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Daily Distortions no.23. An accountant’s Bermuda triangle of wells..

October 29th, 2008 · 1 Comment

The more nonsense they write and the more personal insults we and this website receives, the more we know we are on to something..

A guy called David Phillips writes an article about InterOil which leaves quite a bit to be desired. It is actually deeply flawed. Not necessarily by design, although there are quite a number of people out there who’s daily business it is to make up bad stuff about InterOil, but perhaps not this guy, because there is an alternative explanation, he is not a geologist but an accountant and perhaps he’s not that familiar with the oil and gas business.

What does he write that we objected to? Well, stuff like this:

  • Discovery of a second well that confirms commercial gas reserves is critical to a proposed liquefied natural gas project in Papua New Guinea with the government.[Phillips]

Huh? Discovery of a second well to confirm commercial gas?? That really is curious, because Elk4 is the second well!

  • One well, however, does not make for a reliable estimate of larger field reserves. Work on two prior well sites, Elk-1 drilled in 2006 and Elk-2 spudded in 2007, was suspended due to limited gas flow rates. [Phillips]

Elk1 limited gas flow rates?? Huh? Elk1 had similar record flow rates as Elk4! This is just plain wrong, 100% wrong in fact. We’ll leave the question whether it incompetence or deliberate up to the reader, but when we read it, we felt we had to point out his mistake. This is how he reacted:

  • “No major activity occurred at the Elk-1 or Elk-2 well sites during the second quarter of 2008. The Elk-1 well drilled in 2006, has been suspended as a gas/condensate discovery.” Direct from corporate 6-K filing. [Phillips]

So, those “limited gas flow rates have now disappeared, an implicit acknowledgement that he was wrong on that count (and how could he have been right, there are numerous DST test results proving otherwise).

But he keeps the argument that there is only one discovery well standing. Is there something in it that because no major activity occurred during the last quarter on a well, that well can be discarded? Or because the well has been suspended?

We ask him something along the lines of this:

  1. Does it matter that Elk1 was drilled two years ago and that it was ‘suspended’ and no activities on it’s site occured during the last quarter?
  2. What activities should have occurred? What else can they do with it, the testing of the well has long finished, there is no outlet yet, no LNG facility yet, no pipeline yet? Can he suggest any other action that they could have undertaken but to suspend the well?
  3. Since the same holds for Elk4, that might very be ‘suspended’ as well. Does that mean that when that happens, he will disregard this well as well, and InterOil will have NO discovery well left, according to his logic, he should. That will be the day, IOC’s well’s disappearing into one accountant’s Bermuda triangle..
  4. Is it not true that a well that has been ‘suspended’ because at present, there are no activities possible, somehow disappears, or at least doesn’t count as a discovery well anymore? Is it not true that it can be reactivated at any time when the company has build an outlet, a pipeline to an LNG facility, for instance?

We are still waiting for the answers, his argument, of course, is complete nonsense. Just because a company has no present outlet for a well and suspends it doesn’t make it any less of a discovery, and more important still, it doesn’t mean that they can’t reactivate the well whenever they have an outlet for it.

This is not the end of it because a familiar character latched on to the story. No surprise there.

  • David Hui Lau posts a very detailed analysis of Interoil. He doesn’t address the idea of their exagerated claims and is actually very non-biased. But who shows up to complain? You got it our friend STPIOC. Hui Lau promptly and politely rips him to shreds. STP does his usual stating conjecture as fact. www.10qdetective.com [Bostonkenmore]

He later provides the correct link(although keeping with a different author), but he got the right story. It is noticeable that he fails to explain just how this guy has ripped us apart, and how we are stating conjecture as facts. And he has an explanation of sorts why the author hasn’t answered our questions:

  • Hui Lau doesn’t have time to go back and forth with paid pumpers. [Bostonkenmore]

Apart from the fact that the author did that once already, Boston is completely oblivious to our central (only, in fact) point, the gaping hole in the story itself, which first had Elk1 with “limited flow rates” and when that was obviously wrong, lets Elk1 disappear by some act of magic, and by the same logic, Elk4 will have to disappear pretty soon as well.

Instead, he calls his analysis of InterOil “very detailed” and “very non-biased”. We could add to that that it was also very wrong..

Of course Boston is that guy who still is promulgating a “theory” that the geology where IOC drills produces “imploding” wells. He’s still doing it so we might have to come back to that hilarious one but we ripped it to pieces already here, and here.

We’re sure we have more nonsense to come from this guy.

Tags: Daily Distortions

1 response so far ↓

  • 1 Jim Tate // Oct 29, 2008 at 5:15 pm

    Crazy person this Boston