CVN - Carnarvon Energy

[Garpal Gumnut]

L44-H Appraisal Well
The L44-H well is located in the central lobe of the Na Sanun East (“NSE”) oil field,
approximately 3.25 kilometres north of the producing NS3-D1 well.
Well testing is continuing and a stable rate of 1,265 bbls/day has been achieved. The oil
is good quality at 35 degree API. A small amount of water is being produced varying
from 0.7% to 1.2% as the well continues to clean up and unloads the remainder of the
drilling fluids lost into the reservoir while drilling (“lost circulation”).
The well is free flowing on choke settings of 8/64 inch on the annulus and 17/64 inch on
the tubing. Flowing casing head pressure is 220 psi and flowing tubing head pressure is
280 psi indicating the well may be capable of oil production at even higher rates.
L44-H penetrated the top 14.5 meters of the target volcanic reservoir interval at a depth
of approximately 866 meters. Lost circulation (an indicator of good quality, fractured
reservoir) was encountered at three levels with total drilling fluid losses of more than
1,100 barrels. Electric logs indicated the best volcanic reservoir section yet encountered
in any well over the entire 14.5 meter thick volcanic interval. This has been confirmed by
the excellent oil flow rate.

Nice

Can somebody explain the significance lost circulation and fractured resevoir in the above report as I'm not up to speed on oil reports

Garpal

 

[1234]

its also the first time CVN has become self supporting
i think the market is ready to rerate it now as more than just a junior explorer.... maybe in the next week or so.......its derisked significantly because of this drill and because of it, its suddenly become more likely to go into full production sometime in the future

agree with gumnut, i hope it doesnt fill its gap in the next two weeks when i plan to offload a little

At least now, even with a plug and abandon the sp won't plunge. Remembering also we have ann's due in a week or so to fuel this along.

Having a squiz at how POE backed up on the TSX last ngt.. Traded up to nearly $6, before settling down at ~$5.50, on a $5.80 open.... ( up~9% )

Not bad for a stock which opened @ ~$4.20 two days ago.

Supports my 'double high' theory, and that CVN will not pull back Monday after this JV gets re-evaluated on the fly..

 

[1234]

Can somebody explain the significance lost circulation and fractured resevoir in the above report as I'm not up to speed on oil reports

Garpal

"A serious condition that occurs when drilling mud pumped into the well does not return to the surface, but goes into the porous formation, crevices, or caverns instead."

Basically, the more lost circulation, the bigger the 'hole/s' in the ground they've stumbled on/in..

 

[resourcesman]

At least now, even with a plug and abandon the sp won't plunge. Remembering also we have ann's due in a week or so to fuel this along.

Having a squiz at how POE backed up on the TSX last ngt.. Traded up to nearly $6, before settling down at ~$5.50, on a $5.80 open.... ( up~9% )

Not bad for a stock which opened @ ~$4.20 two days ago.

Supports my 'double high' theory, and that CVN will not pull back Monday after this JV gets re-evaluated on the fly..

1234, good point about sp behaviour on a plug and abandon being different from now on

re TSX moves, it would have been nice if the sp had settled near intraday highs, rather than mid tho.... but cant complain

 

[Garpal Gumnut]

"A serious condition that occurs when drilling mud pumped into the well does not return to the surface, but goes into the porous formation, crevices, or caverns instead."

Basically, the more lost circulation, the bigger the 'hole/s' in the ground they've stumbled on/in..

So is this good or bad. are the holes full of oil, or is it all crevices going nowhere.
Its all confusing to me . Any articles I can look up e.g. reading oil reports or drilling for Dummies??

Garpal

 

[1234]

1234, good point about sp behaviour on a plug and abandon being different from now on

re TSX moves, it would have been nice if the sp had settled near intraday highs, rather than mid tho.... but cant complain

Not only will a plug and abandon not drop the backside out of the share, they won't have to issue any more shares for fund raising!. Double whammy..

The 'close above open' is a bit of an ask for CVN ( and POE ) when open was 30% above the previous day's trading!.
Consider the sp rose the week prior nicely, closing above open for three successive days, I'm rapt..

It nearly got there ( CVN), but a little sell ( the last trade for the day ) dropped it from .295 There was some big buying going on coming to close of trade..

Word will spread about CVN's efforts on Friday, and with the storm going through the Gulf of Mexico dropping 360,000 bopd out of worldwide production, oil $ is going up!

I'm tipping low 30's for Mondays' trade, with a hint of a mid 30's close?? US was kind to us overnight too.. Could even open higher than Fridays close, as POE did on the TSX??

I can't help but be taken back to forecast volumes. They uncapped 3x what they were expecting - from this one prospect, and on not one more result after this one, it's still undervalued @ 30c. The risk on this stock has diminished. No longer a true speculative imo. The only thing stopping the sp opening high will be traders wanting to load up some more, and have some large sell orders placed to scare off punters. I won't be too worried to see big sell orders placed a stupid prices Monday AM, only to be lifted just before open... ( there's 2mil sitting @ 30c now. )

Roll on next week..

 

[resourcesman]

So is this good or bad. are the holes full of oil, or is it all crevices going nowhere.
Its all confusing to me . Any articles I can look up e.g. reading oil reports or drilling for Dummies??

Garpal

my logic says that it means that its full of holes and does not mean that its full of oil.... but when you combine it with oil shows (that tells u there is oil there), and that oil is above all these holes, then its likely that the hole is full of oil... i could be completely off tangent here

maybe a geologist can tell us how wrong i am

 

[resourcesman]

I just hope that the price goes high enough in a couple of weeks when I plan to offload a little to profit take... probably after L44G and L44G-d1.... probably another gusher, judging by the large amount of lost circulation on it being in the same ballpark as the other big wells.... didnt do so on friday for the reason you mentioned: its gonna take a little time for the market to realise this company

CVN currently makes up more than 90% of my portfolio, and even tho im sure this is going places, I thought id better take some profits and pay off a loan haha

cheers mate

 

[resourcesman]

I can't help but be taken back to forecast volumes. They uncapped 3x what they were expecting - from this one prospect, and on not one more result after this one, it's still undervalued @ 30c. The risk on this stock has diminished. No longer a true speculative imo. The only thing stopping the sp opening high will be traders wanting to load up some more, and have some large sell orders placed to scare off punters. I won't be too worried to see big sell orders placed a stupid prices Monday AM, only to be lifted just before open... ( there's 2mil sitting @ 30c now. )

Roll on next week..

The Hartley's mid-case 50% hit rate analysis doesnt take into account that the hit rate should increase with each well, as they understand it alot better..... less plugs needed... but its still too early to say

theres also the other prospects in the concessions that were not added to the value (for good reasons because there is too little known about them).....and the invaluable knowledge picked up by the company of the generally geology for their other concessions closeby (their recent bid for an onshore permit to the west)..... so plently of upside left

 

[1234]

Bit of a chart: re the potential of CVN.

Consider the following when viewing:

CVN needed ~2500 bopd to be self funding
They have ~2700 bopd currently, effectively now cash flow +'ve, and no need to issue more shares for fund raising.
They currently have a success rate in excess of 50%. Looking more like 75% with up to 3X bopd what was expected.
They should see nothing less than 3000bopd total in the next 14 days, maybe up to 3500?

CVN also have results from two more drills coming in the next 3-7 days. L44-G was flowing oil "Some weeks ago" but testing couldn't be completed because the L44G-D1 rig was being drilled next door.
NOW. 'some weeks ago', when reading ann's, means about 2. Have a look at the buying around September 11. Massive volumes considering the announcement had nothing in it except a hint of oil, but who knew how much??

They also have drilling underway with results due in 2-3 weeks from separate locations

The latest drill results not only nearly DOUBLED their bopd output, it took them to self funded status. They also opened at a five year high on Friday.

These results have fast tracked their exploration programme and they have two new permits to explore in the coming months, with 50% and 100% Operating profit from each..

Substantially De-risked, and moving into Broker territory I can see this holding a stable 50c within two months and pushing 40c on hype alone in the next week.. Next year who knows...

 

[Garpal Gumnut]

Bit of a chart: re the potential of CVN.

Consider the following when viewing:

CVN needed ~2500 bopd to be self funding
They have ~2700 bopd currently, effectively now cash flow +'ve, and no need to issue more shares for fund raising.
They currently have a success rate in excess of 50%. Looking more like 75% with up to 3X bopd what was expected.
They should see nothing less than 3000bopd total in the next 14 days, maybe up to 3500?

CVN also have results from two more drills coming in the next 3-7 days. L44-G was flowing oil "Some weeks ago" but testing couldn't be completed because the L44G-D1 rig was being drilled next door.
NOW. 'some weeks ago', when reading ann's, means about 2. Have a look at the buying around September 11. Massive volumes considering the announcement had nothing in it except a hint of oil, but who knew how much??

They also have drilling underway with results due in 2-3 weeks from separate locations

The latest drill results not only nearly DOUBLED their bopd output, it took them to self funded status. They also opened at a five year high on Friday.

These results have fast tracked their exploration programme and they have two new permits to explore in the coming months, with 50% and 100% Operating profit from each..

Substantially De-risked, and moving into Broker territory I can see this holding a stable 50c within two months and pushing 40c on hype alone in the next week.. Next year who knows...

Good to know.

As I said, its my Woodside and hopefully my kids and grandkids will hold CVN in the future and marvel at my "skills".

Garpal

 

[michael_selway]

"Bit of a chart: re the potential of CVN.

Consider the following when viewing:

CVN needed ~2500 bopd to be self funding
They have ~2700 bopd currently, effectively now cash flow +'ve, and no need to issue more shares for fund raising.
They currently have a success rate in excess of 50%. Looking more like 75% with up to 3X bopd what was expected.
They should see nothing less than 3000bopd total in the next 14 days, maybe up to 3500?"

Hi do you know what the mine life of CVN is?



thx

MS

 

[resourcesman]

Hi MichaelSelway,

You wouldn't happen to be an English teacher would you? I may have been one of your past students.

Hartley's reckons that oil could flow up until 2020, but with rates peaking at 11,000 BOPD around 2011. After that, it is expected to decline. This is only for the Na Sanun and Na Sanun East fields. At this point, however, I think its too early for them or anyone to make an accurate estimate as to the flow rates.

You can take a look at the Hartley's reports on the carnarvon website

 

[Pommiegranite]

Bit of a chart: re the potential of CVN.

Consider the following when viewing:

CVN needed ~2500 bopd to be self funding
They have ~2700 bopd currently, effectively now cash flow +'ve, and no need to issue more shares for fund raising.
They currently have a success rate in excess of 50%. Looking more like 75% with up to 3X bopd what was expected.
They should see nothing less than 3000bopd total in the next 14 days, maybe up to 3500?

CVN also have results from two more drills coming in the next 3-7 days. L44-G was flowing oil "Some weeks ago" but testing couldn't be completed because the L44G-D1 rig was being drilled next door.
NOW. 'some weeks ago', when reading ann's, means about 2. Have a look at the buying around September 11. Massive volumes considering the announcement had nothing in it except a hint of oil, but who knew how much??

They also have drilling underway with results due in 2-3 weeks from separate locations

The latest drill results not only nearly DOUBLED their bopd output, it took them to self funded status. They also opened at a five year high on Friday.

These results have fast tracked their exploration programme and they have two new permits to explore in the coming months, with 50% and 100% Operating profit from each..

Substantially De-risked, and moving into Broker territory I can see this holding a stable 50c within two months and pushing 40c on hype alone in the next week.. Next year who knows...

Thanks for the chart 1234.

I think predicting a SP is very very difficult to do at the moment for the following reasons:

1. So many more drills happening over the next few months, with results unknown.

2. Sole bidder for block in Phitsanulok Basin (most prolific onshore field in Thailand) - JV with Sun Resources - To be decided in October

3. Application for new blocks outside of Thailand and Australia. Aiming to be a global player perhaps?

More upside than downside...but how much upside and when is hard to tell.

 

[1234]

Hi do you know what the mine life of CVN is?



thx

MS

Mine Life.. They have declining production curves set up until 2020, that is for the one Basin in Thailand.

The other prospects in Thailand and Canning Basin etc are not inclusive in the forecast.

Each 'well' has a (predicted) life of 4-5 years according to the docs, (estimates) and current estimates have been given on each (successful) well flowing ~450bopd. - such is the significance of the latest flowing 1300bopd

They're drilling 100 wells in the next 12-18 months.. ( If only they all flow 1300bopd )

With $9mil in the bank at present and turning cash flow +'ve, signs are looking good.. Maybe even a divvie !!

 

[1234]

Well waddya know. The big sell orders have left the building.

Will be interesting.. to say the least.

 

[INORE]

well by my calcs we should get an announcement today or tomorrow on testing being started on L44G-D1 and L44-G and these results should be out by about the 2/10/07 or next tuesday(ish)...therefore people should be starting to jostle for a position this thurs/friday...

 

[1234]

well by my calcs we should get an announcement today or tomorrow on testing being started on L44G-D1 and L44-G and these results should be out by about the 2/10/07 or next tuesday(ish)...therefore people should be starting to jostle for a position this thurs/friday...

You're spot on I reckon.

Seems the buying has pumped 4 mil in the last 1 hr.

Up to 31.5c now.. seems to have settled down a squidge.

Keeping a close eye ont the email that's for sure!

 

[INORE]

Well cvn travelled nicely today on high volume and up almost 10%...still hoping that testing announcement out tomorrow. Are these guys normally punctual with what they say they are going to do???

 

[1234]

Well cvn travelled nicely today on high volume and up almost 10%...still hoping that testing announcement out tomorrow. Are these guys normally punctual with what they say they are going to do???

The past couple of ann's have been very good from a projected date pov.

I had there last ann in Outlook to come out on Mon 24th sep, it was the one that came out last Friday 21st sep..

23rd of Aug ann, they said 4-5 weeks (because of the two drill situation). That takes us to any day this week...

They have already told us it's flowing, but test results couldn't be done.


August 23rd - RE: L44G
"Flow testing on this well cannot commence until the recently spudded L44G-D1 well is complete and
the Aztec Rig #14 has left location. Initial test results are not anticipated for 4 to 5 weeks."
"Significant oil and gas shows were reported throughout the entire well.
Of particular note, free oil was observed over the shale shakers while drilling through the primary
volcanic objective at 896 and 910 metres. Lost circulation, similar to that encountered while drilling the
productive volcanic zones at POE-9 and NS-4, was encountered while drilling within the same primary
target volcanic at 960 metres."