ADI - Adelphi Energy

[Agentm]

Sorry AgentM, but 30% is a pipe dream. 70% is much more likely. The trend average is around 70-80% so far.

i know that john campbells summary you quoted was rather like a pipe dream to many, but he doesnt have some facts on the sugarkane on hand and much is being kept quiet, but his summary on the declines are very interesting to watch on these wells, and imho can be validated

the kunde 1 well, the discovery well dropped from 17 mmcf to 12mmcf over 12 months.. not the 70% or 80% you refer to, but it still had a mild decline of 30%.

its pretty nice acreages in the sugarkane, and there are good reasons to believe that the 70-80% declines you mention may happen, but on the other hand, you may be surprised to know it can also be as john campbell says..

i am keeping an open mind on the sugarkane.. as am following and investing into the sugarkane Cretaceous play very much on the finer points that these rocks deliver

 

[choppy]

the kunde 1 well, the discovery well dropped from 17 mmcf to 12mmcf over 12 months.. not the 70% or 80% you refer to, but it still had a mild decline of 30%.

That well dropped from 17mmcf to 10mmcf per MONTH over the first year. That is from approx 566 mcf per day to 333 mcf per day. You have to understand the way vertical vs horizontal wells produce.

The vertical well never has the high initial rates of a horizontal well and thus never has the high declines. A vertical well production profile is like a horizontal well production profile 1 or 2 years in. If you are factoring a 30% decline rate for these horizontal wells then you are grossly overestimating the potential reserves.

 

[Miner]

That well dropped from 17mmcf to 10mmcf per MONTH over the first year. That is from approx 566 mcf per day to 333 mcf per day. You have to understand the way vertical vs horizontal wells produce.

The vertical well never has the high initial rates of a horizontal well and thus never has the high declines. A vertical well production profile is like a horizontal well production profile 1 or 2 years in. If you are factoring a 30% decline rate for these horizontal wells then you are grossly overestimating the potential reserves.

Choppy

For the first time I am getting nervous on ADI after reading what you said.
I am sure our ADI guru AgentM will come back with more facts but until then - I am a bit shakened. Will not loose sleep as my average buy out of ADI is 8 cents but still who does not like paper profit ?

Regards

i know that john campbells summary you quoted was rather like a pipe dream to many, but he doesnt have some facts on the sugarkane on hand and much is being kept quiet, but his summary on the declines are very interesting to watch on these wells, and imho can be validated

the kunde 1 well, the discovery well dropped from 17 mmcf to 12mmcf over 12 months.. not the 70% or 80% you refer to, but it still had a mild decline of 30%.

its pretty nice acreages in the sugarkane, and there are good reasons to believe that the 70-80% declines you mention may happen, but on the other hand, you may be surprised to know it can also be as john campbell says..

i am keeping an open mind on the sugarkane.. as am following and investing into the sugarkane Cretaceous play very much on the finer points that these rocks deliver

 

[Ramblin Round]

Miner, what you may be forgetting is how manageable these multi stage fracs make this play. Most wells drilled for Sugarloaf/Eagle Ford are only fraccing, on average, 4 stages of say a 14 stage setup. So re-entry a few years down the road with coil tubing and another 4 stage frac gets it back to full production. You can do this a number of times while you're still in pay dirt. That's part of the beauty of what makes this shale play so significant.

DeWitt County and other counties around here are currently survey planning a water pipeline to provide continuous water flow. It is my belief that this water is to frac wells in Dewitt, Karnes County and all wells south and beyond.

Now think about this for a minute....... why would you spend hella money on a water pipeline if you are only trying to get wells to production once? This leads me to believe that this project has decades to continue producing and stimulating these wells with re-entries to revolve around the economics of oil and gas production and sales. DYOR but these are things I see with my own eyes here that I am reporting. Perhaps this makes you feel better about your ADI investment no ?

 

[Agentm]

That well dropped from 17mmcf to 10mmcf per MONTH over the first year. That is from approx 566 mcf per day to 333 mcf per day. You have to understand the way vertical vs horizontal wells produce.

The vertical well never has the high initial rates of a horizontal well and thus never has the high declines. A vertical well production profile is like a horizontal well production profile 1 or 2 years in. If you are factoring a 30% decline rate for these horizontal wells then you are grossly overestimating the potential reserves.

totally agree choppy. i was posting monthly figures. please dont suggest i am using those figures as daily production figures.. i am not forgetting to factor in anything choppy. i observe all the monthly flow rates and i see very healthy wells in the adi acreages, i dont see that in the AZZ well so far for instance..

choppy, your misquoting something and attributing it to me.. and i again point out that what i put on the forum had an author whom was john campbell, not myself.. i merely looked around for wells that he may be quoting and found one, and as i said, the well went from 17mmcfpm to 12 mmcfpm over the 12 months, 30% decline, which i assume is what john used.. i have not studied declines so far as most of the conoco wells are in the chalks, these are the first wells that are proper in the eagleford. i also noted several obvious grammer mistakes and its very likely there are further mistakes in the transcripts. i also agree that JC has never been correct on anything on the eagleford up till now when he has dramatically changed course and derision on the play itself, the jvp and the operator.

most wells have declined 80%, that what the jvp are relying on, i was just pointing out that there is data pointing to a slower decline..

choppy, when you say.."Sorry AgentM, but 30% is a pipe dream. 70% is much more likely. The trend average is around 70-80% so far." then i agree entirely on the pipe dream, but i was just pointing out how john may have concluded it. and with higher calorific content and very much high end results from the chalks/eagleford completions drilled by hilcorp, i think the economics are very much in control atm on a stellar acreage position.

i have seen many presentations where the declines of the wells are mentioned

this from a broker covering aut

Shale Attributes
The Eagle Ford shale is in its infancy with a production history of less than 2 years. However the results seen to date suggest that it could be one of the most productive and high value shales. Some 50 wells have now been drilled with a success rate of 100%. Decline curves used to predict the wells were initially based on those observed in the Haynesville Shale, however early results suggest that the initial decline rates are lower than this. Decline is estimated at ~80% in year 1 followed by ~45% in year 2 and 30% in year 3. Chesapeake Energy has been operating in the Haynesville for a number of years and recently published a decline curve based on the aggregated data from 56 wells from 2008, as did Petrohawk Energy in a recent presentation:

i note these comments in a recent presentation by aut in april

Production casing strings have not yet been installed in these wells.Competitor reports indicate improved production following ultimate
deployment of production tubing.

Preliminary Results Indicate Robust Economics

Industry analysis shows the Eagle
Ford to be one of the best shale
plays in North America

Project Returns improve with
increased Condensate and NGL
yields

AUT acreage has condensate yields
of 75 – 300 bbl/mmscf and high
yield gas ~1250 BTU/scf

AUT’s initial well results compare very favourably with the best regional Eagle
Ford wells

The solid IP rates extrapolated using analogue decline rates suggest that within the current cost structure, AUT’s Eagle Ford shale acreage will be very
economic

 

[Agentm]

Miner, what you may be forgetting is how manageable these multi stage fracs make this play. Most wells drilled for Sugarloaf/Eagle Ford are only fraccing, on average, 4 stages of say a 14 stage setup. So re-entry a few years down the road with coil tubing and another 4 stage frac gets it back to full production. You can do this a number of times while you're still in pay dirt. That's part of the beauty of what makes this shale play so significant.

DeWitt County and other counties around here are currently survey planning a water pipeline to provide continuous water flow. It is my belief that this water is to frac wells in Dewitt, Karnes County and all wells south and beyond.

Now think about this for a minute....... why would you spend hella money on a water pipeline if you are only trying to get wells to production once? This leads me to believe that this project has decades to continue producing and stimulating these wells with re-entries to revolve around the economics of oil and gas production and sales. DYOR but these are things I see with my own eyes here that I am reporting. Perhaps this makes you feel better about your ADI investment no ?

i agree rambling on your point on pipeline companies

we know there is a pipeline company that recently set up offices in karnes county, and local talk is that they are not there for the cheap rent..

i am hearing conoco and eog are most likely to be on their client list, and perhaps a few others..

adi is central to the most leased county, karnes is nearly 100% leased atm.. no other counties match this level of leasing

its also noteworthy that petrohawk have spoken about the eagleford being more oily in the return as it trends east to west from lasalle and mcmullen, and we note the shorter laterals in kennedy and weston pretty easily match the petrohawk 5000 feet completions to the west. the morgan well imho is one of the highest stabilised ip flow rates i have seen in the region

i am of the belief that the adi acreages are right in the heart of a very sweet region, its attracting a lot of competitor attention, and i am not convinced hilcorp are walking from the jvp nor from these acreages at all. my belief is that hilcorp will continue to develop these acreages and produce from them.. its obvious by the way the sp is trending that its a story not believed by the shareholders keen to exit, but i think the current prices are attractive if you understand the possibility of hilcorp developing the ami eagleford is very likely. there is significant upside to adi if the punters exiting today are miscalculating this and i am more of the opinion that the recent broker reports talk of progressing this play is very much a realistic outcome..



all imho and dyor..

 

[condog]

Adi is cheap cheap cheap at present.

Choppy, plenty of evidence floating around now indicateing significantly reduced declines in newer wells then from last year. 30% in yr one is almost being unanimously quoted now.

Rambling agree - with re-entries, the chalks and the eagleford, plus perhaps down to 50 acre well spacing there is many many years left.

I note looking at recent available lease data there is plenty of non leased acerage in the oil window and id hope the JVP's get cash flow early enough to not only drill but secure more acerage in the oil window.

Agent have to agree. Morgan blows everything away. These things can easily be re fracced much much longer then they are currently doing. Up in the bakken they have 32 stage and the odd 36 stage frac happening with some upwards of 9000 feet.

Ieveitably technology will bring those horizontals into play in the Eagle ford. The future will also involve imo re-drilling these wells with longer horizontals and also up inthe Austins when the eagleford flows are depleated for each well. Could be wrong, but i see 10-15 years in these acerages alone.

 

[lemontree]

In my opinion now is a good time to stock up on ADI, it's going for cheaper than before the Morgan IP results! I suspect it'd have to do with the 22mil issues shares distrubted just yesterday ;p

 

[Agie82]

Ramblin, I personnally know of land leased for a large pipeline ROW come up FM 1116 from Westhoff towards Gonzales. I was coming back from Victoria and notice a staking crew working on the north side of 87 from Cuero to about 4 miles out of Westhoff. The pipeline supposedly has 4 lines, 2 oil, 1 gas, and 1 unkown, water??? But then Gonzales County is on top of 3 aquifers, Corrizo Wilcox being the largest. Hilcorp now has 6 permits on Barnhart country between Pilgrim and Westhoff and EOG is permitting more wells just west of Cheapside. All I know right now.

 

[condog]

Any of our USA correspondants know whether the frac crews have tapped that big Keg known as Morgan and got it flowing to sales yet. I will be bitterly dissapointed if i find out on the asx before the forums.

Last time you only gave us about a days notice, thats slipping guys. LOL

 

[Agentm]

Any of our USA correspondants know whether the frac crews have tapped that big Keg known as Morgan and got it flowing to sales yet. I will be bitterly dissapointed if i find out on the asx before the forums.

Last time you only gave us about a days notice, thats slipping guys. LOL

condog the morgan announcement was a week ago on the asx

5 May 2010

Morgan #1H

Following the successful fracture stimulation of approximately 4,400 ft of horizontal section as per the frac design, the Morgan #1H well was flowed back to sales commencing on 27 April 2010. The well production has now stabilized and the following Initial Production rate was achieved:

· 5.16 mmscf/d Gas & 2,046 bcpd or 31 mmscfe/d


hope it helps

 

[rock86]

Think condog probably meant to say Rancho. In saying that have a look at them flow rates, incredible yet we are still so cheap. Just imagine if they did start drilling and fraccing 9000 feet horizontals in our sweet spot acreage, flow rates would be unseen.

 

[condog]

Think condog probably meant to say Rancho. In saying that have a look at them flow rates, incredible yet we are still so cheap. Just imagine if they did start drilling and fraccing 9000 feet horizontals in our sweet spot acreage, flow rates would be unseen.

Yep its a typo, meant to say Rancho...clearly Morgans flwoing ive only made about 40 posts on it....any news on Rancho

 

[dazby]

--------------------------------------------------------------------------------















Australian Equities Research




--------------------------------------------------------------------------------

Aurora Oil & Gas Ltd (AUT $0.64) Buy, Initiation of Coverage


--------------------------------------------------------------------------------



Initiation of Coverage

Investment Highlights

? AUT is a liquids-rich shale gas producer, focused upon the highly prospective Eagle Ford Shale in on-shore Texas .

? Low geological risk underpins a growing production profile, reserve base and strong earnings.

? AUT hold a material position within the high condensate yielding Sugarkane Field within the Eagle Ford Shale trend.

? JV partnership with Hilcorp provides experienced shale gas operator to extract maximum value from the acreage.

? Flow rates (initial, 30 and 60 day), from AUT’s existing wells are among the best recorded in the Eagle Ford to date.

? Recent transactions value prospective shale acreage in the US at US$19,000/acre and include all of the Majors. This values AUT @ A$210m or $0.95/sh.

? AUT is cheap with EV/boe of A$4/boe, based on 1C resources of 100bcf gas and 17mmbbls of condensate.

? An upgrade to resources and a maiden reserve expected Sept Q’10, with at least 6-7 wells on production by mid-year.

? Continued reserves growth with an active drilling campaign over the next 10 years.

? On current conservative production forecasts, AUT can be +2mmboe (or 5,500boepd) producer by FY’13 and double total production by FY’15.

? AUT has A$9m in cash and no debt.

? Quality management, underpinned by strong technical team and a strategic partnership with a proven shale gas operator.

? We initiate coverage with Buy and a price target of $1.02/sh.

 

[choppy]

Choppy, plenty of evidence floating around now indicateing significantly reduced declines in newer wells then from last year. 30% in yr one is almost being unanimously quoted now.

Show me some evidence if you believe this to be true. In my opinion, from studying the production data, this is unequivocally false. If you look at EOG's decline rate type curves from their April presentation you will see huge decline rates.

 

[Ramblin Round]

Agie - Petrohawk has again partnered with Kinder Morgan and have a sub entity called Kinder Hawk now in which they are on the pipeline projects with.

Petrohawk and Geo Southern are a 66%/33% JV.

For some strange reason just recently Lower Colorado river Authority (LCRA) has bought up many right-of-ways and are surveying the electric lines and rights to many areas around here. I'm not sure how thye fit in except for just surveying thus far. But they ahve went and cleaned up many of their electrical right-of-ways and are currently doing the surveying for the pipelines.

 

[estseon]

I posted this on the AUT board by mistake (the discussion on depletion is on this board):

Re Depletions:

Go to http://webapps.rrc.state.tx.us/PDQ/q...ilderAction.do

Lease 245465 (gas well) district 02 for the period 1/1/09 to 1/1/10 Baker 1

The production is all over the shop but at Jan 09 was 10.3 MMCFG + 2,148 bbls and in Jan 10 was 25.6mmcfg + 1,867 bbls.

It was obviously shut in during part of Sep 09 for further works. Possibly Nov 09 also. COP won't stop tinkering with them. It's in the chalk. EME has an interest in this one.

March 09 was 47.2 mmcfg + 3,862 bbls - that was the peak.

So Jan 10 was 50% of the peak subject to the caveat that the operator is constantly tinkering with it. The 12 month comparison gives 250% gas and 85% of oil - no depletion if the two are taken together (gas + oil).

These are actual results in Live Oak, next door.

Postscript.

Those are monthly figures. They put Morgan into perspective.

 

[Agentm]

2 new permits from conoco into karnes county..
edith gray from a few weeks back and the new yanta cattle co permit

as previously disclosed many weeks back, the murphy drees well was brilliant

these wells are on trend and just to the east of the adi acreages..

the murphy drees well and the recent pioneer well which is a good deal south and east of the adi acreages are very critical wells and completely reinforce the nature of the play in karnes county.. which imho is demonstrating some staggering results time and again.. and confirming the adi acreages are right in the heart of the best results seen thus far..

Murphy Oil - Eagle Ford Shale - First Quarter Of 2010 Update - Part One

Murphy Oil (MUR) reported earnings for the first quarter of 2010, and held a conference call to discuss the results. The company disclosed additional details on its acreage in the Eagle Ford Shale in Texas.

Murphy Oil (MUR) has accumulated more than 200,000 net acres across the oil and gas windows and has 2 rigs operating in the Eagle Ford Shale. The company has drilled 4 wells and reported the results of the Drees A-79 1-H and George Miles #1 well.

Drees A-79 1-H Well

“In the oil trend our number Drees number one in Karnes County came in at 1462-barrels of oil a day plus 1.25 million cubic feet of gas and had a 30-day production average of 1264-barrels of oil and 1.1 million cubic feet of gas per day. Clearly, a very strong well, and one that sets us up for a nice development.”

“The oil well in the Carnes is a great well and today, I was looking this morning before I came in and it's flowing 860-barrels of oil and 770,000 cubic feet. So that's after almost 60 days, 58 days today of production, so a real strong well.”

George Miles Well

“The second well in this acreage block spud shortly. The other two drilled wells are situated in the gas trend and are in various stages of completion. The earlier reported well test at the George Miles number one well in McMullen County is producing at less than 1 million cubic feet a day.”

“Here (George Miles well) our frac treatment did not open up all of the zones we thought and we are re-looking at our options. We have just completed a previously drilled well Ash Number 1 purchased as part of an acreage drill that's in LaSalle County and clean up is just above 2 million cubic feet a day.”

“Our budget for the Eagle Ford this near had a nominal 10 million cubic feet a day and clearly we aim to improve on that. On the beauty of this particular play is the ability to ship focus between the oil to the gas parts as product prices dictate.We’ve got $115 million in our budget for Eagle Ford spend.”



you can see the massive differences in well results from karnes to mcmullen over and over again


this is the recent pioneer result well south of the adi trend

The Chesnutt Gas Unit #1 well, which is located in Karnes County, Texas, tested at an initial production rate of 15.6 million cubic feet of gas equivalent per day (including 14.1 million cubic feet of gas per day and 255 barrels of condensate per day) on a 24/64 inch choke with approximately 5,600 pounds per square inch wellhead flowing pressure. The liquids-rich gas contains 1,200 British thermal units per cubic foot. The well was drilled to a vertical depth of approximately 13,300 feet and completed in a 4,100-foot lateral section with a 12-stage fracture stimulation.


all imho and dyor

 

[condog]

I noted another Aussie junior in a JV in the Bakken pulled off a 9600ft Horizontal with over 2800boepd announced yesterday. Be nice when / if we start cracking rock that size in the Eagleford. They only have a small interest so dont go looking for them. The point is the lengths of fracs and flows that the technology is bringing. Im not sure on the cost of the well, would like to know, as Im pretty sure they are saying only $5M per well now for those lengths.

Bring it on hilcorp.

 

[choppy]

Drees A-79 1-H Well

“In the oil trend our number Drees number one in Karnes County came in at 1462-barrels of oil a day plus 1.25 million cubic feet of gas and had a 30-day production average of 1264-barrels of oil and 1.1 million cubic feet of gas per day. Clearly, a very strong well, and one that sets us up for a nice development.”

“The oil well in the Carnes is a great well and today, I was looking this morning before I came in and it's flowing 860-barrels of oil and 770,000 cubic feet. So that's after almost 60 days, 58 days today of production, so a real strong well.”

As you can see that is a 42% decline in condensate production (30% decline in gas production) in the first 60 days, and this well is touted as one of the best. This play is definetely going to be economic, but lets just recognize that it isn't going generate some totally insane rate of return.