to use these words to keep shareholder interest and the ASX doesnt seem to pull them up on it.

i agree

the current optimism shown by the jvp is the first time we have really seen it, and the best we have is encouraging, although Tom from eme was very excited in the baker release of eme's in the uk!

Commenting today, Empyrean director Tom Kelly said - "This is further good news for Empyrean as we now have a total of five wells in the Sugarkane discovery area - two on Block B and three on Block A that have encountered gas whilst drilling. We look forward to the results of testing from each well during what promises to be an exciting testing phase for the company."


i think adi have been very conservative, and i think it stems from alex and also from eric (arq energy) being cautious to not ramp this thing. its unique and different geology, very new territory, so until more is known the jvp are keeping the news flow tight and the share price in a nice little pocket..

as things play out, and if as we all hope the wells come through strong as expected, then they will hype it up i can assure you!

 

[Evangeline]

Gee I hope you're right M....seems all my stocks are going *rse up atm...would be great to get some action here!

 

[resourceboom]

Hi Doc, not sure what a p5 is, did you mean p50 (50% probability)? I believe the kane 600bcfe is a medium-high probability. If we get z1 and z2, gas and condensate could well be above 1TCFE.

True we only have 20% (more like 16% NRI) but when you consider that is around 100BCF for ADI with a mkt cap of around 55M AUD, I think we have plenty of scope for a rerating.

I also have a very small holding in PPP and yes the estimates sound similar, however the gas is 1) onshore (cheaper opex & capex) and 2) in USA, where I believe gas prices are much stronger then in AUS. Of course when testing of Z1 at SL1 as well of Kunde 3, Baker 1 and Kennedy 1 horizontals are done the market will be much more informed, and on success I don't think it would be unreasonable for the sp to be between $1-2 ($1-2 per BCFE).

Having said that of course there are many ways to play an investment in ADI. Some may wait till the bearish chart pattern turns around, some may wait till the fundamentals have been derisked with further testing, some may bag it and not invest at all. But there are also plenty who are invested now in the hope of larger returns who are of the belief that this could well be a great new texas play. Agentm is one of the most confident holders, has done a stack of research, much of which he has shared here. As such an outspoken character he risks being glorified or crucified upon success or failure, and we have already seen posts carrying both of these sentiments.

Ok, so without reading too much more than what's posted here, 600bcf is likely the p5 number for this play. For comparison, PPP, Tap & Apache recently drilled at Maitland and there's the potential for 880bcf there with plenty of upside given they're yet to find the edge of the field.

 

[Agentm]

hey resource..

nice to see your still around. i think your response was extremely precise.. i believe broker expectations i have heard gave the $2+ region as a next stop on the sp. with wells all testing in quick fashion the p10 p50 p90 will start to kick in. With zone 3 suddenly firing up the jvp have a lot more to think about, and zone 2 must be looked at without doubt. I think the days ahead are going to flow with plenty of information. kunde wells are due for testing, baker is steaming ahead, kennedy is due to be cased and fraced. if kunde 2 is in the zone 3 region as i believe, and with the data from Sl1 testing zone 3 right now, the TCEI Conocphillips camp can start to look at the reserve potentials of the zone 3 region as well.. i gather zone 2 will have to be looked at in SL1 once they are satisfied with the flow tests of zone 3..

compared to the news blackout days of the past, we are seeing the early stages of a genuine play developing here, maybe we will hear more on how big this discovery is in the near term.. i think its just around the corner.

cheers

 

[pauldoohan1]

Gday guy's excuse my stupid question but when i look at the announcments for ADI and AUT they are the same I'm assuming this is because they are part owners of the same well's. Why are the share prices for these two companies alway way different. AUT seems to hold more land more wells on the go and a share in the big potential wells that ADI does. Am I missing something here?

 

[sam76]

Gday guy's excuse my stupid question but when i look at the announcments for ADI and AUT they are the same I'm assuming this is because they are part owners of the same well's. Why are the share prices for these two companies alway way different. AUT seems to hold more land more wells on the go and a share in the big potential wells that ADI does. Am I missing something here?

hey mate, Yes AUT has a bigger slice of the pie so to say but the discrepency in price is most likely due to AUT having a lot more shares on issue.

You also have to take into account the recent C raising that finished well under subscribed (85%) meaning that the underwriters (Bell Potter et al) had to take up a lot of script which no doubt will be sold into the next run.