Comments on the latest Press Release

[Palm]

Just holding Art. Got all of this one that makes sense.

[Putncalls]

They will be using state of the art. The key will be the DIFFERENCE in pressure and temperature. The sensors will be as identical as possible and the data will be as many points as practical averaged over as long a period as desired. I can't speak to the pressure sensor but I can say(99% certain) the error difference in temperature will be less than 0.0001 degrees and the absolute temperature will be within 0.1 K.

[petrengr1]

[quote='petrengr1' pid='66164' dateline='1453496882']

A few comments on IOC’s latest Press Release http://tinyurl.com/h5mfapn :

1. “the second planned extended well test has commenced at Antelope-5.”

Comment: The first test was a four rate flow test with rates between 30 MMCFD and 60 MMCFD over a three day period. They produced a total of 152.9 MMCF. They had a pressure drawdown of ~2 psi and I believe the pressure built back almost to the original reservoir pressure more or less instantly upon the well being shut-in. The stabilized reservoir pressure at Antelope-5 showed a decrease in reservoir pressure of 0.061 psi. This pressure reading came from one down hole pressure recorder. It was the deepest of five pressure recorders and it was set at 1,644.6 meters below the rotary table. I think we have never been told the size of the casing or the depth it was set but it was set at or near the top of the reservoir which was reported to be at 1,680 meters below the rotary table. So this gauge was set just inside the casing above the open hole and no doubt just below the packer on the bottom of the tubing. I can visualize that at flow rates of 50 - 60 MMCFD the pressure recorders might be “knocked around” a good bit during the flow period due to turbulence.  I do not know why they only reported the pressure from the lower gauge at Antelope-5 and had nothing to say about the other four gauges. Could it be that they were damaged or quit working?? Now they say: “In order to improve the certainty of the minimum connected volume, we have added additional pressure gauges”. Wow! How much redundancy is required? They were already using five pressure recorders. How many are they using this time??? They plan to produce the well this time ~14 days at a rate of ~50 MMCFD. They say they expect to produce approximately 5 times as much gas this time as they did on the  first test which would be about 765 MMCF. If we have no water drive the reservoir pressure should drop 5 times as much as the first test. The loss in reservoir pressure at Antelope-1 was measured at 0.080 psi based on the average of 5 down hole pressure recorders. All five gauges apparently worked at Antelope-1 where there was no turbulence because the well was shut-in. So the average pressure drop between the two wells was ~0.07 psi. We are probably looking for a pressure drop of about 0.35 psi on this new test.

2. “Antelope-6 appraisal well, located 2km eastsouth-east to the Antelope-3 well was preparing to drill ahead at 1,120 meters (3,674 feet) true vertical depth sub-sea.”

Comment: “ preparing to drill ahead” probably means they have just set casing at 1,120 meters true vertical depth sub-sea. I no longer know what the casing program is. IOC used to set the 13 3/8” casing at this depth. So that could be it. OSH said that we finished the hole at Antelope-5 with a 6” hole so that could mean that they are now using a different casing program with 7” casing set at the top of the reservoir. We will not know until they tell us.

Their latest map shows that they expect to find the top of the reservoir at ~2,000 meters TVD sub-sea. So if the map is correct they have about 880 meters to drill before reaching the top of the formation. The gas/water contact they are currently using is -2,214 meters TVD sub-sea . So if the map is correct we will have 214 meters (702 feet) of some kind of formation above the gas/water contact or a 214 meter gas column. I believe it is possible the well will come in a bit higher than prognosis and I am hoping to find some good porosity limestone above a zone of dolomite. IOC is expecting some lower porosity dirty “lagoonal” limestone, probably containing shale and silt. So they have low expectations for this well. They say: “proposed total depth of around 2,464 meters (8,084 feet) true vertical depth sub-sea.” so they plan to drill the well 250 meters (820 feet) below the gas water contact.

3. “The PRL15 joint venturers are discussing an additional appraisal well to the west of Antelope-5. The decision whether to drill a further appraisal well will follow the evaluation of the Antelope-6 appraisal well and the results of the latest flow test at Antelope-5. “

Comment: If they wait until Antelope-6 is drilled and evaluated to make the decision to drill Antelope-7 that means that they will not start building the location for Antelope-7 until after drilling at Antelope-6 which could be around April 1st. I believe it would take them at least four months to build the location and move in the rig and then three months to drill the well. So the well would be completed around Nov. 1, 2016.

If they start the certification process after completing Antelope-6 we could receive the interim resource payment in the 3 Qtr of 2016 or about 4 months (120 days) after completion of Antelope-6.

If they choose to drill Antelope-7 before starting the certification process we will not receive the interim resource payment until about the end of the first Qtr. 2017 but the payment will likely be larger than if we do not drill Antelope-7.

What is the reason why they drill under GWC?

[/quote

Relker-

1.  They will drill through about 1,522 feet (464 meters) of the carbonate section. About 702 feet (214 meters) of this will be above the gas/water contact and about 250 meters (820 feet) will be below the gas/water contact.  The top of the pay at Antelope-6 is expected at about -2,000 meters sub sea and the top of the structure is at about 1,400 meters sub sea. So Antelope-6 is about 600 meters below the top of the structure. There is a lot of area up dip from Antelope-6 that needs to be evaluated. From Antelope-6 it is 3 km to Antelope-1, 2 km to Antelope-3, 2.5 km to Antelope-5, and 2.2  km to Antelope-2. The section they are drilling below the gas/water contact will be above the gas/water contact in the up dip areas between these wells. So I think they just want to see what this rock looks like at the Antelope-6 location. Is it the same carbonate section we have been seeing at the other wells and does it have similar porosity. They will use this information to evaluate the up dip areas between the above mentioned wells.

This is the main reason for drilling below the gas/water contact. Now here are some other possibilities all of which I think can be disregarded.

2. Anywhere else in the world they might be looking for another reservoir. Here I do not believe that is the  case. I believe all of the section they drill will be in the same carbonate section as the Antelope Field. To be otherwise they would have to cross the underlying thrust fault. I do not think they will be drilling deep enough to cross that fault. If they could locate the fault at this location that would give them the first point for identifying the location and angle of the fault. I don’t believe any of the other wells have crossed the fault either. These thrust faults are usually at a low angle, maybe from 10 degrees to 40 degrees. For them to find the fault at the planned TD of Antelope-6 (2,464 meters or 8,084 feet) the angle of the fault would have to be a little less than 10 degrees for the location of the fault to be as shown on http://tinyurl.com/z4yzgue page 14.

They will not be drilling deep enough to reach the Pale/Subu sandstones.

3. Maybe they are trying to see if they can reach the lava dome inside of the dormant volcano which is below the lagoonal rock they expect at this location. Just kidding!

[jft310]

Makes Perfect sense .

[petrengr1]

I have a a few questions. By the way the detailed discussions on the well results and well tests are phenomenal and certainly shows the engineering expertise here but, I am just a novice and would like to know the following: 1. If A7 is drilled why would it add so much in understanding that the 6 wells already would not show? And to add to that discussion would we not receive the extra payment of molecules with the final evaluation allowed by the Agreement just a few years later? So in the long run we get paid on information the A7 well shows down the road. So even though it is another six months or so to wait why not take the certification money as soon as possible and continue the exploration. 2. Since we like to speculate, why hasn't Hession cut a deal for TBR? That would be a boost to the stock PPS. No offers yet? Or just not the right deal? 3. If the company is to receive an offer on a buyout and most here want to say that they have to pay on the certification dollars, but why would they not also have to pay on the 9 billion opportunity the gas plant provides and TBR discoveries and the other acreage. So what some are saying right after certification they can steal the future assets for a song. Not sure I get that but do believe that could be the case because I have seen these buyout deals take care of the management team and leave the shareholders holding the proverbial bag. So since we have a minimum seven to nine month wait at the moment I think these discussions are great! Look forward to hearing more.

MartiniStocks-

1. If A7 is drilled why would it add so much in understanding that the 6 wells already would not show? And to add to that discussion would we not receive the extra payment of molecules with the final evaluation allowed by the Agreement just a few years later? So in the long run we get paid on information the A7 well shows down the road. So even though it is another six months or so to wait why not take the certification money as soon as possible and continue the exploration.

My Comment:

The reason for drilling Antelope-7 would be to evaluate that area of the field by drilling and possibly help locate the western fault. We need to find out how far to the west the really good rock of the upper reef extends. Right now all they have is their seismic and gravity data and they are having a hard time deciding where the western fault is located. I believe Hession said that if the western fault can be proven to be as shown at   http://tinyurl.com/z4yzgue page 14 it would add 1 to 3 TCF as compared to the previously mapped fault location.

Yes we have the right to call for another certification in the future as late as after 20% of the gas has been produced. If we wait that long to ask for the second certification before we get paid we will have to reach FID, build the plant and sell some of the gas. The present value of the payment to be made many years in the future is almost zero.

2. Since we like to speculate, why hasn't Hession cut a deal for TBR? That would be a boost to the stock PPS. No offers yet? Or just not the right deal

My Comment:

I know nothing about what Hession is doing on trying to monetize Triceratops, Bob Cat and Raptor. If he could make a properly structured deal with someone whereby it would be profitable for IOC I am all for it. Hopefully it would be a deal whereby our new partner would carry IOC’s share of the cost of drilling several wells. Since Antelope Field (PRL-15) will justify the building of the LNG Plant maybe we would not have to give away the first 3.5 TCF, especially if our new partner is Total who will be the operator of the new (proposed) LNG Plant. It would be great to have a Major being the operator and doing the drilling in these three fields with IOC having enough money to proceed with exploration drilling of the other prospects.

3. If the company is to receive an offer on a buyout and most here want to say that they have to pay on the certification dollars, but why would they not also have to pay on the 9 billion opportunity the gas plant provides and TBR discoveries and the other acreage. So what some are saying right after certification they can steal the future assets for a song. Not sure I get that but do believe that could be the case because I have seen these buyout deals take care of the management team and leave the shareholders holding the proverbial bag. So since we have a minimum seven to nine month wait at the moment I think these discussions are great! Look forward to hearing more.

My Comment:

I agree that IOC and shareholders should be adequately compensated for the present value of the Company by anyone who may desire to buy the Company. However, again the present value of the $9 Billion opportunity is probably almost nil because it is so far in the future. I presume that the BOD and shareholders will reject any inadequate bid.

[sageo]

Thanks guys for the fine discussion . Btw Pet,appreciate the pdf on the Goldman Energy Conference on Jan. 6-8 2016. I printed out page 14 (showing those 7 beautiful gas wells) for my IOC file. [ The file is getting "fatter" while the wallet is getting "skinnier" ] . ( I know,that will get better if I live long enough ! Ha,ha. Have a pleasant evening.

[MartiniStocks9756]

Thanks PET!