ADI - Adelphi Energy

hi agentm, what I mean is, conoco can just sit and wait at their leisure unless the JVPs hit paydirt soon...at the moment EKA and AUT are getting bled of cash...they should at least try and get value for a farm in rather than wait till the coffers are totally dry....ie get an auction rather than a firesale....if value is there and other parties recognise it the JVPs should be proactive rather than waiting till their options have run out. That's just my take...I don't have evidence but it seems like common sense.

Agentm said:

this from petrohawk..

http://www.petrohawk.com/news/?id=1278493



Eagle Ford Shale

In South Texas, Petrohawk has leased approximately 160,000 contiguous net acres prospective for the Eagle Ford Shale in LaSalle and McMullen counties. This area has been recognized by the Texas Railroad Commission as "Hawkville Field." During the first quarter, Petrohawk operated one horizontal rig in the play and recently added a second rig. Three wells were drilled and two were completed during the quarter. The Donnell #1H was completed on February 20th at a rate of 3.6 Mmcf/d and 395 barrels of condensate per day (Bc/d), or 6.1 Mmcfe/d, on a 19/64" choke with 3585# flowing casing pressure. The Brown Trust #1H was completed on March 26th at a rate of 8.1 Mmcf/d and 200 Bc/d (9.3 Mmcfe/d) on a 24/64" choke with 4210# flowing casing pressure. Production data from the four wells completed to date indicates lower initial annual decline rates, and a flatter hyperbolic decline, than those observed in other shale plays.

Petrohawk is encouraged by analysis of core samples from two of the wells drilled to date. The Company recognizes a trend across the field from southwest to northeast of increasing condensate yield, from no condensate production from the Dora Martin #1H to a yield of approximately 110 barrels per million cubic feet of gas from the Donnell #1H, with a distance of approximately 30 miles between the two wells. The Eagle Ford Shale has been encountered in all five wells from between approximately 11,000' and 11,700' true vertical depth.

Other encouraging aspects of the core analysis of these two wells include the following: average total organic content (TOC) between 4.4% and 4.7%; total porosity ranges between 9.4% and 10.7% average permeability ranges between 1,110 and 1,280 nanodarcies; gas saturation ranges between 83% and 85%; and estimated free gas in place per section between 180 and 210 Bcf.
These measurements, as they relate to other shale plays, suggest that the Eagle Ford Shale in this particular area is one of the highest quality shale reservoirs discovered to date in the United States.


Based on gas in place data derived from the core analysis, along with the performance of wells completed to date, Petrohawk is raising its internally estimated ultimate recovery assumption for wells in this play to a midpoint of 5.5 Bcfe per well, with a range of 4 to 7 Bcfe/well.

Drilling efficiencies already achieved in the play highlight the economic potential of the Eagle Ford Shale, relative even to other efficient properties in the Company's portfolio, such as the Haynesville Shale. Drilling and completion costs have been reduced by approximately 60% from the first well drilled to the most recent well completed. The first three wells drilled in the play, which were all drilled with pilot holes, whole cores and intermediate casing set, averaged 53 days from spud to rig release. The fourth well, which did not have a pilot hole drilled but did set intermediate casing, was drilled to total depth in 32 days. The fifth well, which also did not require a pilot hole but did not have intermediate casing set, was drilled to total depth in 22 days. An improvement in well design has eliminated the need for intermediate casing going forward. Average drilling and completion costs for Eagle Ford Shale wells in Hawkville Field are currently ranging from $4.5 million to $5.5 million.

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Agentm said:

the petrohawk presentation reveals a lot of information that our jvp partnership have not been so forthcoming with, well logs are very good indicators of whats in the rock. and the work they have done on these 4 wells they have drilled and the two they are currently drilling really puts the eagleford into a good light, particularly in our region, it seems to be improving when they compare it to their wells further west. they include arrows indicating which direction they see the eagleford improving, and when you compare the results of the conoco wells, its clear that they are drawing conclusion based on results not assumptions.. the condensate gets better where we are..

these slides are extremely interesting..

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Broadside said:

hi agentm, what I mean is, conoco can just sit and wait at their leisure unless the JVPs hit paydirt soon...at the moment EKA and AUT are getting bled of cash...they should at least try and get value for a farm in rather than wait till the coffers are totally dry....ie get an auction rather than a firesale....if value is there and other parties recognise it the JVPs should be proactive rather than waiting till their options have run out. That's just my take...I don't have evidence but it seems like common sense.

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i think the idea of the jvp was for a few small caps to get into a world class play. but the ability to churn through the years it takes and to to be liquid at the end has taken its toll on some jvp members. i dont know what aut and eka are doing, but i think it matters little, the play is being touted by all operators now as legitimate and there is very strong evidence the region we are in is close to the best acreages seen thus far..

eme has increased its stake in a farm in with TCEI on a number of live oak wells, and it turned very sour there..

AUT has increased its acreages considerably, and it needs to fund 2 wells at 100% cost to keep that acreage. i struggle to see them funding it at this stage and i guess its possibly looking to farm out right now or face having to raise capital to the tune of $12+ mill

You mentioned EKA, i gather its not sitting of a fat wallet either,

We know adi is not at all concerned with cash flow, it has sold one asset and has no cash concerns at the moment.

TCEI has the leases with the jvp..

Conocophillips has a jvp with TCEI, and i cant see them starving out anyone, so far conoco has been extremely active in their exploration and appraisal program, which commenced with the burlington resources discovery well of kunde 1 in 2006.. three years later they have drilled 6 horizontals and 2 further verticals next to that well, and in kanes county one horizontal (currently drilled) and in dewitt they have 3 verticals and perhaps one horizontal.. hardly waiting for anything imho.. full steam ahead really.. and they have 2 rigs dedicated to the eagleford. one drilling in live oak one in karnes county.

pioneer have halted all drilling in the edwards and only one rig is being used on the eagleford..

petrohawk have 2 rigs drilling exclusively on the eagleford.

weber (in dewitt county) have 2 rigs drilling right now on the eagleford.

anadarko are drilling and are apache..

to me i see all operators doing extensive drilling and exploration on the eagleford. TCEI has spent a lot of capital on the leases and on their JVP with conocophillips and on their jvp with ADI..

I cant see how conocophillips can be doing he things you see, i see conoco and TCEI doing the majority of drilling and our jvp right now playing a very conservative role of wait and see on many regional wells to determine how to efficiently forge ahead..

adi never released the logs for sugarlaof 1, but couch oil did and it soon found its way around the traps..


this is a sugarlaof 1 logs and the open hole log from petrohawk..

Agentm,

Your last three posts were great!! Some good information on the activities taking place in South Texas and the Eagleford. If these trends continue it will be interesting to see what lies in Karnes and Dewitt County. The potential looks good though!!!

jestex12 said:

Agentm,

Your last three posts were great!! Some good information on the activities taking place in South Texas and the Eagleford. If these trends continue it will be interesting to see what lies in Karnes and Dewitt County. The potential looks good though!!!

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jestex

watch out.. petrohawk are on the prowl, they just took a stake on the AZZ land..

imho there is a lot going on and a lot of operators want eagleford land..

some of these small caps have some great acreages,,

interesting movements on AUT today.. early birds arriving perhaps?

This is an interesting video that ties in with Obama's plan to reduce reliance on oil imports (that he goes on and on about, in every speech) . CEO of Chesapeake Energy talking of gas . I couldn't copy the link so you will have to search for it at this site http://video.msn.com/video.aspx?mkt=en-us and search for "Betting on Natural Gas"

Please note the below is paraphrased into bullet points from the Petrohawk Energy Corporation

First Quarter 2009 Operational Update:

1. Petrohawk has leased approximately 160,000 contiguous net acres prospective for the Eagle Ford Shale in LaSalle and McMullen counties and the area is now recognised by the Texas Railroad Commission as Hawkville Field.

2. Petrohawk has been operating one rig in the play and has now increased this to two.

3. The production history from four wells completed to date indicates lower initial annual decline rates and a flatter hyperbolic decline which is a very positive production characteristic and superior to those observed in other shale plays.

4. Analysis of the available data indicates a trend across the field from southwest to northeast of increasing condensate yield with the Eagle Ford Shale having been encountered from true vertical depths of approximately 11,000’ to 11,700’.

5. The Eagle Ford Shale is a highly calcareous organic shale beneath the Austin Chalk with very high average total organic gas filled porosities in excess of 10% and very low water saturations.

6. Estimated free gas in place per section (1 section = 640acres) between 180 and 210 Bcf.

7. Tabulated data available suggests the Eagle Ford Shale in this particular area is one of the highest quality shale reservoirs discovered to date in the United States.

8. Petrohawk has raise its internally estimated ultimate recovery assumption for wells in this play to a midpoint of 5.5 Bcfe per well, with a range of 4 to 7 Bcfe per well.

9. Eagle Ford Shale wells on average are currently ranging from $4.5 million to $5.5 million for drilling and completion costs with the latest well designs allowing total depth to be achieved in as little as 22 days.

10. Petrohawk has a 1 billion dollar capital budget for 2009 and expects increased activity levels in the Eagle Ford Shale.

Furthermore, ConocoPhillips (NYSE:COP) has recently announced that it has amassed a 300,000 net acreage position in the Eagle Ford in South Texas, while St. Mary Land & Exploration Company (NYSE:SM) is acquiring up to 210,000 net acres realising the potential of this new resource play.

Antares is extremely pleased to be involved with a company of Petrohawk’s calibre and successful history. Antares is encouraged by the above activity adjacent to its 8,200 acre Yellow Rose position and will thoroughly evaluate the Eagle Ford in its initial Yellow Rose well.

The Petrohawk slide talks about 156,000 acres and 1,500 locations. If they mean that they envisage drilling 1 well per 100 acres, each having a mean recovery of 5.5bcf, that has significant valuation implications for our acreage, particularly as ours is likely to have a richer condensate yield. Applying their estimates to our 23,161 acres suggests 1.27tcf recoverable.

The currently producing Austin Chalks may be in addition.

Agentm. Thanks for responding to previous O/T.
Can I ask another?
If you wanted to find out about Atascosa Exploration LLC, San Antonio, how would you set about it? The obvious google search yields nothing.
(This question relates to Vialogy who are trialling some seismic image enhancement software in Texas).

TIA

No offense, but as a previous holder of ADI I find it amazing to see the same names on this thread.

Do the true believers still think there is a future for this company?

hashhertu

pm me if you want to discuss off topic things

kpas.. what is a true believer? sounds religious..


conoco has built a second pipeline in live oak and is drilling development wells one after the other.. latest permit next to the baker wells... baker 3

From the plan, it seems that they are intent on drilling at 90 degrees to the line of the trend, which seems to be WSW to ENE (as shown in the Petrohawk slides) like the Bakers, Lasca Butler, Olson Baker, Kunde 4, Kunde 3.

Eskew East, however, appears to be along the trend.

Lots of graphs, hype and uncomfirmed news. We have had months and months of the same. Meanwhile the share prices have gone down and down and down. You can be certain anyone questioning for proof in their sending of private messaging to our agent will result in being blocked by the reciever.

.

http://www.dailymarkets.com/contributor/2009/04/20/natural-gas-is-ready-to-rally/

its interesting that with the price of gas at the shut in price, where its no longer profitable to drill wells and sell it, there is either of two ways the price can go.. down and all is over for explorers and most oil companies, or up??

natural gas prices dropped as low as $3.50 per million British thermal units (BTUs).


15 million BTUs of natural gas to buy one barrel of oil

historically the ratio is 10-1

past decade 8-1

15-to-1 ratio is the most extreme reading of the past 20 years. This means one of two things has to be true: Either oil is too expensive or natural gas is too cheap.

\\\\


imho there is also a consensus that oil may go up.. if that happens its hard to imagine the gas price still trending down

conoco is primarily interested in the shale.. for the oil..

petrohawk thinks about the eagleford in this manner

Petrohawk Energy Corp., Houston, recently announced the discovery of large gas reserves in LaSalle and McMullen counties in South Texas from the Cretaceous Eagle Ford shale.

Petrohawk spokesman call the discovery "one of the highest-quality shale reservoirs discovered in the U.S."

The company estimates 5.5 billion cubic feet of gas per well can be recovered.

The Eagle Ford shale has been encountered in all five wells drilled by Petrohawk from 11,000-11,700 feet (true vertical), and average 53 days from spud to rig release at a cost of $4.5 million to $5.5 million per well.



imho interesting days ahead for the eagleford explorers

http://seekingalpha.com/article/125...ngs-call-transcript?page=-1&find="eagle+ford"

We have a very meaningful acreage position in the potential Eagle Ford Shale play area, and we have a number of people interested in that. And we're working with others to potentially take a position, and get some wells drilled.

Unidentified Analyst

I hope I am not the only person here. Could you, just kind of discuss a little bit more in terms of the prospects of selling properties or leases down in order to... your debt problems as far as the opportunities to do so between proven properties on the one hand and your exploratory leases on the other hand?

Paul Ching

So we are working hard to and I believe that we are potentially close to a deal on our exploratory properties in South Texas which is mainly look at Eagle Ford Shale and then in Chalk, and we have a party that is very interested and we're close to it to deal and actually sell that down. We have been working on our... to sell down our East Texas, Chalk and again we're working in that direction with a party.

On our main assets as far as selling properties, our main producing assets, we've not lead, we look at the alternatives but we've not come to a conclusion. Yes, we've to do that and I think that depends on the discussions that we're having with the banks. And whether or not we end up having to go in that direction, it is not a preferred direction we would hope that we can work through the borrowing base redetermination with banks and with potentially other kinds of structures, our ability to maintain those properties and keep those in the company and of course as prices improve and for better day.

Unidentified Analyst

So it sounds clearly as if the, the focus is on your East Texas properties in terms of assisting your liquidity and in regard to the South Texas and Eagle Ford Shale places et cetera on the assumption that you try and maximize a front-end payment out of that what would you expect to retain in the way of working interest in those wells?

Paul Ching

Larry, we expect to retain about 25% working interest in those wells.

Unidentified Analyst

And get an upfront cash payment?

Paul Ching

And yes, some up front cash payment... and be reimbursed for the laying cost.

Interesting announcement from AUT after the bell about farmout arrangements for their acreage. Interesting to see if the other jvp's are involved.

blues said:

Interesting announcement from AUT after the bell about farmout arrangements for their acreage. Interesting to see if the other jvp's are involved.

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Yes certainly is an interesting development by AUT, probably to be expected with their obligations re leses they hold and a tight cash flow situation.... anyone care to share their views related to the positive / negative implications for AUT related to this decision.... and also whether the other JVP's are likely to follow suit ..the market doesn't seem to like it , Aut dropped four cents in yesterday's trade .........

It was TCEI that was the surprise to me, not AUT (which has huge acreage) or EKA (which clearly had cash problems).

However, COP has been forging ahead since EME terminated its special deal with TCEI and there are 5 additional laterals (approved, at least) plus a directional. And there was quite a lot of work done on the 3 producing wells that EME retains an interest in.

That might explain why TCEI is now looking to farm out some of its other acreage. That might also explain why EME had no alternative but to terminate the special agreement.

It is the danger of getting into bed with a substantially bigger corporate with a substantially larger budget and no clause in the agreement enabling the smaller partner to call upon the Goliath to cool it a bit.

The proposal to farm out appears to be necessary but the danger is that the JVPs could get burned out by that new partner coming in as operator. They will just have to have an agreed programme and budget agreed in advance.

There was significant volume traded in EME shares (about 7m total - 8% of the SC) and it gathered momentum around US opening. It may mean nothing but it might suggest something happening over on Block A. There was a 50% increase in share price (from miserably low to significantly undervalued (imo)). One might normally point the finger at day traders or momentum traders but not, in my experience, before a bank holiday weekend. Those guys tend not to want open positions even overnight. Nor can one really see it as a continuation of 'normal' trading activity - it was well in excess of that. So, maybe this will be all resolved before October.....

estseon said:

There was significant volume traded in EME shares (about 7m total - 8% of the SC) and it gathered momentum around US opening. It may mean nothing but it might suggest something happening over on Block A. There was a 50% increase in share price (from miserably low to significantly undervalued (imo)). One might normally point the finger at day traders or momentum traders but not, in my experience, before a bank holiday weekend. Those guys tend not to want open positions even overnight. Nor can one really see it as a continuation of 'normal' trading activity - it was well in excess of that. So, maybe this will be all resolved before October.....

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i was looking at the eka announcement before, one holder has shown purchases of 5,499,000 this year, and in total holds 5,999,000 including dec figures..

doesnt match up with the trading volumes for the share ( 3,316,158 shares traded for $116,898 in value) so i gather its off market tranfers in this also??

appears to be some other risk adverse investors coming into the jvp..