Ive been re-reading this announcment to try and interperet whats actually likely and its the most rediculously ill worded extremely positive announcment i have ever read.... It wasnt till about my 4th time through i noticed the significcance of it.. I will attempt to highlight below the way i now read it and see what you think.
I think two things happened today.. the traders jumped out because they mis interpreted it which isnt surprising givien its wording, secondly the company dissapointed because it held back on quantified data, in which case it should possible never have had the halt in the first place..
Highlights - highlighted in red.
ASX Announcement
12 January 2010
The Manager
Company Announcements Office
ASX Ltd
4th Floor, 20 Bridge Street
SYDNEY, NSW 2000
Dear Sir,
• Fausse Point Well intersects
over 300 feet of formation and reaches Target Depth.
• Joint Venture
secures an additional 80 acres of adjacent land.
Highlights:
• The #1 Well has now been drilled to its final depth of 8,475 ft.
• Drilling has encountered
over 300 feet of quality hydrocarbon bearing formation.
•
Mudlogging shows good quality sandstone with hydrocarbon fluorescence and up to 2% oil in drill cuttings and mud.
•
Electric line logging has identified hydrocarbon occurrences throughout high permeability and porosity sands.
• An additional 80 acres of adjacent land has been secured.
•
Casing of the entire well completed in preparation for an extensive testing campaign.
•
3 exciting zones of interest in #1 Well to be tested.
The Board of Verus Investments Ltd (“Verus”)
is delighted to announce that recent drilling of the TGR Land Co. Inc #1 Well at the Fausse Point oil and gas project in Louisiana
has intersected the primary targeted deep gas play with very strong oil and gas indications.Drilling over the last few days penetrated the main target gas sands (identified by seismic) at just over 8,145 ft and continued to the final well depth, encountering over 300 ft of good quality high porosity and permeability formation.
Logging and sidewall coring of the target gas sands has been completed and casing has now been run and cemented to this target depth.
The results of the logging and side wall cores will be provided to the market as soon as they are fully interpreted.The drilling rig will shortly be demobilized and a “workover” rig will be mobilised to undertake production testing. It is anticipated that this rig change over will take 2 weeks and testing a further 2 weeks.
The development of a comprehensive and extensive production testing and formation evaluation program is underway to provide the information required to fully evaluat the discovery. Once testing is complete, the results and
all other data will be analysed to fully understand the commercial viability of the discovery.
This data will also enable the partners to plan for the field to be completely and efficiently developed to maximise its potential.Comprehensive analysis to understand these zones of interest is currently underway with any definitive conclusions requiring further review as drilling has occurred adjacent to a salt dome with the presence of salt which can provide mixed results.
While the gas shows and oil indicators over the three zones of interest are very encouraging, the commercial significance cannot be determined until a production testing operation is completed.
Land access agreements required for production pipeline laying, and agreements for connection to existing nearby production facilities and distribution network, thereby enabling gas sales, are almost complete. The tie in point to this major trunk line is approximately 1.6 miles away.
Additionally, the Joint Venture partners have completed negotiations to enable exclusive access to approximately 80 acres of additional license area adjacent to the discovery. This compliments the existing 272 acres already within the Joint Operating Agreement.
“This is a fantastic result for Verus” the Chairman Mr Andrew McIlwain commented.
“Whilst we always acknowledged that this investment was not a certainty, the confidence we had in the data and the capabilities of the operator Golden Gate Petroleum and its subsidiary company - Kindee Oil & Gas – as well as the drilling contractor, has been returned many fold. We are still to fully understand the commercial viability of the well, however at this stage; this appears to be the best outcome Verus shareholders could have wished for”.
“The approach taken by the operator on this job has been first class. The shallower gas bearing intervals encountered provided some challenges, as previously reported to the market, slowing drilling at the time. At the operator’s recommendation, we brought forward casing of the well which enabled continued safe drilling to the primary target.
Our “dry well” cost estimate was reasonable and the casing costs and additional logging were always going to be part of bringing the well into commercial production” Mr McIlwain stated.
My comments -
1. Why secure 80 additrional acres if commercialisation is not likely to be assured.
2. Over 300 feet with very high pressures encounterd that stopped and dramatically slowed drilling for so long is stated as significant many times...
3. OVer 300 feet of hydrocarbon bearing formations.....very significant...
4. casing of entire well - Its not financially intelligent or viable to case the entirety unless its viable or at least your confident its should to be....
5. Mudlogging shows good quality sandstone with hydrocarbon fluorescence and up to 2% oil - if its here an adjacent well in such a huge tenement with so many other known targets , will find a primary oil target...
6. 3 exciting zones of interest in #1 Well to be tested - indeed , no kidding what happened to wireline data ......
7. "The Verus board is delighted to announce " - what are they delighted about....IMHO they are delighted about wht the indicative dat they are still sitting on waiting for confimred analysis
8. One of the most critical few words
"has intersected the primary targeted deep gas play with very strong oil and gas indications." Very strong indicator this is what they where after....
9. "Logging and sidewall coring of the target gas sands has been completed " so they know but we dont.... hence me trying to read things into it...
10. "The results of the logging and side wall cores will be provided to the market as soon as they are fully interpreted" so expect an imminent announcment....
11. "The development of a comprehensive and extensive production testing and formation evaluation program is underway to provide the information required to fully evaluat the discovery." They think its worth evaluating - great sign....not as good a s a definite, but maybe conservative mgmt scared of making independent decisions...
12. "all other data will be analysed to fully understand the commercial viability " is this a hint / mistake or did it just ambiguosly indicate commericla viability... im not sure...could be either way...
13. "This data will also enable the partners to plan for the field to be completely and efficiently developed to maximise its potential." another leading sentence that seems to hint very strongly at commercial viability....
14."While the gas shows and oil indicators over the three zones of interest are very encouraging " they are not prepared to make a decision or announcment without the testing....probably very wise but many small explorers have enough know how to make that decieion without 4 weeks of testing.....
15."Land access agreements required for production pipeline laying, and agreements for connection to existing nearby production facilities and distribution network, thereby enabling gas sales, are almost complete. " What on earth would you do this for if you were noit fully intending to commercialise this venture....
16.Additionally, the Joint Venture partners have completed negotiations to enable exclusive access to approximately 80 acres of additional license area adjacent to the discovery. - very indicative they think they have something very significant....always a hugely positive sign....
17. “Whilst we always acknowledged that this investment was not a certainty, the confidence we had in the data and the capabilities of the operator Golden Gate Petroleum and its subsidiary company - Kindee Oil & Gas – as well as the drilling contractor,
has been returned many fold. has been....does any one else see that as a staement that indicates possible known certainty of a result....
18. Then the icing on the cake
"We are still to fully understand the commercial viability of the well, however at this stage; this appears to be the best outcome Verus shareholders could have wished for”. I dont know about you but 40c per share as indicated in the investor presentation was the best result i had in mind..? is this pointing at it as the outcome..or have i totally mis correlated the two statements.
19. Again seems to be speaking as if its a done deal, just not announced yet.
"Our “dry well” cost estimate was reasonable and the casing costs and additional logging were always going to be prt of bringing the well into commercial production”