ADI - Adelphi Energy

[tomcat]

I'm still trying to decipher the latest drilling report. I have re read all the reports from start to now , and it is still not clear to me if they are talking about the 1,500 ft lateral pilot hole (ie 4600ft to 6000ft) or from around the 14,000 ft measured to 16325 ft measured mark.

at 13,835 ft measured (1000 to 1300 units , 17/9/08)
at 15,239 ft measured (2000 units , 50ft flares , 1/10/08)
at 16,178 ft measured (excess of 2000 units , 8/10/08)
at 16,325 ft measured or 4600ft lateral (2000 units , 15/10/08)

are we talking about the 1,500 ft inside these measured ranges or not.

The comparison to dual 6000 ft laterals only seems to be an indication of how Kowalik is with respect to drilling a shorter lateral and single one at that . What is it ?????

Hi Seasprite,

I believe they are saying that the 1500ft is the very last section of the Horizontal (Lateral) section of the well.If you have a look at the release they state the following:

We agree with the Operator’s interpretation that whilst approximately 4,600 feet of horizontal section was drilled in this well, it was approximately the last 1,500 feet that was drilled at a specific horizon within the upper chalk which should be pursued in subsequent wells drilled in this area of the field. This particular horizon demonstrated the gas flows and flares during drilling which are an indicator of higher permeability, usually through natural fracturing. Accordingly completion operations have focused on that 1,500 foot section.

So they found a horizon where they essentially hit the 'Sweet spot' This can also be seen from their weekly updates as below:


measured depth 15239 (Which was about 400 ft into the last 1500ft drilled)

Since the last report the well has continued to produce gas intermittently while drilling, with larger flares observed following periods of shut in when tripping to change components of the drilling assembly. The surface gas readings have averaged 2,000 units during this section.More significant gas flares including a 50 foot flare were observed while drilling the horizontal section prior to pulling out of hole.

Here we have our first indication that the readings hit over 2000 units and they encountered more significant gas flares (the first 50 foot flare was seen)

AUT also point out:

We consider it worth comparing the current production at Kowalik #1H to our analysis of recent wells drilled in analogue Austin Chalk formation in Polk and Tyler Counties in East Texas. There development operations are advanced and upwards of 100 development wells have been drilled, the majority now being dual 6,000’ lateral sections (i.e. up to 12,000’ of exposure to an established and well known reservoir). In relative terms applying a comparative rate per 1,000’ of horizontal section, we consider that the Kowalik #1H initial production represents a mid-level producer and is consistent with and within the range of productivity levels to be expected.

My take on this statement is that if they can drill a 6000ft lateral in the same horizon as the last 1500ft of Kowalik then they will have a decent producing well.

High risk / High reward, patience is hard to come by in this market and I have been in this stock for a loooong time. So very biased towards a successful outcome, but I have always been happy with the big picture and Kowalik has shown that this play extends through our acreage which is what ADI was getting at:


The present production rate of approximately 2.8 million cubic feet of gas equivalent per day is significant to the extent that it expands the area of gas and condensate productivity. Kowalik -1H is located approximately 5 km from our producing Kennedy - 1H well and 9 km from announced recent production in adjacent acreage.

So we have a lot of acreage of a play that extends between Kowalik and the Kunde / Baker wells...they just need to get into the right horizon and drill away...easier said than done it would seem, but I remain in for a while yet.

With AWE as a major shareholder of ADI they will have available all the technical info ADI is receiving. Doubt they will let their investment in ADI fall by the wayside if they think this play is the real deal...time will tell

 

[seasprite]

Thanks for that tomcat, you could have read that report in one of two ways , that's why I decided to go back and re read the whole lot , I suppose a good indication of AWE's commitment would be the taking up of the remaining rights issue possibly . But I'm only speculating , as you do .

 

[Hatchy]

Has anyone else picked up on this and can interpret whether it's a mistake or whether we have gas production higher than initially reported, Why does it say 884,000 then talk about 2.8mil cub feet?

Quote from announcement:

During the 24 hour period prior to this time the well produced
approximately 884,000 cubic feet of gas, 190 barrels of oil and 30 barrels of water. The water production is considered to be predominantly fluids used in the recent cleanout operation.

The present production rate of approximately 2.8 million cubic feet of gas equivalent per day is significant to the extent that it expands the area of gas and condensate productivity.

 

[seasprite]

hi hatchy , it's barrels of oil equivalent refer to
http://www.eppo.go.th/ref/UNIT-OIL.html for conversion factor

 

[seasprite]

Has anyone else picked up on this and can interpret whether it's a mistake or whether we have gas production higher than initially reported, Why does it say 884,000 then talk about 2.8mil cub feet?

Quote from announcement:

During the 24 hour period prior to this time the well produced
approximately 884,000 cubic feet of gas, 190 barrels of oil and 30 barrels of water. The water production is considered to be predominantly fluids used in the recent cleanout operation.

The present production rate of approximately 2.8 million cubic feet of gas equivalent per day is significant to the extent that it expands the area of gas and condensate productivity.

I see what you mean hatchy . Sounds like they are talking about flow rates prior to clean and then the after figure is given . Who knows . These reports are written to confuse .

 

[estseon]

In my opinion they MUST frac now, fraccing is a lot cheaper then drilling, and the cost benefit, even if it *only* gets to 1000bpd is well worth it. Then the income can help pay off the drilling.

They have made the point that they are in a different area of the field. Weston is further south and someone has posted (cannot remember who or where) that it is more likely to be an analogue of the Baker wells (Block A). There was also mention that the zone that Kowalik was drilling into was about 40% thicker than encountered in other wells. This appears to add up to there being a different formation in the north, so they need to learn about it. Now, in my view, is not the time to spend money that they might need for wells 3 & 4 in pursuit of knowledge. If they drill, say, Gonzales after Weston, they will hopefully know now what they are targeting. However, spending money designing a fracc of the first 3,000 ft of Kowalik may not be the best way forward at this time. Besides which, they will have to wait for the well to clean up. By that time, they may be ready to kick off the lateral for Weston. Frankly, I'd rather that they keep their focus on that. But, that is a personal view.

 

[maverick11]

I think EKA and EME will feel a bit of financial pain soon. AUT currently has the most cash but ADI is backed by AWE. I have heard around the place that there is the posibility AWE will top up ADI down the track. That would also be my persoal assumption.

I really want to see plans for an acid wash/frac at Kowalik. I know they have left the possibility vaguely open, but I want to see something concrete for once. Presently Kowalik and Kennedy are sub economic. When they know the frac's work, why not go after one at Kowalik?? Hopefully they will once it cleans up, meanwhile all momentum in the sp has been lost. It was looking to break out by the end of last week!! Good to see someone soak them up today though..

 

[seasprite]

Good to see someone soak them up today though..

ANZ Nominees Limited (Cash Income A/C) have been picking up dribbs & drabs.


1,018,123 (increase to)
1,033,693 (increase to)
1,101,193 (increase to)
1,136,761 (as at 4/11/08).

 

[nick2fish]

I think EKA and EM will feel a bit of financial pain soon. AUTO currently has the most cash but ADI is backed by AWE. I have heard around the place that there is the possibility AWE will top up ADI down the track. That would also be my personal assumption..

Yea mine too Marverick , Awe got plenty of cash and in need of exploration assets which ADI has plus producing assets which maybe undervalued.

A 30% shareholding already and maybe a bigger or more sustainable appetite to risk than ARQ's

Cheers

 

[estseon]

EME's basic interest is 6% (cost sharing 7.5%). It has funded an additional 20% of costs for an additional 12%WI under a special deal with TCEI for a limited number of wells but can pull out at any time for new wells. That's the understanding, anyway. There are, perhaps, 5 more wells (after Weston) to which this special arrangement would apply (unless the deal is renewed). In view of the fact that the JVPs are looking at dozens of wells over the next few years, the weighted average participation from the current deal will wane to the point where there is a balance between major dilution through share issues at the present time to keep funding this substantial cost share and the benefit of the increased participation for a limited number of wells.

Looking at AUT's recent presentation, one gets the impression that they could drill anything up to 30 wells over the next 3 years. EME's averaged WI would be 8% instead of 6% and that assumes that all wells perform equally. The cost would be funding the equivalent of one entire well in addition to its basic share and that could be by April next year because of prepayment.

There have been many figures bandied around for well costs. Let's say GBP5m. To break even on WI/share EME taking that 3 year view, would have to issue no more than 20 million shares. To raise £5m, they would have to be issued at 25p or more. Beyond 3 years, EME's WI will converge towards 6% but the dilution from the increased number of shares will remain.

If Weston is good and the SP rebounds so that they can issue at 50p or more, the case is stronger for continuing with the special deal.

If EME ducks out and just moves forward with the basic WI, TCEI will have to find the additional cash.

 

[Agentm]

I see what you mean hatchy . Sounds like they are talking about flow rates prior to clean and then the after figure is given . Who knows . These reports are written to confuse .

its not confusing or designed to confuse, what the jvp are doing is adding both the gas and oil into one quations, they use the term "equivalent". so you have your oil and gas rates which you can either do the sums of on their own, or you have the daily gas "equivalent" rate which only needs one calculation to get your daily revenue figures off.




some would be disappointed in the kowalik result, others very jubilant. i know what camp i sit in.. it remains a long term investment for me, and there are some very critical months ahead for all oil explorers.. i view this in the way that was summed up beautifully on another forum by a guy i know, as far as the oil industry goes, is very knowledgeable in it. his little addition and a view into his thoughts struck home to me, as its really how this play has to be viewed, its a big picture view, and as someone said to me today, a lot of "ifs" are involved, but thats the nature of high risk high reward investing.. lets see what you think..

sandlion wrote this.

Ladies and Gents....

Expectation is the death of most explorers...it's not a management issue at all, it's not like they are sitting in the weekly planning meeting throwing darts at a map. It's obvious that this is a long play, and to be fair the results are improving each hit. We all want the fast buck, but in a huge new tenement you have too proceed by elimination with the information on hand. Chalks are NOT standard anticline formations, the factors involved are many and diverse and only a continued program of narrowing the circle will yield the true results.

You should see how many cruddy wells are drilled for CSG which are low yield but not deemed failure. Information is power.

I hold and will continue to do so, it's not a stock for the quick buck is all but neither is it a 'stick a hole in the ground' operation like GDN or EGO. It's a professional JV with boxes to tick.

Regardless, heres hoping for good results for all...I see my guesstimates flows weren't too shabby after all

 

[seasprite]

I put the figures into the rigzone and santos conversion calculator yesterday and they didn't match , you might have to enlighten us on how they come up with the total figure .

I'm in for the long haul as well and are movin on to Weston 1H . The important thing to me was flow rates are commercial and cash for the jv's is generated in the interim until they re visit Kowalik .

 

[blues]

I have spoken to 2 of the jvp's in the last day and they both are saying pretty similar things. They both said that the flow rates at Kowalik are disappointing at this stage based on the size and no. of flares they had while drilling and it will take time to work out what they can do to improve it. They also said they are now very confident the whole area is gas saturated and it is just trying to work out how to get it out of the ground commercially. Both jvps talked about being on a massive learning curve but are more confident than ever but said it will just take time. How much time and money is the question!

Cheers.

 

[Hatchy]

What I fail to understand is that we have a falling, if not tanking share price and yet what remains is that we have a field that has been shown to produce.

This market doesn't make sense.

Would all those selling out please leave and not come back.

 

[Lucky_Country]

I think the fact that the share price is not tanking is testament to the fact alot are confident they have got something down there.

The next 3 well will define the resource and increase productivity.

2009 should be a stella year with more than 1 rig drilling in a fiels that they have learnt so much about.Throw in Yemen and developments surrounding Indonesia harry hindsight may be appearing in 12 months time !

Every investment has its risk but I feel they are diminishing on the Texas acerage

 

[fflintoff]

Oil Barrel 13 Nov - Empyrean Brings Out News Of Two New Wells On Its Flagship Sugarlo

Empyrean Brings Out News Of Two New Wells On Its Flagship Sugarloaf Project In Texas


It is becoming a little tricky keeping track of Empyrean Energy which is listed on London’s AIM and has assets in the US and Germany. We reported a month ago about two wells on its flagship Sugarloaf project in Texas which has two blocks - A and B - and is also referred to as the Sugarkane Gas and Condensate Field. Now we have news of two new wells.

Empyrean is one of a group of companies which grew rapidly in the early 2000s that sought their fortune in the US by revisiting lots of small and medium sized discoveries of hydrocarbons made by large companies which were never exploited because of low prices when the finds were made. The high oil and gas prices prevailing until recently changed that.

Empyrean started out with the Margarita project on the Texas Gulf Coast. The company drilled six shallow wells, was successful with three of them and achieved cash flow from modest production. It then decided, while keeping Margarita alive, to go for bigger targets with the Sugarloaf project. It established a position of a working interest of 7.5 per cent in Block A and interests ranging from 6 to 18 per cent in Block B.

This acreage has always been considered highly prospective but the reservoirs can be difficult, particularly the Cretaceous Austin Chalk. The oil and gas can be “tight”. It is held in crevices and fractures, and requires new techniques like horizontal drilling, underbalanced drilling and fracture stimulation to fully exploit it.

Last April the company’s shares surged 90 per cent on news that a well on the Sugarloaf tested commercial quantities of gas and condensate. (The shares have drifted up and down since.) At the time, this was the first of a number of discoveries to test the project area with the TCEI JV Block A-3 well flowing at 1.9 million cubic feet of gas a day and over 460 barrels of condensate per day equivalent to 6.5 million cubic feet equivalent a day. (The company subsequently talked of even better flow rates.) The well was open hole tested in the upper part of the Cretaceous Austin Chalk Formation. Okay, Empyrean only has 7.5 per cent of this but considering that its take from the Margarita wells was of the order of 120,000 cubic feet a day it represented a major step up and was obviously worth pursuing.

Last month we commented on news of the Kennedy #1 well on Block B and the Kowalik #2 well on Block A. Here it gets a bit confusing because there was at the time a Kowalik #1H extant on Block A. We have to start thinking of zones here.

Empyrean said the operator Texas Crude Energy (TCEI) had advised that commercial production commenced on the Kennedy #1H well at initial rates of 0.2 million cubic feet of gas per day and 60 barrels of condensate on October 2. This initial Kennedy production came from a fracture stimulated zone of approximately 600 feet in the bottom of the 4,000 feet horizontal section of the well drilled through a lower stratigraphic level to that being drilled at Kowalik #1H. This represented the first production from this level within the Sugarloaf field.

Commenting on the Kennedy news Empyrean director Tom Kelly said: “This first commercial production from Kennedy in the middle pay zone is very exciting as it confirms the middle pay zone as being commercially productive. The middle zone has the potential to hold greater reserves than the upper zone. We think there is also vast room for improvement in flow rates from this zone.” The company also said around the same time that TCEI also reported that on October 8 the Kowalik #2H well on Block A of Sugarkane had reached a measured depth of 16,178 feet which equates to approximately 4,350 feet of measured gas readings in excess of 2,000 units.

Are you still with me? Good. The latest release from Empyrean now gives us new information on the Kowalik #1 on Block B. This well flowed gas and condensate sales to line during test. TCEI advised that at 6am on November 3, the Kowalik 1H well flowed un-stimulated sales to test. During the 24 hour period from 6am the well produced 937,000 cubic feet of gas, 321 barrels of oil and 14 barrels of water. The water production is considered to be predominantly drilling ad completion fluids. The operator is now planning to inject the well with mud-cleanout treatment to enhance the flow and further clean the formation. Empyrean has a working interest of 18 per cent in this well.
Meanwhile, back on Block A Empyrean has been advised that the TCEI JV Block A-5 well, a new well, has reached total depth of approximately 12,470 feet. Electric logs and casing have been run. The logs indicate the well intersected the upper, middle and lower pay zones of the Austin Chalk and possibly the Eagleford Shale across a 220 feet gross interval.

What all this goes to say is that Empyrean is building quite a stream of gas and liquids output which should begin to translate into cash flow. It is a little soon to be precise about the level of cash flow, but some back of the envelop calculations go like this.
The Sugarloaf is a 44 well development. On the data available so far, the broker Blue Oar reckons the recoverable amount of hydrocarbons net to Empyrean is 32 billion cfe.

Assume a ten year life of the field (this may not be correct) and divide by the number of days in the year and you get output in the region of 8 million cfe/d. These are crude figures but add in some more guesstimates and assume a price of US$10 per 1000 cubic feet for the gas ( again this might be dubious), then the cash flow begins to look very appealing for a small company; something like US$ 80,000 a day or over US$2.4 million a month. But these are gross figures, very rough estimates and with this kind of acreage you are very much in the “many a slip between cup and lip territory”.

 

[Agentm]

Sugarloaf Update Block A (Empyrean Energy)

RNS Number : 0713I
Empyrean Energy PLC
13 November 2008


13 November 2008
Empyrean Energy PLC
"Empyrean" or the "Company"; Ticker: (EME))
Sugarloaf Prospect, ("Sugarloaf"), Block A, Texas USA KUNDE 3


* TCEI JV Block A-1 kunde 3 well production facility and optimization complete
* Well is currently flowing gas and condensate to sales



Empyrean Energy Plc, the oil and gas explorer and producer with assets in Germany and the USA provides the following update on operations on Block A which is part of the Sugarkane Gas and Condensate Field:

TCEI JV Block A-1 Well (Kunde 3)


Empyrean has been advised by Texas Crude Energy Inc ("TCEI") that the TCEI JV Block A-1 well (kunde 3) is flowing to sales after having had a
production facility built and optimized.

The reported 7 day average stabilized rate was approximately 200 barrels of oil per day and 650,000 cubic feet of gas per day. This is approximately equivalent to 2.6 million cubic feet of gas equivalent per day.

The well is flowing from a 900 feet interval that had an acid treatment during flow testing. It is the intention of the operator to fracture stimulate this 900 feet of perforations and then add a further 1800 feet to the completion interval for a total of 2700 feet. The additional 1800 feet will also be fracture stimulated if the initial stimulation is successful.

It is expected that the fracture stimulation operations will commence in December 2008 and that the well will continue flowing to sales until then.

Commenting today, Executive Director Tom Kelly said "This first Block A well flowing to sales is a significant step for the company and paves the way for the A-3 and A-4 wells to be connected to sales now that the operator has
finalized optimization of the production facility at the A-1 well. This early work will save time and allow future wells to have production facilities ordered in advance of completion to ultimately allow wells to be brought on to production as soon as possible after drilling."


So this is how i read it

Kunde 3 has 900 feet of the well in the zone thus far.

The have done an acid treatment and is flowing off the perforations.

In DEC 2008 the operator will be fracture stimulated over 900 feet of the well, and then drill the well a further 1800 feet.

if the 1800 feet is good they will fracture stimulate that also..

current flow rates of the well off the perferated section with acid treatment:

The reported 7 day average stabilized rate was approximately 200 barrels of oil per day and 650,000 cubic feet of gas per day. This is approximately equivalent to 2.6 million cubic feet of gas equivalent per day.


Kowalik flow rates of 1500 feet of well unstumilated and open hole with no fracture stimulation as yet..


at 6am on 11 November 2008, the Kowalik-1H well was flowing un-stimulated to sales on test. During the 24 hour period to 6am the well produced 884,000 cubic feet of gas, 190 barrels of oil and 30 barrels of water.

The water production is considered to be predominantly fluids used in the
recent cleanout operation. This combined rate is approximately equivalent to
2.8 million cubic feet equivalent gas per day.


conocophillips well olsen baker has 2 permits in for the horizontal completion of that well

 

[seasprite]

Seismic survey over south bengara II block

 

[Agentm]

14 November 2008

Via ASX Online

ADELPHI ACQUIRES INDONESIAN PRODUCTION SHARING CONTRACT

Adelphi Energy Limited is pleased to announce that it has acquired a majority interest in a new production sharing contract ("PSC") in Indonesia.

Pursuant to a joint bid agreement ("JBA") with Continental Energy Corporation and GeoPetro Resources Company, the group's joint venture company, ACG (South Bengara-II) Pte. Ltd. ("ACG"), signed a new PSC for the South Bengara-II block. Adelphi owns a 50.002% interest in ACG and its new PSC.

The South Bengara-II PSC was one of several new PSC's signed by the Minister of Mines and Energy at a ceremony in Jakarta yesterday. The award is a result of ACG's winning
bid submitted in the August 2008 international bid round held by the Indonesian ministry of oil and gas.

ACG, in accordance with the terms of its bid and the PSC, is obliged to pay a signing bonus of US$1 million and complete a work program during the first three PSC contract
years which includes conducting geological and geophysical field surveys and studies, acquiring at least 100 line kilometres of 2D seismic,and drilling one exploration well for a total minimum expenditure of US$7,850,000.

In accordance with the provisions of the JBA, Adelphi will be free carried through the first US$4 million of gross expenditure on this block including the initial $1 million signing bonus.

This is expected to cover the first two years of the PSC term.The South Bengara-II Block encompasses an area of 5,257 square kilometres and lies onshore on the northeast coast of the island of Borneo in the Indonesian province of East Kalimantan. The block contains an existing gas accumulation, several oil and gas seeps,and large prospects and leads. It also lies adjacent to and immediately south of the Bengara-II Block which is partly owned by Continental and GeoPetro and in which a drilling program revealed encouraging results last year.

Continental will have management rights over ACG’s operations during the initial exploration phase of the PSC given the synergies with its existing Indonesian interests and its fully staffed Jakarta office with experienced technical and commercial personnel.

Commenting on the award, Chris Hodge, Adelphi’s Managing Director said that “we are delighted to have signed this PSC with the Government of the Republic of Indonesia and we look forward to working closely with our new partners to immediately commence exploration work on this prospective acreage.

Importantly, Adelphi has no cost exposure towards this PSC for the initial years and has retained a significant equity interest which provides us with options to fund future drilling expenditures.”

 

[maverick11]

From Petroleum News today..

Aussie oilies in the red

WITH oil prices hitting their lowest in 22 months and investor confidence at similar lows,
it comes as no surprise that the majority of Australian oilies are wallowing in the red.

Despite a stellar result from the Kowalik-1H well onshore Texas, the Australian partners in
the Sugarloaf joint venture were all victims of the general market malaise.

Kowalik-1H is flowing about 2.5 million cubic feet of gas equivalent with the operator,
Texas Crude Energy, planning to produce the well for some time while considering further
operations to test the potential for increasing production.

The JV also plans to establish production in upper Austin Chalk before pursuing the
potential in the deeper zones.

The Australian partners in the Sugarloaf JV are Aurora Oil & Gas (20%), Adelphi Energy (20%)
and Eureka Energy (12.5%).

AUT closed at 25c on Thursday, down 5.7% for the week and 13.8% for the month, ADI
closed at 22c, down 20% for the week and the month, while EKA was down 43.8% for
the week and 30.8% for the month to 9c.

Red Fork Energy managed to break even on the exchange with the announcement of a
gas discovery at its West 2-2 well intersecting the target Woodford Shale zone in East
Oklahoma.

The well has been cased and cemented and is awaiting an initial production test of the
shale, and has strong gas shows according to sample analysis and log information.

Red Fork now has four production wells drilled, cased, cemented and awaiting
production tests at its 100%-owned East Oklahoma project and will start testing soon.

RFE closed at 25c on Thursday, unchanged for the week though still down 13.8% for the
month.

Oddly, Pryme Oil & Gas, which plugged and abandoned the Indigo Minerals 27-1 well at
its Turner Bayou 3D project as a dry hole, was also unchanged for the week.
PYM closed at 10c, down 9.1% for the month.