ADI - Adelphi Energy

[jestex12]

Nice EOG map Agentm!! This Map gives a great snap-shot of what's happening in South Texas and why all the big players are there.

 

[Agentm]

Nice EOG map Agentm!! This Map gives a great snap-shot of what's happening in South Texas and why all the big players are there.

the presentation is a must read imho

http://www.eogresources.com/media/slides/ac_st0410.pdf

slides like this put the hartleys comment on the play being totally derisked into perspective

"We interpret the key remaining risk to be operational"

"Hartleys Initial View
We recently upgraded ADI to a Buy based on the initial flow rates received
from its first two wells and consistent information from wells in the
surrounding acreage. This new information has increased our confidence in
the potential of the resource and we re-iterate our Buy recommendation and
short term price target of 45cps.
If initial results from the next three wells (expected over the next 2-3 months) continue to be strong, there is substantial room in our valuation for further large upgrades in price target and valuation, as indicated by our unrisked valuation of 188cps."

if your looking at the reserves tht eog give for the darlene well, just a few clicks north of the kowalik and rancho grande wells, then your starting to see why i invested in this oil and gas play

eog are saying this today about it, a huge statement imho

“We believe the South Texas Eagle Ford horizontal crude oil play will prove to be one of the most significant United States oil discoveries in the past 40 years," said Papa.

 

[Tordilla Kid]

Personally pleased with the EOG report overall, as was the intended audience--Wall Street. Was hoping for proven undeveloped reserves, but must be content with estimated sixth largest US field of all time displacing East Texas Field of the 1930's (Spindletop). Can another E&G “top” EOGs “spin.” Papa’s team did a great job!

Hillcorp Turnbull horizontal 6 t0 7 miles south east of Lyssy/Orr wells so will be interested along with ADI holders in the IP there.

Disappointed that EOG didn't report anything on the Lyssy/Orr wells, but then again they didn't really get started until January of 2010. Lyssy 1-H approved in September of 2009, but a problem with I-H, then sidetrack proposed, then they started over apparently in January 2010. EOG has been “getting busy” there ever since. Was down FM 791 last week. Appeared to me the Orr 2-H pad is ready to go with Orr 1-H drilling away in the background. Have heard good things about Lyssy/Orr.

, TK

 

[Hatchy]

I haven't seen anything like this since the oil boom of the 1900's. Crazy stuff.

You were around to see the oil boom of the 1900's? That'd make you at least 100 years old!

Happy days to be had soon.... I'll make back that 80c I paid a few years back, I can feel it in my bones.

 

[Agentm]

Personally pleased with the EOG report overall, as was the intended audience--Wall Street. Was hoping for proven undeveloped reserves, but must be content with estimated sixth largest US field of all time displacing East Texas Field of the 1930's (Spindletop). Can another E&G “top” EOGs “spin.” Papa’s team did a great job!

Hillcorp Turnbull horizontal 6 t0 7 miles south east of Lyssy/Orr wells so will be interested along with ADI holders in the IP there.

Disappointed that EOG didn't report anything on the Lyssy/Orr wells, but then again they didn't really get started until January of 2010. Lyssy 1-H approved in September of 2009, but a problem with I-H, then sidetrack proposed, then they started over apparently in January 2010. EOG has been “getting busy” there ever since. Was down FM 791 last week. Appeared to me the Orr 2-H pad is ready to go with Orr 1-H drilling away in the background. Have heard good things about Lyssy/Orr.

, TK

i think the lyssy wells are too close to be reported on, as you and i know they had serious trouble with the first, and then the side track, then drilled a clean well right next to it.

the dab hughes darlene well was exceptional, and no one is commenting on that in any forum over here,,

imho still completely misunderstood by and large over here, and the jvp has serious upside potential with 3 wells to be opened up any day on the AMI acreages and a further well turnbull to be opened up in longhorn

as hartleys said

It is still early days; however, each piece of new information received to date
has increased the potential of the play and estimated ultimate recovery per
well is now likely to be significantly greater than 5 billion cubic feet of gas
equivalent. To give an indication of potential value, there could be over 200
well locations on the Sugarloaf acreage, resulting in over 1 trillion cubic feet
of gas equivalent. We estimate that Adelphi’s share of this at current spot
prices (US$80 oil, US$4 gas) is worth ~150cps (using US$2 per mcfe
calculated net present value and 10% working interest post farmout).
At US$100 oil, the valuation potential increases to over 200cps.

Strong newsflow is expected over the next 2-3 months as the additional 3
wells are completed, fracture stimulated and flow tested. Now that the
technical risk has been decreased due to a substantial number of successful
wells being drilled in the play, we view these wells as very low risk (90%
chance of success).

Hartleys Initial View

We recently upgraded ADI to a Buy based on the initial flow rates received
from its first two wells and consistent information from wells in the
surrounding acreage. This new information has increased our confidence in
the potential of the resource and we re-iterate our Buy recommendation and
short term price target of 45cps.
If initial results from the next three wells (expected over the next 2-3 months) continue to be strong, there is substantial room in our valuation for further large upgrades in price target and valuation, as indicated by our unrisked valuation of 188cps.

 

[jancha]

i think the lyssy wells are too close to be reported on, as you and i know they had serious trouble with the first, and then the side track, then drilled a clean well right next to it.

the dab hughes darlene well was exceptional, and no one is commenting on that in any forum over here,,

imho still completely misunderstood by and large over here, and the jvp has serious upside potential with 3 wells to be opened up any day on the AMI acreages and a further well turnbull to be opened up in longhorn

as hartleys said

It is still early days; however, each piece of new information received to date
has increased the potential of the play and estimated ultimate recovery per
well is now likely to be significantly greater than 5 billion cubic feet of gas
equivalent. To give an indication of potential value, there could be over 200
well locations on the Sugarloaf acreage, resulting in over 1 trillion cubic feet
of gas equivalent. We estimate that Adelphi’s share of this at current spot
prices (US$80 oil, US$4 gas) is worth ~150cps (using US$2 per mcfe
calculated net present value and 10% working interest post farmout).
At US$100 oil, the valuation potential increases to over 200cps.

Strong newsflow is expected over the next 2-3 months as the additional 3
wells are completed, fracture stimulated and flow tested. Now that the
technical risk has been decreased due to a substantial number of successful
wells being drilled in the play, we view these wells as very low risk (90%
chance of success).

Hartleys Initial View

We recently upgraded ADI to a Buy based on the initial flow rates received
from its first two wells and consistent information from wells in the
surrounding acreage. This new information has increased our confidence in
the potential of the resource and we re-iterate our Buy recommendation and
short term price target of 45cps.
If initial results from the next three wells (expected over the next 2-3 months) continue to be strong, there is substantial room in our valuation for further large upgrades in price target and valuation, as indicated by our unrisked valuation of 188cps.

That is a big confidence booster coming from Hartleys.
They even talk about the price of oil ratio with ADI with oil at US$100.
Also positive on oil price and yet ADI still seems stagnant atm.
Noticed that AUT have admirers with larger trading volume and an increase in sp.
Would that be because of their growth potential where as ADI have limited acreage in the play?

 

[sam76]

That is a big confidence booster coming from Hartleys.
They even talk about the price of oil ratio with ADI with oil at US$100.
Also positive on oil price and yet ADI still seems stagnant atm.
Noticed that AUT have admirers with larger trading volume and an increase in sp.
Would that be because of their growth potential where as ADI have limited acreage in the play?

A lot of the AUT interest would come from broker support. Something ADI doesn't have........................

 

[Agentm]

That is a big confidence booster coming from Hartleys.
They even talk about the price of oil ratio with ADI with oil at US$100.
Also positive on oil price and yet ADI still seems stagnant atm.
Noticed that AUT have admirers with larger trading volume and an increase in sp.
Would that be because of their growth potential where as ADI have limited acreage in the play?

jancha

if you do the costings on 10% of 23,000 acres you will be blown away on how that can be managed. i think your underestimating the potential value considerably

adi is not "limited" in any way, it has a very handy holding in the acreages

there are other players with very substantial holdings in the oil belt that are very "limited", and their ability to run with the acre spacings needed to hold those leases is not even feasible. they simply dont have the capital, nor even the management expertise to delver a project of that size, so selling would be the only option for them but getting those wells in and keeping the acres would be critical also.

aut has extended acreages, but be very weary of how those acres can be managed. great upside as they have free carried wells and cash in hand

major companies are coming in with larger positions, but they have the capital and know how to successfully carry it off.

if you overextend into these acreages your also needing to be mindful of the consequences of how to hold those acreages.

all imho and dyor

 

[jancha]

jancha

if you do the costings on 10% of 23,000 acres you will be blown away on how that can be managed. i think your underestimating the potential value considerably

adi is not "limited" in any way, it has a very handy holding in the acreages

there are other players with very substantial holdings in the oil belt that are very "limited", and their ability to run with the acre spacings needed to hold those leases is not even feasible. they simply dont have the capital, nor even the management expertise to delver a project of that size, so selling would be the only option for them but getting those wells in and keeping the acres would be critical also.

aut has extended acreages, but be very weary of how those acres can be managed. great upside as they have free carried wells and cash in hand

major companies are coming in with larger positions, but they have the capital and know how to successfully carry it off.

if you overextend into these acreages your also needing to be mindful of the consequences of how to hold those acreages.

all imho and dyor

I understand what your saying Agentm & all makes good sense but i was querying the difference in interest with the two companies AUT & ADI.
AUT seems to have more volume an interest with the sp going up where as ADI has little interest and sp flat.
Sam76 said that AUT has broker support but with 29 buyers & 9 sellers and a volume of 1.1mil buying & 365k selling it seems more than just broker support.
(Public in general seem to be more interested in AUT).
ADI on the other hand has 25 buyers & 30 sellers with a volume of 640 buying & 910 selling.
If as Sam76 said AUT has more broker support then why doesn't ADI have the same broker support?
Dont quite understand why the 2 would vary so much unless it's to do with the acreages that AUT hold as opposed to the ones that ADI hold.

 

[adobee]

A lot of the AUT interest would come from broker support. Something ADI doesn't have........................

With reference to above which brokers are covering AUT in comparison to ADI ? I am aware of Hartleys & pattersons.. who else is doing any research on these ?

 

[WRONG'UN]

Of course what we see in the MD is only from people who are prepared to show their hand - I have a feeling that if and when the sps of ADI and AUT decide to run again, there won't be much advertising in the buy queue.

 

[condog]

Wronun I agree - If AUt slips i will wait for right volume and smack on without warning, as i would expect others to do if they want in. I want many more and my buy is not sitting in that cue yet.

with reference to brokers. TBOMK only pattersons are covering AUT. Hartleys are covering ADI.

With reference to buy sell spreads. Over the last few months when drilling was only in the JVP AMI, ADI consistently out performed AUT in terms of relative price to either acerage or boe estimated reserves. ADI also had far better volumes and buy sell spreads.

Only since Longhorn was announced has AUT started to perform and rightly so , given the value those extra free carried wells will create.

This wont be popular, but its my honest assessment, rightly or wrongly. In the short term i expect EKA and ADI to flounder relative to AUT until flows are released, then they should kick up a bit. But your kidding yourself if you think ADI can keep pace with AUT in the short term with those wells, which are not only free, but higher interest and potentially Longhorn ones will be very oilly or condensate rich.

Dont get me wrong ADI is a fantastic investment and will do exceptionally well, but not relative to AUT in 2010. 2011 may be a different story, but 2010 is a no brainer.

 

[philly]

This wont be popular, but its my honest assessment, rightly or wrongly. In the short term i expect EKA and ADI to flounder relative to AUT until flows are released, then they should kick up a bit. But your kidding yourself if you think ADI can keep pace with AUT in the short term with those wells, which are not only free, but higher interest and potentially Longhorn ones will be very oilly or condensate rich.

Dont get me wrong ADI is a fantastic investment and will do exceptionally well, but not relative to AUT in 2010. 2011 may be a different story, but 2010 is a no brainer.

Hi Condog,
I hold ADI and I agree with your "unpopular" assessment regarding ADI v AUT v EKA. In the short term AUT seems to have the greater upside as it is free carried for 7 wells with great potential. We have already seen that Hilcorp is an excellent operator so the SP for AUT will get a nice kick along when drilling begins. ATM I'm looking at selling half my ADI shares and buying into AUT. Just my thoughts and DYOR

 

[mir]

philly
I've been in aut & eka from day 1 & have followed very closely.i have posted many times recently ,imo auts's share price should be 2.5 times adi's & 4 times eka's so what you are considering doing imo is spot on.

 

[WRONG'UN]

So, from a money/risk management point of view, what is the "best" strategy - put 100% of one's Eagle Ford allocation into AUT - or hold two, or all three, in some ratio? And how big a proportion of one's total funds should the Eagle Ford allocation be? And what does "best" mean anyway - is it maximum profit, or is it optimum profit with acceptable risk, or what?
Do your own research and analysis, and make your own decisions, of course. I've made mine.

 

[Silhouetteau]

Can someone help me better understand the Hartley's report.

In it, they state one well is producing 11.4mmcfe/d and this is generating around $50/60k a day.

I was just wondering how they determined the 50/60k?

My rough go at this:
11.4mmcf = 11400 mcf
11400mcf x $4mcf = $45600/d

Can someone help explain why i'm so far off?

Thanks

 

[mir]

silhouetteau
it's not all gas ,70% oil @ $80 & 30% gas @ $4 imo.
redo your calc's on that, 11.4 mmcfe "E" is equivalent .i think when they convert to equivalent they times oil by 10 to 12 times which only works out at just over $40 per barrel.

 

[Agie82]

Made a run through Cheapside, still EOG still drilling on Clampit 2nd well. Saw a new pad on Marshall last week, turned out to be tank pad, 20 tanks on pad. That makes 34 tanks on 2 locations on Marshall. I am sure EOG is using that as central location for Marshall, Clampit, and Brothers, (new location on property about 1/2 mile west of Marshall. Also saw new rig moving in 6 miles south of Smiley toward Yorktown. Koenning lease being drill by Riley Resouces. New name in area. Also, land owners are being paid for new pipeline coming in from south. They say it is a right of way for 4 lines, 2 oil, 1 gas, and 1 other condensate. Keep you informed as we hear other news in Gonzales.

 

[Agentm]

dont let hilcorp and texas know its this good!!

obviously as far as hilcorp is concerned, the locals cant read!!

lol


Pro: Shale gas will be a pivot to the oil and gas industry and regional economy



In the throes of recession, the oil and gas industry's one silver lining may be the proliferation of natural gas, which is being harvested from underground rock formations across the country.

In South Texas, the Eagle Ford Shale has been an economic boon to DeWitt County, county and Cuero officials have said.

Landowners are raking in on lease sales where they had not been leasing in decades, and the presence of the companies in the area is stimulating other sectors.

And with new well sites appearing and more companies moving in, the industry seems to be taking note of its value.

But the technique used to recover natural gas from shale rock has come under recent scrutiny.

Hydraulic fracturing is the subject of controversy in many northern states, where people believe it is contaminating their drinking wells.

Gas leaks and leaching of fracturing fluids are two potential causes of water contamination cases in Ohio, Colorado and Pennsylvania, according to reports from ProPublica, an investigative journalism Web site.

It's perked the eyebrows of the Environmental Protection Agency, which is currently proposing a research approach to study the safety of hydraulic fracturing.

Shale gas: It's the "crown jewel" of the oil and gas industry, said an industry expert.

Travis Windle, spokesman for the energy coalition Energy in Depth, cites colleagues working in the industry as saying shale gas has changed the game.

And the Eagle Ford Shale, a formation of carbon-rich rocks that belts South Texas, may be the newest game changer.

It is especially significant to the Crossroads region, where the appearance of drilling wells has stimulated the economy.

But the micro effects create a macro boom, Windle said.

"While the Eagle Ford is smaller in size, the actual reserves there that have been able to be tapped through hydraulic fractures and horizontal drilling are going to do great things for not only the Texas economy, but also for the country," he said.

The Perryman Group, a economic analysis firm based in Waco, estimated in a 2009 study that the Barnett Shale in North Texas will create about 108,000 jobs annually until 2015.

The same study found that in 2008 Barnett Shale activity was responsible for an estimated $13.7 billion in annual output and 132,497 jobs.

DeWitt County and its residents have reaped benefits from the recent Eagle Ford drilling.

Activity is expected pick up with one gas company expecting to have six active sites in the county this June, County Judge Ben Prause said.

"Apparently, the future's going to be really bright for years," Prause said. "It should be increasing from what we're told."

"It's going to be quite a busy time," he added.

Last year's activity helped reduce taxes and introduced new revenue streams to the county.

Drillings rigs in the county are taxable property. Appraisal value, in general, increases with drilling activity.

The economic benevolence of natural gas drilling has manifested in small rural towns within the Marcellus Shale. This formation spans eight states and extends into Canada and is the second largest natural gas play in the world, Windle said.

In the direst of economic times, natural gas has effected a domino effect, generating jobs in not only the gas industry but other sectors as well, he said.

"The grocery stores, the car dealerships, the contractors, the hotels, the whole gamut - it's pretty neat to see," Windle said.

 

[Ramblin Round]

Front page news right there !! I'm holding one in my hand as we speak. I am so glad I got into this play when I did. This is really exciting stuff !