ADI - Adelphi Energy

[seasprite]

I would be very interested to see how they attack Weston 1H , now that the jvs have had a big learning curve . I can only picture in my mind how Kowalik was drilled and from that I imagine Weston may not go as deep , possibly 10,500 ft mark vertically and the inclination will not be as steep as 60 degrees and reduced to maybe 30-40 degrees to hit the transition point (sweet spot) . I know it's all guess work but it kills time and gets the old brain in action. Any other ideas out there besides "we will just have to wait and see".

 

[Agentm]

weston is the second well to be drilled byTCEi in the same fashion.

kennedy had no pilot hole, so they went in and missed the formation by quite some distance.. the decision to guess where the formation was based on sugarloaf near by was a disaster imho, and you notice the jvp is not adopting that approach in the current wells. maybe one day they can get so good at drilling they dont need the vertical pilot hole any more, but i doubt if any change will happen whilst they drill for the coming few years.

Kowalik had a pilot hole, which was wirelined, and then the jvp decided on which formation is the target. and then sidetrack the well and commenced a lateral.

Weston will adopt the same process, it will drill a pilot hole, wireline it, and then drill a lateral and target a specific region and try to keep the lateral in that zone.

imho all three wells are drilling different targets.. kowalik would have followed the kunde 1 wells trend, and weston imho will be chasing the baker play.. and imho the kennedy well is not in the chalks at all..

 

[Hatchy]

Ok,
Hands up who's worried where the share price is headed?

I'm included in that pack.

I went for all I could plus more in the issue, now i've seen near on a 50% decline since that, and lacklustre drilling.

I thought the JV would have more brains behind what they're doing. They make a stupid mistake of going too deep on kennedy - they drill apparently correctly with loads of flares in Kowalik and yet get nothing, and now we're faced with them targeting yet another area of chalk. It's not as if they're learning off Kowalik either - agentm correct me if i'm wrong, but isn't it a different chalk structure being targeted with Weston?

So the only lesson the JV has learnt is that we need a pilot hole - but what about what really matters in getting the barrels out of the ground?

It took years to get CSG out of the ground in a profitable way here in QLD, we could be in for the same with these Chalks over in Texas I think - and that's at a time when Cash is King and money is getting tighter day by day, not when people could throw money into a project and not care too much like 3 years ago.

It's not as if they should need to learn to drill a pilot hole. Are they pro's. Surely they should be focussing on getting the brain squad in to work out a way to effectively get what's down there out.

Hold on tight boys, you're gonna get scared with this ride!

 

[Agentm]

Ok,
Hands up who's worried where the share price is headed?

I'm included in that pack.

I went for all I could plus more in the issue, now i've seen near on a 50% decline since that, and lacklustre drilling.

I thought the JV would have more brains behind what they're doing. They make a stupid mistake of going too deep on kennedy - they drill apparently correctly with loads of flares in Kowalik and yet get nothing, and now we're faced with them targeting yet another area of chalk. It's not as if they're learning off Kowalik either - agentm correct me if i'm wrong, but isn't it a different chalk structure being targeted with Weston?

So the only lesson the JV has learnt is that we need a pilot hole - but what about what really matters in getting the barrels out of the ground?

It took years to get CSG out of the ground in a profitable way here in QLD, we could be in for the same with these Chalks over in Texas I think - and that's at a time when Cash is King and money is getting tighter day by day, not when people could throw money into a project like 3 years ago.

Hold on tight boys, you're gonna get scared with this ride!

its all matter of perspective imho..

i think kennedy is fine myself, and i agree with the jvp to frac it thoroughly in the future..

easy to have hindsight and be critical of operators, but with oil wells, you have to accept things go wrong, weston can have any of a number of things go wrong and you can lose the well..

kowalik has about 1500 feet of connectivity with a frac operation or acid job in the future. again its fine, it shows me two zones are definately active and have hydrocarbons..

now weston imho is chasing the baker play, and i am not convinced kowalik and baker are the same plays myself, and its only my own theory hatchy, its not been announced that way at all from what i see.

the drilling goes where the drilling goes, things happen all the time, COP have sidetracked kunde 3 twice and baker 1 twice and could not complete either lateral fully.. kowalik has at least achieved a long lateral completion and found 1500 foot of formation thats producing. i am excited about it, but others are not.. kunde 3 only has 900 foot over a similar length, cost easily two to three times kowalik and if you understand where the well is, and whats been done to it, i think kunde 3 is worth every cent invested in it, and concoco have got ambitions to frac it next month, and if that works, drill out the end and complete a further 1500 feet of well..

so what you need to appreciate hatchy is its very difficult, very unsure and its not like drilling a straight line, that never happens, and finding what your after, and staying in that formation is one hell of a skill indeed..

as the jvp say, each completion teaches them more, weston has the benefit of the other completions to utilise.

no guarantees here hatchy, just good old fashioned high risk high reward exploration..

imho you need to lower the expectations of exploration wells and understand how fortunate the jvp is to have kenendy still on a future plan, despite the formation really not responding to fracture stimulation as yet, but imho its not over yet, only a very small part oft the well has been experimented on thus far. and kowlik in early days and still likely to be worked further, no P&A here on those two wells..

the jvp have proven hydrocarbons in two regions now, time to get smart and work these wells further, 1500 feet in kowalik to work with and an entire lateral in kennedy to work with..

early days, real early days hatchy..

 

[Hatchy]

now weston imho is chasing the baker play, and i am not convinced kowalik and baker are the same plays myself, and its only my own theory hatchy, its not been announced that way at all from what i see.

Hi AgentM,
I think that it has been announced that way, I do remember reading something about it - not from ADI though, one of the other JVP partners.

I agree that I need to lower my expectations.

Would you agree that if they had the cash, they should have the smartest engineers in to wisper to the rocks?

Hatchy

 

[Agentm]

from what i hear about operationally, i have no doubt TCEI and the jvp is on the right track, but others may not.. and imho they are using whatever skills they can muster that have been in the chalks.. as any operator would.

this is extremely interesting geology, much is being learned each well, all you have is a tiny hole 8 inches wide miles underground.. and with that you have to try and figure it all out.

petrohawk have, meridian has, pioneer is about to and is drilling now in dewitt county, geosouthern has it figured, anadarko, TCEI, our jvp,

did i mention conocophillisp has the cote d'or figured out, right now two rigs are drilling in dewitt, north of yorktown, and pioneer is also there at yorktown chasing the same play right this second..

this play extends right across texas, imho BCC may have it also.. and a number of other players are drilling in the region and have been doing their own research over the past few years,

thats what i see, one after the other saying the same thing, eagleford feeding the chalks!!!

dyor and imho

 

[Agentm]

19 November 2008
Company Announcements Platform
Australian Stock Exchange Limited
Exchange Centre
20 Bond Street
SYDNEY NSW 2000
Via ASX Online

UPDATE ON OPERATIONS AT THE SUGARLOAF AMI

Adelphi Energy (Adelphi) is pleased to provide the market with an update on operations within the Sugarloaf AMI.

Weston -1H

Adelphi has been advised by the operator, Texas Crude Energy Inc (TCEI) that as at 6am Texas time on 18 November the Weston -1H well was drilling ahead at a depth of 10,527 feet.

The well is targeting the upper chalk interval that has been reported to have successfully produced gas and condensate in three wells in the adjacent acreage and is currently on production at the Kowalik -1H well.
Adelphi has a 20% working interest in the Sugarloaf AMI. Other ASX listed participants in the Sugarloaf AMI and their respective working interests are:

Aurora Oil and Gas Limited 20%
Eureka Energy Limited 12.5%


pilot hole is pretty close now..

 

[hashertu]

Agentm. Thanks for your last response to one of my questions. 100 character minimum message precluded a short reply.
Do you think there is any significance attached to Weston pilot hole is going to 12550 feet whereas Kowalik went to 11970 feet?
Do you know if Kennedy production facility has been installed?
TIA

 

[fflintoff]

Agentm. Thanks for your last response to one of my questions. 100 character minimum message precluded a short reply.
Do you think there is any significance attached to Weston pilot hole is going to 12550 feet whereas Kowalik went to 11970 feet?
Do you know if Kennedy production facility has been installed?
TIA

From AUT ´s weekly reviews:-

“The Operator has installed a production facility and the well has now been tied to a nearby gas transmission line and commenced production. “

 

[Agentm]

hey hash..

production facility at kennedy is in place, as is a very good one at kowalik.

the sugarloaf well found the chalks at 11900. we know that as we all have the kslogs on sugarloaf. and the austin chalks are not 600 feet deep, they were 300 so my conclusion on weston is that it is drilling the chalks and the eagleford below it.

all imho and dyor

 

[woltage]

My concern is cash reserves. They have 4.5 mill cash with Weston paid for (I think?). Are they able to fund further exploration wells, fracs etc from 4.5 mill plus revenue from Kowalik and Kennedy if Weston fails?

 

[gdaf]

should ask AWE - they have well over 250m and own 30% of ADI.

The one hundred character limit is frustrating yes. But blah di blah di da, the stock market is moving into one of its historically cheapest times compared to earnings blahdi blah

 

[blues]

Good presentation from AUT today at their AGM. It is well worth a read for all ADI supporters.

Cheers.

 

[Agentm]

something tells me that 2009 is going to be a very busy year for some people in karnes county..

a company that prepares drill sites for oil companies has been busy setting up in karnes county, its not unusual for a company to set up a site to store equipment, but 57 acres is sure a huge site for an operator.

i know that last year all drilling in karnes county was about 58 permits put in for all operators throughout karnes county.

this contractor is gearing up for over 200 sites that they are aware of coming up that is in their immediate scope of works..

the conocophillips operator is active again in karnes county right now,, they only have one drill site in karnes, that the bordovsky site. its got a workover rig on it.. after a long sleep there the well is about to have some work done to it.. i'll let you know if anything else arrives on that site soon.,,

apparently anything east of bordovsky is being heavily worked for lease opportunities right now..

as much as it appears to be all quiet on the western front, with no rigs in live oak at all for COP, they have plenty of rigs in dewitt county drilling on trend with the sugarkane.

i picked up 3 wells that pioneer have that are in the eagleford and producing in de witt and in lavaca.. and permits for a lot of wells that will follow suit,, i picked up a very old well that was a P&A .. recently it had the plugs drilled out and is being looked over by an exploration company. that well was a vertical and did intersect all the formations everyone is hot about right now... i noticed that pioneer like the old fred and barney and have named the cretacious/eagleford play as flintstone.. and some wells in their stingray and sawfish clusters in dewitt county are definitely in the eagleford.

looking at the logs for sugarloaf on the rrc, it announced the formation picks as austin 11982 and edward 12228.. in kennedy their completion report for the last fracture stimulation says the TVD (total vertical depth) is 12332

our jvp says the kennedy well is in the middle zone, and kowalik in the top zone.. it say to me the top zone is chalks, and the middle is eagleford..

so whats the bottom zone then..

 

[Sunburnt Land]

Would anyone care to place a value that AWE would be prepared to pay for ADI in the event of a takeover?

Current market cap of ADI is just over $19m (at the current $0.16 share price). Bear in mind AWE already owns about 30% of ADI.

IMO, ADI would be a nice little bolt-on acquisition for the cashed-up AWE.

 

[Hatchy]

In the current market, companies will be looking to snap up bargains.
I'd be inclined to say it wouldn't fly for less than 35c.

Sunburnt Land - This is the last thing we want though. Sure maybe in a years time when we've proven asset bases and are pumping out oil faster than we can cart it away. Not now though. I got stung with QGC - they'd be $20 in a few years if they weren't taken over.

I think AWE's 30% is probably best thought of as security in troubled times, rather than a take over nudge bar.

 

[blues]

Any comments on ADI's AGM presentation? I found it quite a down beat and disappointing presentation. Looks like the jvp has money problems and will be interesting to see how this plays out. Perhaps they will all need to farmout a percentage of their holdings to continue here. Lets hope Weston is a ripper.
Interesting comment about "farming out or selling assets to recapitalize our balance sheet".

 

[Agentm]

the presentation was far more informative than the other jvp's, it tells a good story and its also telling the holders that they are aware of the economics and are reacting to it.

i dont agree it was downbeat, a dose of reality is not downbeat but to me is just what you need in these times, sure the potential upside is always fantastic, but you need to manage through these times and be as efficient and clever as you can be.

yemen is coming through in no time, with the results of the 3d also to be released in the near future i think.. and weston is closer to a lateral than many may believe..

taking a breather and fixing wells up that you have drilled is a very good road to take, after 90 days you can then reevaluate again.. farming out is not unexpected at all to me.. a few% is neither here nor there if the upside of eagleford becomes evident.. dont forget the other laterals that conocophillips have drilled are all pretty deep imho, and i think they have not forgotten to check the eagleford out in their exploration throughout colorado, dewitt, karnes and liveoak.. and we know what the likes of petrohawk and pioneer have said, they have already got eagleford wells on the go also..

my view is that this play 2 years ago was never talked about, all of a sudden all the operators large and small are talking about it.. the eagleford is worth remembering as being a feed to the chalks, it says to me that should the chalks be productive then theres really a good chance the
eagleford is also on your agenda..

Pioneer Natural Resources Q3 2008 Earnings Call Transcript

5 Nov 2008

“Speaking of Edwards, we are really speaking of South Texas. We have another slide in here that Scott alluded to. Our interests in the Eagle Ford shale and that shown on slide 14. I thought it would make sense to discuss our interest in the Eagle Ford shale, we really have never discussed this before, but in light of the Petrohawk discovery it seems to make sense. We have about 15,000 acres it turns out just north of the Petrohawk discovery, which is in La Salle County, as shown on the slide. But really, the play is a lot more extensive than that and really underlies all of our other Edwards related acreage as you go northeast from their discovery through the entire trend. And of course, we have a lot of data on the trend. We have, of course, 150 wells or so in our 310,000 acre lease position that you can see in the yellow boxes in the slide. This whole acreage of course is spread over the whole Edwards trend, which is six counties and about 150 miles long, and just a few miles wide along the Edwards reef trend. And every one of our wells of course is drilled through the Eagle Ford, because the Eagle Ford directly lies over the Edwards that we're drilling the reef play. And it is the case that as we drill through here, it is frequent that we have to actually flare gas when we are drilling through the Eagle Ford and we have logged all this information in all of our wells
It gives us a lot of encouragement that we have Eagle Ford ubiquitously spread across essentially all of our Edwards acreage. And we know that the Eagle Ford has significant unconventional gas potential across the acreage. We have been gathering the data to be able to progress that, to map it, and to quantify what we think is the potential. And what we believe is, if the Eagle Ford is present across all of our acreage, or at least 100,000 acres we control of that acreage, and based on the sweet spot we think we have identified, it is probably about 30,000 acres that we are going to choose to drill our first initial wells. And the first of which we spud in Dewitt County in the middle part of October. It is about 100 miles north east of Petrohawk’s discovery and the objective is it begins the test the Eagle Ford on our acreage. We have just completed coring this well and are preparing to drill a lateral section and we should be done with that well, say in the next couple of months. We will be drilling the 2,500 foot lateral and be using the typical multistage isolation packer technology. Then we will drill our second well about 5 miles away. So as we get into the latter parts of 2009 or in the middle parts of 2009, we can talk a little bit more about how these wells are performing in the early stages of evaluating what our potential is. But we think looking at early economy and early evaluations that our current estimate of mean recoverable resource potential within that sweet spot is already over 500 Bcfe. The cost of the wells in the Eagle Ford wells would be essentially similar to the Edwards wells we have drilled. They are basically the same depth and will have similar costs. And of course, by the time we get through with all of our infrastructure development, we will have the ability to tie in to some of the Edwards infrastructure we have been waiting on and putting in place for the last couple of years.
We also believe we have Austin Chalk potential that sits immediately above the Eagle Ford shale, and it could be substantial in terms of resource potential, because we believe it to be also gas charged as it overlies the Edwards reef structure and that is frequently fractured. We have also typically got a flare gas when drilling through that Austin Chalk zone, which is typically about 300 feet in our areas. So we know we have some conventional pay within the Austin Chalk that is currently behind 5 and we are really also in the process of looking at the resource potential and seeing where there are attempts to test the Austin Chalk in ‘09. So that is just kind of a recap of a new thing we are looking at and we are pretty excited about it. It turns out that we have the acreage in place that we believe can lead to substantial growth in a new play.”

 

[Hatchy]

I think it's a very serious dose of reality.
It makes us look not at next year, or the year after but the year after that when oil prices will be higher than now, and hopefully the aussie will be back up.
It's a funny thing though - what cash ADI has now isn't worth all that much in USD, and that's the currency that pays for a well. It's also the currency that comes out of a well if successful.

Right now we want the aussie to be high so that we've got lots of USD to drill holes, frac etc. Then when we've drilled we want the aussie to be low to reap the benefits therein.

I honestly don't think we have the cash reserves to afford to frac anything.

I think we've got a bleak future - expect low prices going forward - whatever red your ADI shares are in at the moment won't get better for some time.

You're not alone in the pain.

IMHO

 

[gdaf]

all of these questions are still unanswered by the report, and still remain crutial to this company's immediate future:

- Will AWE bankroll them or not?