'ebster123' pid='37213' datel Wrote:Gentlemen, I do agree, we are $51 because of no answers. MH appears to be working on a deal, a tough multi factorial deal. There are many wheels in motion and these all need to align to seal the deal. However, I for one have enjoyed the lack of heavily expanded postulations and personal desires quotes. I have like the MH way of thinking (though he has not fully followed it himself) of under promise and over deliver. Others have said and expanded on what they think is happening with no F...ing clue what is really happening. I appreciate Sam's perspective, he is calling out reality. Sometimes too much Koolaid is not a good thing. I await MH, until then, no one really knows, right?!!

Thanks Ebster, as you correctly surmised, my criticism was not really meant towards MH.  Keep the faith.

'Stavros' pid='37207' dateline='<a href="tel:1392166 Wrote:Indoreservoir: You've been negative all along on IOC and drilling POS since you joined SHU in August. Do you, in your wildest dreams, think that InterOil would have borrowed $250 Million to drill 3 wells if each one had a POS of 10% - 20% at best? I don't think that Dr. Hession (a PhD trained geoligist) and Dave Holland (the best working geologist in the region) would risk the entire company if they thought the odds of success were less than 80% on the worst of the 3 wells. Never mind 10%. With all due respect, if you want to "throw water" on the IOC drilling endeavors, do so with specific facts related to the three fields that willl be "spudded" in the coming weeks, not on historical drilling success rates where "dry hole blowbacks" occur on a regular basis.

Stavros,

Thanks for the reply.  I am long quite a few shares well above the current price, so my wallet says i'm not negative and you are wrong if you think I am.

As for POS, you have to deal with facts - historical success rates, field size distribution, etc.  If you choose to ignore those thats clearly your choice, but the reality is what I've said.  Now, could the POS be higher than 10-20%? Certainly, as pointed out by others and my shares and wallet hope it is.

The $250 million was undoubtedly secured by Elk.Antelope - no banks that I'm aware of are lending money for exploation drilling without security. Private equity does fund such efforts, but at significant cost.

As for MH and David Holland, I'm pretty sure they'd agree with what I've said though they have different POSs. The risking methods are well understood and I'm sure they use these standard methods.

These are facts and they should not be downplayed because they don't paint the picture SHU members (me included) want to hear. I'd love to say we have a 90% chance of more multi-TCF discoveries, unfortunately, I believe the reality does not correspond to that statement.

Again, GLTAL

'Indoreservoir' pid='37215' datel Wrote:

'Stavros' pid='37207' dateline='<a href="tel:1392166 Wrote:Indoreservoir: You've been negative all along on IOC and drilling POS since you joined SHU in August. Do you, in your wildest dreams, think that InterOil would have borrowed $250 Million to drill 3 wells if each one had a POS of 10% - 20% at best? I don't think that Dr. Hession (a PhD trained geoligist) and Dave Holland (the best working geologist in the region) would risk the entire company if they thought the odds of success were less than 80% on the worst of the 3 wells. Never mind 10%. With all due respect, if you want to "throw water" on the IOC drilling endeavors, do so with specific facts related to the three fields that willl be "spudded" in the coming weeks, not on historical drilling success rates where "dry hole blowbacks" occur on a regular basis.

Stavros,

Thanks for the reply.  I am long quite a few shares well above the current price, so my wallet says i'm not negative and you are wrong if you think I am.

As for POS, you have to deal with facts - historical success rates, field size distribution, etc.  If you choose to ignore those thats clearly your choice, but the reality is what I've said.  Now, could the POS be higher than 10-20%? Certainly, as pointed out by others and my shares and wallet hope it is.

The $250 million was undoubtedly secured by Elk.Antelope - no banks that I'm aware of are lending money for exploation drilling without security. Private equity does fund such efforts, but at significant cost.

As for MH and David Holland, I'm pretty sure they'd agree with what I've said though they have different POSs. The risking methods are well understood and I'm sure they use these standard methods.

These are facts and they should not be downplayed because they don't paint the picture SHU members (me included) want to hear. I'd love to say we have a 90% chance of more multi-TCF discoveries, unfortunately, I believe the reality does not correspond to that statement.

Again, GLTAL

Why has the success rate been 100$\% over the last  8 years for IOC? 6 big successes and one near miss. Methane sniffers, gravity surveys, siesmic data mixed with actual drilling data? Could they be on top of an ancient corel reef? That is what the cores say.

What is it with this 90% miss rate in the 21st century? When was the last time CLR missed in SD. They NEVER miss here in CO.

Putsncalls

I don't know where your 8 wells came from - assume these are E/A and Triceratops 1 & 2 - but please note the difference between appraisal wells and exploration wells.  All of IOC's wells except for Triceratops were appraisal wells and these have a higher POS than exploration wells.  (Even Triceratops might be argued as appraisals of the much earlier Bwata-1, though Bwata may have been shallower and not intersected the carbonate.)

[I just looked at  page 19 of the IPAA presentation in Apr 13 - Bwata-1 was the Triceratops discovery well, so T1 and T2 are appraisals.   The only true exploration well we've drilled is Elk--1.]

So out of your 8 wells, we've had one exploration well and the rest are appraisal.

If they had drilled Antelope 3 as a stepout (outside of existing wells) instead of infill (between existing wells) we might have got a better up-front deal from Total.  As it is, Total (and XOM before) insist on stepout wells to verify the size of E/A.

2D sesimic is simply not that good, and our ability to define structures and image them is reflected in the lower POS for wells drilled in 2D.  Will there be variations in the POS?  Of course.  But to suggest 90% or 100% POS for exploration wells is simply ignoring geologic variability and would NOT be carried by any reasonable geoscientist on an exploration well in PNG.

Stavros

Thanks for the comments.

I hold the shares as I think E/A appraisal may lead to upside, and of course the exploration has a chance to find something.  I prediced an 80-90% chance of failure based on worldwide statistics of exploration wells drilled on 2D - the other items don't add much (gravity, seeps, etc I'm sorry to say).  Thats not 'negative' at all, but reflects reality based on oil and gas industry norms.

I prefer my investing to be reality based, as I suspect you and others on SHU do.

What are you using for POS?  Can you support it with facts?  Please give me that info as I am always welcome to new info - good or bad.

As for my 'paralysis,' I can take the loss now but I estimate a reasonable (>50%) chance that the pps will recover.  I think it is worth considering some downside insurance for a possible exploration/appraisal well failure (don't you wish you'd had insurance against a less than stellar deal?).  I asked that question and as yet no one has provided a reasonable reply.

Sooo, please don't shoot the messenger if I bring-up some inconvenient scenarios - none of us know the POS and its an estimate anyway.  If I see Holland I'll ask him what POS they carry - possibly in Singapore in April - though he might be very careful with that info.

note -  edited after re-reading Stavros' post.  Cheers

'Putncalls' pid='37219' dateline='<a href="tel:1392182 Wrote:E1, E3, A1, A2, A3 and T1 are six wells as I said. The intersection of the bit and the HCs was well predicted in all of these holes. E2 was pretty darn close. There is now a LOT of drilling data to review. With respect to Total I see no requirement for a successful "exploration well" with your POS of 10%. I also don't see why T2 or T2+ would be called an "exploration well" with a POS of 10%. Do you think that BP drilled Mandango thinking the POS was 10%? I guess all of SD WY ND MO and CO is so well known through drilling that ALL wells drilled there must be classified as appraisal wells? Then there is this strange coincidence that IOC's success rate increased drastically after expanding their seismic and gravity program. I suggest that new technology has changed the HC business.

'Indoreservoir' pid='37221' dateline='<a href="tel:1392187 Wrote:

'Putncalls' pid='37219' dateline='<a href="tel:1392182 Wrote:E1, E3, A1, A2, A3 and T1 are six wells as I said. The intersection of the bit and the HCs was well predicted in all of these holes. E2 was pretty darn close. There is now a LOT of drilling data to review. With respect to Total I see no requirement for a successful "exploration well" with your POS of 10%. I also don't see why T2 or T2+ would be called an "exploration well" with a POS of 10%. Do you think that BP drilled Mandango thinking the POS was 10%? I guess all of SD WY ND MO and CO is so well known through drilling that ALL wells drilled there must be classified as appraisal wells? Then there is this strange coincidence that IOC's success rate increased drastically after expanding their seismic and gravity program. I suggest that new technology has changed the HC business.

Putncalls You did say 6 wells in 8 years - my bad. Its clear that the ONLY exploration well IOC has drilled is E1. All the others are appraisals - thats why they can predict formation tops accurately. And its very troubling that appraisal wells E2 and T1 were wet (I think from the presentations I see - looks like T1 is right at the GWC from their Sep 12 presentation.) I'm not sure why you excluded E2 from your list, but never mind. So we had E1 and then missed on E2, and we had Bwata-1 and missed on T1 - doesn't this lead you to think we could be in for more surprises? Again, I don't know if the POS will match industry 2D seismic averages of 10-20%, or whether it will be 30-40%, but ANYONE with G&G skills who is saying its in the 60-70% range is smoking something illegal in most states. Total did not require an exploration well for E/A redetermination - they require 1-3 delineation (read 'appraisal' wells if I recall. These should have higher POS than the exploration well POS's I'm talking about, fwiw. I also note I said POS of 10-20%, not just 10%. And it could be 20-30-40% (though I doubt the higher number) as I said before and others have pointed out. BP's Macondo well was drilled on 3D seismic/well and I suggest you take a look at a Mississippi Canyon seismic map and compare that to PRL15 - you'll notice a huge difference in coverage, density, and offset information. So I'd guess Macondo had a 30-40% POS, maybe higher - I don't work the GOM so not sure what their numbers are. And while you are doing that, take a look at well densities in those states you mention. I did a quick google search on 'average usa exploration well success rate" and the number IHS quoted for the year 2000 was 38%, which they say is about the 10-yr average. I'll again point out that much of this work was done on 3D seismic. You mention new technology, and this is a major one. Will post 2D seismic worldwide success rates if I can find it. Cheers

Sclumberger publication quotes USA exploration well success rate at 25% in the 1970s and 80s, and 3D seismic had increased that to some 50% by 2005.  Worldwide success rates will be lower due to lower well density and seismic coverage.

Still looking for more info.

Last post on this as I fear I'll bore all.

For success rates even in prolific hydrocarbon provinces, most (all?) are << 50%

Go to the American Association of Petroleum Geologists archive search page:

http://archives.datapages.com/data/index.html

and enter your search term as "success rates"

You'll get some 243 results and you can look at the abstracts for free. Often the headline numbers are seen in the abstracts.

GLTAL