May 14th 2014 Presentation

[petrengr1]

I notice a couple of new pieces of information and some changes in today’s presentation.

1. I refer you to http://tinyurl.com/n7tl8ph slide 18. “Seismic survey over Antelope
Deep now complete” You may note that the red lines marked BH some of which extend outside of PRL 15.

2. The Antelope line A10IOL14 has been extended considerably to the northwest. The line now ends south of the Jaguar prospect and southwest of the Hou Creek base camp.

3. We have three new lines marked as TE021OL13 (East of Triceratops and West of Bobcat), TE031OL13 (Bobcat) and TE041OL13 (Jaguar). May be named TE for Triceratops East.

4. The new line in the southeast of the slide 18 was mentioned by Dr. Hession as the Zebra program and is a part of the work program for the new license. It is quite a long line and it appears to cross or come near the Razorback South, Zebra and Mastodon prospects and passes south of the Rhino West and Rhino East prospects.

5. On chart 17 they show a location marked Triceratops-3 (Provisional) which is northwest of Triceratops-2. I believe IOC and PRE have selected this as the next location to be drilled at Triceratops. That is a drastic change from what we have been told previously. We were previously told that we would target a reef to the southwest of Triceratops-2. The slide says “Targeting volume definition” so they must believe this location will give them the ability to prove up a larger volume of the reservoir. Also note this comment “ Complex trapping geometry with uncertain up-dip extent”.

6. On chart 16 I was a little surprised to see the planned location for Antelope-5. I had thought they wanted to prove the reservoir extended further to the southeast but instead they have placed the location west of Antelope-2. Antelope-4 will be a southeast of Antelope-2 but not very far. Just as a matter of interest at Antelope-2 we drilled the first  horizontal hole 934 meters to the WNW and the second horizontal hole was drilled 686 meters ESE from Antelope-2.  http://tinyurl.com/l96xubf chart 9.

The two new locations are in the same direction from Antelope-2 as the two horizontal holes were drilled. Looks like we are not taking much of a risk with these two wells. This should just prove up the reservoir rock that GLJ has already used to calculate 9+ TCF. If they drill Antelope-6 and want to expand the size of the known reservoir I would think they would want to step out to the southeast. Maybe they have decided they would rather have the wells in the best location for production and equip them for such upon completion.

[Putncalls]

Peteng,

Any comments of the current sidetrack?
Thanks

[petrengr1]

Peteng, Any comments of the current sidetrack? Thanks

This appears to be the typical case of the drill pipe becoming stuck in the hole due to sticky shale, sloughing shale or swelling shale. May be caused by the shale doing a kind of plastic flow due to it malleable nature when a hole is drilled through it. Or it is sometimes caused by the shale being wet by the drilling fluid causing the clays to swell. Or it can be caused by over pressured shale that has not had an opportunity to loose its water since deposition. The problem can sometimes be corrected with a change in the mud character and sometimes by mud weight.

Why are they sidetracking? When the pipe becomes stuck you either have to get it unstuck and pull it out of the hole or you have to "back off" the drill pipe above the stuck point and side track or attempt to "fish" out the stuck portion. It is usually more economical to abandon the fish, replace the lost drill collars and bit and proceed to side track around the fish.

[sageo]

Pet- Thanks for the comments on your observations. I too was concerned about the change in the new location for Tri 3 when I saw it earlier. Your explanation is much appreciated. (also A5 .....didn't think it would be that far to the west). Glad to see all the new seismics that you expanded on. Always good to get your take on our proceedures.

[calvin grad]

I notice a couple of new pieces of information and some changes in today’s presentation.

1. I refer you to http://tinyurl.com/n7tl8ph slide 18. “Seismic survey over Antelope
Deep now complete” You may note that the red lines marked BH some of which extend outside of PRL 15.

2. The Antelope line A10IOL14 has been extended considerably to the northwest. The line now ends south of the Jaguar prospect and southwest of the Hou Creek base camp.

3. We have three new lines marked as TE021OL13 (East of Triceratops and West of Bobcat), TE031OL13 (Bobcat) and TE041OL13 (Jaguar). May be named TE for Triceratops East.

4. The new line in the southeast of the slide 18 was mentioned by Dr. Hession as the Zebra program and is a part of the work program for the new license. It is quite a long line and it appears to cross or come near the Razorback South, Zebra and Mastodon prospects and passes south of the Rhino West and Rhino East prospects.

5. On chart 17 they show a location marked Triceratops-3 (Provisional) which is northwest of Triceratops-2. I believe IOC and PRE have selected this as the next location to be drilled at Triceratops. That is a drastic change from what we have been told previously. We were previously told that we would target a reef to the southwest of Triceratops-2. The slide says “Targeting volume definition” so they must believe this location will give them the ability to prove up a larger volume of the reservoir. Also note this comment “ Complex trapping geometry with uncertain up-dip extent”.

6. On chart 16 I was a little surprised to see the planned location for Antelope-5. I had thought they wanted to prove the reservoir extended further to the southeast but instead they have placed the location west of Antelope-2. Antelope-4 will be a southeast of Antelope-2 but not very far. Just as a matter of interest at Antelope-2 we drilled the first  horizontal hole 934 meters to the WNW and the second horizontal hole was drilled 686 meters ESE from Antelope-2.  http://tinyurl.com/l96xubf chart 9.

The two new locations are in the same direction from Antelope-2 as the two horizontal holes were drilled. Looks like we are not taking much of a risk with these two wells. This should just prove up the reservoir rock that GLJ has already used to calculate 9+ TCF. If they drill Antelope-6 and want to expand the size of the known reservoir I would think they would want to step out to the southeast. Maybe they have decided they would rather have the wells in the best location for production and equip them for such upon completion.

Correlating your post to that of Raymond James. Raymond james believes Elk Antelope gives a net asset value of $88 per share. This a;;ows for the time value of money. It does not include any value for Triceratops except they allow 12 for further

explorattion to give a target of 100.. I think we know there is gas at Tricertops, it is just a matter of how much. Lets say there is 4T at Tricertops and 7.2 at Elk Antelope.   Is this enough for a plant at EA and  1 or 2 trains at Tricertops to go to OSH?

Is it possible to affirm EA and Tricertops in 12 months and make a final decision on the trains to XOMs plant?

[petrengr1]

Calvin- I don’t think we can just “say” we have 4 TCF at Triceratops. We will probably have to drill several more wells to get a “certified” volume of 4 TCF. I am a little worried about their comment mentioned above: “ Complex trapping geometry with uncertain up-dip extent”. I think they have some complicated faulting and the marl streak they discovered at Triceratops-2. They may now be worried about the  shallow up dip part of the reservoir which may not have an obvious trapping mechanism. The next well appears to be 4 way dip anticline of about the same elevation as T-2 so it should be OK.

If we find gas at Wahoo, Bobcat and/or Raptor there is no reason we could not sell that gas to Exxon/OSH if they make the best offer. With one or more significant discoveries from the three exploration wells now being drilled there should be more than enough gas for three or more additional trains. Including Elk/Antelope and whatever is at Triceratops we should have enough gas for a couple of trains in the Gulf Province and an additional train at PNG LNG.

We should have the re-certification done at Elk/Antelope in less than 12 months and that should allow the partners to reach FID for an additional LNG Plant. I assume it will be separate from PNG LNG and will be either in the Gulf Province or near the Exxon Plant. I believe there will be enough gas to furnish some to both LNG plants once the parties come to an agreement.

It will probably take more than 12 months to get a significant volume certified at Triceratops.