First, let me add my thanks to Tusker for organizing the pre-meeting meeting. My flight was delayed 2½ hours so I arrived at the pre-meeting meeting late. I don’t know what all I missed out on but I did get to listen in to the last part of a lively discussion that was being led by Efi when I arrived. I was able to meet 8-10 of you which was also a delight for me. Thanks to all of you for your input.
This was my first AGM and I found it to be very interesting and the Officers were very forthcoming and helpful in answering questions from the group. After the meeting the Officers stayed around for discussions with individuals or small groups where they happily answered more questions and provided more interesting insight.
Most of the meeting highlights have been covered by Efi above so I will just touch on a few items that I recall and hopefully will not be too duplicative.
From the meeting it seems to me that Phil is not interested in selling the Company or even a major part of any of the discoveries. He said to sell off these discoveries is not a way to grow the Company or not a good way to have “sustainable” growth. I think what he wants is to sell off what we need to, to get the development going but to retain as much as possible so that we have long term “sustainable” growth i.e. long term cash flow.
I asked Phil, since IOC has announced an accelerated Exploration Program, if we could expect to see more than the two IOC rigs working to develop the prospects, more specifically in PPL237 where PRE has been taken in as a partner. His answer was yes! I am speaking from memory now so feel free to correct me but I think the agreement with PRE was to include six more wells in Triceratops and 4 exploration wells in other parts of PPL237. I asked where we might expect to see additional seismic and drilling on other prospects. As I recall his comment was that we would probably see some seismic on the western prospects but he was most interested in “Mule Deer” and, at least by insinuation, the prospects close to Elk/Antelope because these could be brought on production with a minimal amount of pipeline and additional infrastructure cost. Yes, at least part of Mule Deer is in PPL237. So is part of Raptor/Duckbill, Mountain Lion and White Tail. I would not be surprised to see some additional seismic in the Northeastern corner of PPL237 in preparation for the drilling of some exploration wells in that area.
Along the same line I later asked a similar question regarding PPL236 i.e. can we expect to see additional farm-outs and more rigs brought in to explore and develop PPL236. Again, he said yes! Of course there was no mention of timing. He did point out that most of these wells could be drilled by a land based rig since we have a road system in this license area. So, most of these prospects would not have to be drilled by a heli-rig.
Yes, we did have a quick look at the log, and I must admit that the bottom section of the hole, i.e. that part below the level of the Bwata-1 gas water contact does indicate that the well should produce hydrocarbons down to about 2030 meters (6660 feet). It would take many hours to properly evaluate this log and we only had a brief 5 minutes or so to look at it. So I have decided that seeing is believing and I will switch my view to match that of the Company i.e. the zone below the hard streak is productive lower than the Bwata-1 gas/water contact which would be at about 1,900 meters (6,234 feet) in T-2. This means this is a separate reservoir from the upper zone that was tested in DST No. 8 and DST No. 9. These two tests were of exactly the same open hole interval i.e. 4,111 feet to 4,859 feet or a total of 748 feet. IOC believes this lower zone is productive strongly enough to spend several million dollars to prove the lowest possible level of producible hydrocarbons. If this proves to be true we will be able to add +/- 130 meters (427 feet) to the amount of pay we expected before drilling the well. If this is true for other parts of the reservoir, this being the bottom of the pyramid, it will add significantly to the amount of reservoir rock present above the gas/water contact and, therefore, will add significantly to the amount of reserves at Triceratops.
Other evidence that this is a separate reservoir from upper T-2 and Bwata-1 is presented in the May 14th presentation
http://www.interoil.com/presentation/201..._Final.pdf chart 16
>DST#2 pressure indicates that the reservoir below 5,069 feet (1,545 meters) has a higher pressure than Bwata-1 water zone
>DST#4 and DST#5 pressures are not on the water line indicating movable hydrocarbons, as
associated with the wireline logs, core data and drilling data
So they apparently have at least three sets of pressure data that indicate the lower zone from 1,564.5 meters (5,133 feet) to 2,030 meters (6,660 feet) has a higher pressure than the upper zone and the Bwata-1 zone and the pressures also indicate that the fluid in the reservoir rock is not water. The small amount of liquid hydrocarbons recovered on DST No. 2 (chart 17 of the May 14 presentation) was a clear liquid. Since I have never seen a reservoir filled with clear condensate I still believe this is a gas condensate reservoir. If this proves to be true then they should be able to swab enough of the mud filtrate back to get the zone to start feeding gas and condensate into the well bore at which time the well should be able to sustain flow to the surface. The testing will start at the bottom i.e. about 2,000+ meters. I believe I did see a better zone not far above 2,000 meters and this may be where they start testing. If they can prove producible gas at the bottom that will validate that all of the rock above that point is filled with gas and condensate. Of course there are still some folks that hope the reservoir is filled with oil and I hope they are right but we will have to see what the tests reveal.
While we are all interested to prove that the reservoir interval below the Bwata-1 gas/water contact contains producible hydrocarbons we should also remember that they indicated “the best reservoir pay interval between 5,584 feet (1,702 meters) and 5,764 feet (1,757 meters) MD (measured depth)” chart 16. This interval is above the Bwata-1 gas/water contact level at +/- 1,900 meters and will almost certainly produce gas and condensate since we recovered the small amount of clear condensate from 1,938 to 1,967 meters.
One other subject that was mentioned at the AGM was what type approvals are needed for the sell down agreement of Elk/Antelope. Phil said that all parties involved would want to be sure they had the necessary government approvals. He said the Government approvals needed would be from the NEC of the newly elected government. They are continuing to work with the short list of bidders but I believe this means no announcement will be made before August even if they decide who the winning bidder is before that.
