ADI - Adelphi Energy

[Bigukraine]

Agentm,

Question re morgan, ADI reported that they have reached a depth of 16,926ft and have gone through a reservior section of 4,800ft and are saying the frac will start after TD is called 1) are they going to keep drilling a reasonable distance until they they meet resistance because it sounds like the TD is fluid thing(not defined) 2) would they of got an indication of gas/oil from the reservior section (4800ft) thanks in advance !!!

 

[Agentm]

Agentm,

Question re morgan, ADI reported that they have reached a depth of 16,926ft and have gone through a reservior section of 4,800ft and are saying the frac will start after TD is called 1) are they going to keep drilling a reasonable distance until they they meet resistance because it sounds like the TD is fluid thing(not defined) 2) would they of got an indication of gas/oil from the reservior section (4800ft) thanks in advance !!!

morgan can drill to a bit over 6000 feet

they will go until td, or if they have to end it sooner they will

my cash is on them going a lot further than todays length

you cant go longer than the plan, but often if the formation has pressure and temp issues like this one has, then you can end up with smaller laterals.

right now having close to 5000 feet there is sensational

pretty happy myself.

 

[rock86]

morgan can drill to a bit over 6000 feet

they will go until td, or if they have to end it sooner they will

my cash is on them going a lot further than todays length

you cant go longer than the plan, but often if the formation has pressure and temp issues like this one has, then you can end up with smaller laterals.

right now having close to 5000 feet there is sensational

pretty happy myself.

I think all us holders like it (this whole announcment is very posistive and upbeat) however, once again the market doesn't even take notice

 

[jancha]

I think all us holders like it (this whole announcment is very posistive and upbeat) however, once again the market doesn't even take notice

First up thanks Agentm good info.
Secondly you would think that with the updated announcements ( all positive) the sp would head north and yet it's down from it's high of 3wks ago.
Am i missing something here?

 

[Sdajii]

First up thanks Agentm good info.
Secondly you would think that with the updated announcements ( all positive) the sp would head north and yet it's down from it's high of 3wks ago.
Am i missing something here?

I'm puzzling over the same thing. I've increased my holdings twice (well, once in ADI and once in EKA) recently, and since then the news has been good while the price has not improved. If I better understood oil I would probably increase my holdings again, but I just don't understand if the market is missing an opportunity or if the picture would not look so rosey if I knew how to properly view it. From 38c to 28c on nothing but good news just seems bizarre. Is there a negative I have missed? Has the global supply/demand situation changed THAT much over the last few weeks? Doesn't look to be the case to me.

 

[estseon]

The reporting in cfge hides the rich condensate ratio. Because of the conversion, Kennedy (73% of the length of Weston) is appearing to produce the same as Weston. Morgan is heading towards 2.5x Kennedy on trend with Kowalik, which flowed a better ratio than Kennedy. Hopefully, we will have 30 day figures for Morgan by the end of May and figures for Easley early in May.

I suspect that there is disappointment in the fall of Kennedy's reported production from 19.1mmcfge/d. Explanation might help.

 

[choppy]

ADI's Western 11.5 mmscfe/d
Kennedy 11.7 mmscfe/d
Petrolhawk has an average of 7.8 mmscfe/d with their wells.
ADI looks to have the prime spot.
Come on Easley.

Make sure you are comparing apples to apples. Remember that ADI's numbers are adjusted for mmbtu equivalent and on a 12:1 basis of gas to oil. Overall I think it is amazing how uniform the production has been across the trend. The only real variable being liquids content. The drier wells have a higher gas rate that yields very similiar economics at the end of the day.

 

[WRONG'UN]

There are some interesting points in Patersons' 22 Dec 2009 report on AZZ which are relevant to ADI. Excerpts from the report are attached:

Para 1. Flow rates are similar to those recorded elsewhere in the Eagle Ford - confirmation of the uniformity across the field.
Para 2. A post tax NPV of $1/mcfe. On this basis ADI's 130bcfe would have an unrisked valuation of 88 cents per share.
Para 3 - last sentence: "....unlike conventional oil and gas, a positive result in a resource play essentially de-risks the entire resource."
The Dec 2009 Hartleys' report (ref my post #4741, 21/2/2010) valued ADI at 27 - 37c risked, and 180 - 186c unrisked. If, as Patersons contend for AZZ, positive results de-risk the entire resource, then the valuation should move towards the unrisked valuation of 180 - 186c. The oil/gas prices themselves remains a risk (oil the more significant due to the high liquids content in the product), but the the figure of 88c (Para 2, above) could be a reasonable first target.
On the basis of the above, I would suggest that the recent reaction in the sp is in part a healthy correction after a strong rise, and in part a disproportionate reaction to a slight softening in the oil price, and a slightly larger but less significant fall in the gas price.

 

[vpayne]

Geosouthern/petrohawk should employ better map makers. The counties named on slide 18 are correct, however slid 22 shows the Kraus & lanik wells in Karnes instead of Dewitt.

Yes I know, typical picky accountants observations

 

[Ramblin Round]

Ha ha that's pretty funnt right thar ! Wonder if any of the landmen even notice these days. LoL...........

 

[Agentm]

Make sure you are comparing apples to apples. Remember that ADI's numbers are adjusted for mmbtu equivalent and on a 12:1 basis of gas to oil. Overall I think it is amazing how uniform the production has been across the trend. The only real variable being liquids content. The drier wells have a higher gas rate that yields very similiar economics at the end of the day.

choppy the pioneer chesnutt gas unit 1h has got to a completion of 17,566 feet, its about 500 feet shorter than the pioneer handy 1h well which got 17,966 feet

hoping hilcorp will lift their game and get somewhere further with morgan, and at least live up to my expectations of completing one lateral to td

choppy, whats your view on the petrohawk eur on the 53000 acres at blackhawk, its estimated at 500 - 750 MBoe in dewitt county? they have average EUR estimates as 5.5 Bcfe per well in hawkville.

 

[Sdajii]

wrong'un: $1.80-1.86 sounds just on acceptable to me, in fact, I'd grudgingly accept 88c figure (yes, I'm joking, my average buy has been about 20c and I'd be thrilled with anything in the vicinity of either figure). I am still pretty green, but have seen a lot of price targets being thrown around for companies in all sectors, and more often than not they are fairly meaningless which intertwined with time and reality. What is the timeframe for those targets/predictions? More like six months or more like six years?

I was originally buying in at about 17c hoping for a quick profit (which I got), selling out and buying a house later this year, but (FML!) my situation has turned out a little differently from expected and I'm now expecting it to be late 2012 at the earliest before I'm house hunting. So, I'm seeing this as looking good and holding for a while if things keep looking nice. If we hit $1.50 before then my mortgage will be looking a lot less menacing! (or maybe I'll get greedy and have the same mortgage on a larger house : )

 

[estseon]

At 100 acre spacings, that's about 1 - 1.5 mmboe per well.

As their discovery well is comparable to Kennedy, which might be a half or less of a new well drilled at full length, that suggests a potentially ridiculous value for each of our wells. At the current share price, even moving the decimal point back would have most whooping for joy.

 

[gdaf]

"potentially ridiculous value " - could you elaborate? I haven't plugged any figures into the latest round of results yet, but I know that the 30 day averages change the game quite considerably. I wasn't actually expecting those rates until we were well into the newer wells.

 

[Sdajii]

At 100 acre spacings, that's about 1 - 1.5 mmboe per well.

As their discovery well is comparable to Kennedy, which might be a half or less of a new well drilled at full length, that suggests a potentially ridiculous value for each of our wells. At the current share price, even moving the decimal point back would have most whooping for joy.

So you're suggesting we're going to see ADI scream well beyond $2.80? Bold claim, but I hope you're right. What ballpark time frame do you suggest? With that potential there are presumably some big risks I am not seeing, or there is a severe shortage of people who understand oil viewing ADI and a spectacular opportunity is being missed by just about everyone. There seem to be enough wells in the area now to give quite a good idea of how much hydrocarbon can be extracted per acre, and assuming Texas doesn't get submerged by an earthquake or nuked by Chinese terrorists I assume that oil is going to be coming out of the ground, so the only major risks in the long term are currency and oil/gas price fluctuations. I was under the assumption that the largest risk was that the area would turn out not to have a lot of oil, or it would be very patchy, but the whole area is now dotted with wells and that risk seems to be gone. Am I missing something?

 

[Ramblin Round]

I am directly in the play and my comment is this: You can't take your grandma to the hair salon without hearing about Eagle Ford shale or the oilfield explosion aorund here lately. Like a mad scramble, daily. Rigs, lease companies, vaccuum truck companies, location production companies. The job market from Houston to Corpus is asking nothing but frac operators, oilfield hands, geologists and experienced drillers. You can't even get from point A to point B on the highway anymore without getting stuck in a herd of oilfield trucks on these small Texas Farm to Market roads. It is getting ridiculous actually. I've never seen anything like it.

If you don't beleive me, I know personally who the Riedesel 1 is named after and they are 7 miles from me. He still won't buy a new truck but he might buy a new tractor for all that hay from the recent rains here.

ADI for the win !

 

[Sdajii]

Forgive my ignorance, but how far from all this is Bourne, TX (or San Antonio)? Would people out there be hearing about it?

 

[Agentm]

At 100 acre spacings, that's about 1 - 1.5 mmboe per well.

As their discovery well is comparable to Kennedy, which might be a half or less of a new well drilled at full length, that suggests a potentially ridiculous value for each of our wells. At the current share price, even moving the decimal point back would have most whooping for joy.

4127 feet lateral in krause

it was a weber operatoed well and in partnership with geosouthern and a kuwati oil company

the petrohawk outfit purchased it after they put it on the market

this is the first three months production

I am directly in the play and my comment is this: You can't take your grandma to the hair salon without hearing about Eagle Ford shale or the oilfield explosion aorund here lately. Like a mad scramble, daily. Rigs, lease companies, vaccuum truck companies, location production companies. The job market from Houston to Corpus is asking nothing but frac operators, oilfield hands, geologists and experienced drillers. You can't even get from point A to point B on the highway anymore without getting stuck in a herd of oilfield trucks on these small Texas Farm to Market roads. It is getting ridiculous actually. I've never seen anything like it.

If you don't beleive me, I know personally who the Riedesel 1 is named after and they are 7 miles from me. He still won't buy a new truck but he might buy a new tractor for all that hay from the recent rains here.

ADI for the win !

rambling

if you talk to the jvp they disagree, they believe that only this forum and one other is solely the reason for anyone in the counties knowing about the play..

its a point i absolutely disagree with as i am certain the many websites and blogs set up in the us specifically for landowners have far more data and info that is relevant to the landowners.

i do agree that not discussing lease prices on this forum is really important, as we all know there are many factors in the region that change the bid prices of the offers.

but there is not a single landowner in any of the counties that doesnt know whats going down..

my own view of conoco thumbing their noses at the landowners and constantly reminding everyone how cheap they got their leases in their presentation doesnt help in any way.. but thats a point the falls on deaf ears with thsi jvp.. they believe i am to blame!! lol

rambling you and i both know what prices are happening, much as choppy and others do, but that does zip for the adi share right now.

but in dewitt where you are its sure looking good..

 

[Ramblin Round]

That's pretty comical for the JVP to blame only two forums for the entire knowledge of what people know. This being in a region funded by oilfield economics to begin with. Word gets out. My comment to the JVP is this........can you picture a bunch of 60-80 year old ranchers and landowners sitting around tooling on the internet ? No. They're out haying and feeding cows. Word gets out no matter what you do. It's always been like that. Discretion is only going to work so far until the game heats up. For example, one of my lease offers presented thier Eagle Ford project at an investor's convention. After their offer to me I simply go to the energy company's website and find their recent plays and their projections for future plays. It would be foolish to blame a public forum for info that is already out there for anyone to find.

Perhaps just blame the internet in general. That would be more fair. The invention of the internet has changed persuasion of politics, negotiating knowledge for car sales, knwoledge of who you are dating, and knowledge of healthcare to find out if your doctor is doing a good job or not. Tell the JVP that the oilfield is not exempt from the way the internet has changed the world either.

ADI and holding.

 

[Tordilla Kid]

Here are a couple very recent Eagle Ford Blogs. Both very informative and show local/US industry interest.

http://eaglefordshaleblog.com/

http://info.drillinginfo.com/urb/eagleford/

I've been a bit active on gohaynesvilleshale.com talking Eagle Ford. A separate Eagle Ford thread was opened yesterday and already 67 members: http://www.gohaynesvilleshale.com/group/eaglefordshale. More local interest.

Also, this month EOG got TRCC approval for temporary field rules for Eagleville (Eagle Ford) in Karnes County.

Temporary Field Rules: http://www.rrc.state.tx.us/meetings/ogpfd/ogpofldrules/02-64010-frl_000.pdf

Examiners Report: http://www.rrc.state.tx.us/meetings/ogpfd/ogpofldrules/02-64010-frl.pdf

What's up whit dat? Would appreciate input on the field rules from a land owners perspective.

I drive by the Dan Hughes and EOG rigs on FM 791 (west of Falls City) every week to check the rain gauge, etc. Like Ramblin' I see a lot of activity.

My sense is that the bonus and royalty paid to land owners have improved considerably in the past six months.

TK