E-3 Update from slides

[jft310]

Elk-3 well spud preparations



Pre-spud preparation at the Elk-3 delineation well site is nearing completion.



We have begun mobilization of our Rig 3 to the field. All components of Rig 3 are being shipped out of

Port Moresby by barge to Hou Creek.



The objective of the Elk-3 delineation well is to test the Early Miocene to Late Oligocene limestone

section above the gas water contact in the Elk fault block.



This lower limestone interval exhibited better porosity and permeability than the shallower facies

penetrated in the upper reservoir in the offset Elk-2 well.

[TxPm]

I don't remember if it was Phil or who but someone confirmed that E-3 would be spud by the end of the month which is great news as well

[jft310]

I think it was Dave Holland. Rig up they called it by month end.

[TxPm]

Thanks for the clarification JFT, I was trying to listen & take notes at the same time. Hopefully this means we have a well spud soon thereafter

[Spartina]

This rig can go deeper, will be interesting to see what the liquids are @ the bottom of E3

[jft310]

Since the Ellk well was drilled I have been told by IOC Mgt they wanted to drill into the sandstones.

[TxPm]

"The Elk-3 rig site - there’s photos on slide 18 - and the Elk-3 access road are complete, and we are currently moving in the InterOil Rig 3 rig from [unintelligible] to the [unintelligible] road and rigging up on the location to spud before month end."

I don't know if this meant they want the rig on location by months end or the well will be spud before the end of the month.

[petrengr1]

This rig can go deeper, will be interesting to see what the liquids are @ the bottom of E3

Spartina:

Here is something I wrote previously about Elk-3:

Elk-2 hit the top of the limestone at -2262 meters sub sea. The gas/water contact is at -2248 meters sub sea. I expect Elk-3 to hit the top of the limestone at about -1750 meters sub sea or roughly 500 meters higher than the gas/water contact.

The top 500 meters of rock at Elk-2 had about 103 meters of pay i.e. 2% porosity or better. The average porosity of this 103 meters of pay was 7.4% (6.6% in-situ).  I am hoping to find some porosity better than this at Elk-3 but if that does not pan out we should have at least 100 meters (328 feet) of net reservoir rock in the 500 meters (1,640 feet) of fractured limestone that we drill above the gas/water contact.

It might be worth noting that there were a few thin zones with matrix porosity as high as 11- 12%.

We should make a good high volume gas well and prove that we do have at least some matrix porosity in the Main Elk Fault Block. Perhaps this will be good enough to get GLJ to add a little to the resource volume.

I think the liquids at the bottow of Elk-3 will be water, the same as Elk-2. I do not think they will drill to the sandstones at this location to look for oil. Just my opinion.

[jft310]

Pet- Lets have a contest you see water at the bottom of E-3 we can see that above. IOC mgt thinks the sandstones have liquids and they are deeper. The most efficient use of Capital dollars would be to drill into the sandstones now. Spartina thinks what I do that IOC will drill into those Sandstones now on a liquids search. You disagree.
If they stop at one point without drilling into the sandstones then I agree with you. If what I hear and Spartina hear they will drill into the sandstones with this well. then I am right. Much may depend on more money to drill further. I was right about the Dolomite height at A-3, will I be right about the liquids at E-3??? Ask yourself why has Henry raised his T estimate for E/A?????Does Henry have information not on the IOC slides???Most would think so.