Where are the Elephants?

[petrengr1]

Where are the Elephants?
Hession is an Elephant hunter.
Hession has seen the Elephant tracks.
Hession has said we will drill the high impact prospects.
Hession has said the rigs we have now are not suitable for drilling Antelope Deep.
We have made a contract with High Artic for a heli-portable rig  http://tinyurl.com/pppxs92
 
New rig is expected to spud the first well by November 2014. (may have slipped to 1st Qtr. 2015)
Deep gas fields hold more gas per cubic meter of reservoir rock with equal porosity due to the higher pressure.
Top of the limestone reservoir at Antelope-1 was at 5,735 feet. Total depth was 8,071 feet.
We are now drilling Bobcat to an planned TD of  10,282 feet.
We are now drilling Raptor-1 to a planned TD of 14,764 feet.
Antelope Deep-1 is expected to spud in the 1st Qtr of 2015 and I expect it to be deeper than Raptor-1.
We obtained an additional line of seismic for Raptor-1. See the line that runs from northwest to the southeast at http://tinyurl.com/m32z6ho ; page 20. This line fills a gap to the northwest where they showed an alternate location for Raptor-1.
We obtained an additional line of seismic at Bobcat. See the yellow line on page 21 of the above presentation. Notice that this line extends well to the south of Bobcat and crosses the red ridge shown on the map. I believe it probably also crosses the seismic line they got for Raptor. So it looks like they are interested in an area northwest of Raptor and south of Bobcat. This area is Puri/Puri Deep and Kereru Deep. The red ridge may be the Kereru Deep trend.
In some of these folded and faulted (spindled and mutilated) areas we will have the Puri Limestone folded, faulted and thrusted under itself so we might have to drill through the Puri limestone twice (or more) to get to the “deep” reservoir. They drilled through the Puri twice at Puri-1 and Elk-2 and the picture that they showed at the annual meeting
http://tinyurl.com/qzle2wy page 20 indicates that we will have to drill through the Puri Limestone twice to test the Antelope Deep structure.

The deeper prospects that are currently being drilled or may be drilled in the future are:
Bobcat
Raptor
Antelope Deep
Puri Deep
Kereru Deep
Duck Bill

Happy hunting.

Ps - Let’s look a little closer at http://tinyurl.com/qzle2wy
 page 19 and see if we can learn any more about the future plans of IOC. The red circle has a radius of 30 km and represents the area Hession says is within the tieback distance for using the facilities that are planned for Antelope Field. They also show the two wells (shown in red print)  that are currently being drilled, Bobcat-1 and Raptor-1, as well as  “Another 6 being studied and high-graded for future drilling”. These prospects that are being studied and high-graded for future drilling are shown in  white print and are:
1. Puri Deep
2. Mule Deer
3. White Tail
4. Duck Bill
5. Antelope Deep
6. Jaguar

I see another interesting point on page 13 of this presentation where it says:

“Triceratops - 35KM North-West of Elk-Antelope; possible tieback candidate for PRL15”.

 So I guess the red circle on page 19 for the acceptable 30 km radius for tying back to the planned Antelope facilities is not iron clad and it is possible that they will also consider bringing Triceratops to the Antelope facility.

We are scheduled to spud the appraisal well Triceratops-3, shown on page 13, in the 4th Qtr of 2014.

Note that page 13 also says: “Complex structure with significant up-dip potential to west”. Since this Triceratops structure is “complex”, shallow and relatively low pressure as compared to some of the Elephants mentioned above it may not get as much attention as the deeper, higher pressure and potentially “multi-TCF” prospects.


 

[calvin grad]

I am hoping that we have 20T that ties back to EA. What are the chances of this being true?

[Putncalls]

20 Ts may be true in a couple of years but the gas is worth what it will pay. E/A is currently valued at around 25 bucks based on 7 MTPA of production in 6 or 7 years. If the A/E certification is close to the GLJ estimate that means another 20 bucks per share from Total in cash but IOC's E/A gas value is still 25$ until the LNG capacity is increased. E/A gas is currently valued at 45 cents per GCA estimate. With 7MTPA planned the price per E/A MCF actually declines with more gas.

That said the E/A gas value goes up as the time to A LNG declines. Next year at this time the E/A gas should be worth 65 bucks given todays data.

[Getitrt2]

Puts, I don't know where you're getting a $25/sh "value" for E/A, but the professionals at Macquarrie certainly do not appear to agree with you. On a risked basis assuming the old GCA 7.1 tcf estimates they assign a discounted Net Present Value for IOC of $37.85 for Antelope LNG plus $14.30 for projected additional Total resource payments, for a total NPV of $52.15/sh! I give that much more credibility. Furthermore, increased resource estimates provide geometric upside from there, in addition to risk reduction and the passage of time.

That includes nothing, or course, for Triceratops, the exploration assets, and the refinery and downstream value.

[Putncalls]

Ummm. I got more than half my numbers from McGuire. What is 62-40? That is the current PS value of A/E gas. My and any other model that uses Future Cash Flow from E/A will come up with a similar number.

In Jan I calculated 0 for E/A Using my FCF model (40$ PS)
In Mar I calculated 17$ (57$ PS)
Today I calculated 23$ (63$ PS)

Not bad if I may say so myself.

I should probably lower the 250$/SH post A LNG value a bit using the 8$ break even number.
I could use 6.5 years instead of 7.5 years from SPA to A LNG but this is PNG.

[calvin grad]

20 Ts may be true in a couple of years but the gas is worth what it will pay. E/A is currently valued at around 25 bucks based on 7 MTPA of production in 6 or 7 years. If the A/E certification is close to the GLJ estimate that means another 20 bucks per share from Total in cash but IOC's E/A gas value is still 25$ until the LNG capacity is increased. E/A gas is currently valued at 45 cents per GCA estimate. With 7MTPA planned the price per E/A MCF actually declines with more gas. That said the E/A gas value goes up as the time to A LNG declines. Next year at this time the E/A gas should be worth 65 bucks given todays data.

I dont understand.  what you said about 20ts  Seems to me that one could assume  a future price of  9.00 per mcf. Thats total revenue of 180 billion. Lets say plant cost 15 and pipeline is 5.   XOM says theres  cost 23.but not sure if that includes interest or not.

180 less 20 is 160.   Oil offsets production costs..  Lets say interest is30 billion. Now we have left 130.  Ioc share is 35.  What is the present value of that 35

It seems to me the more Ts that are proven the more likely  that FID will be a go.. More Ts would seem to reduce the unit costs of pipeline

I understand that Antelope Deep is included in PR15 and agrrement with Total encompasses any resouce at Antelope Deep.. What about Raptor and Bobcat? Does IOC retain their current percentage or do OSH and Total need to purchase interest from IOC?

[Putncalls]

Wow Calvin that is a lot of questions.

Given that Total will give IOC 1.1 billion (CGA) dollars before FID I think FID is a given. I hear 2016 being used as the year of the FID.

If revenue was based on 9$/MCF (EBITDA) or 450$/tonn, a 7.1MTPA plant would yield 3.2 billion per year. IOC's take would be .365 of 3.2 or 1.2 billion or 20$/sh. Assuming a PPS value of 10x cash flow that would be 200$/share. The key number since DEC 1941(oops 3013) is A LNG EBITDA. We should include condensates also BTW.

IOC gets a small amount of cash from A deep plus 36.5% of the hydrocarbons as I understand. If A deep is full of NG and connected, share holders make a lot of money real fast but unlikely.

[CesiumFormate]

20 Ts may be true in a couple of years but the gas is worth what it will pay. E/A is currently valued at around 25 bucks based on 7 MTPA of production in 6 or 7 years. If the A/E certification is close to the GLJ estimate that means another 20 bucks per share from Total in cash but IOC's E/A gas value is still 25$ until the LNG capacity is increased. E/A gas is currently valued at 45 cents per GCA estimate. With 7MTPA planned the price per E/A MCF actually declines with more gas. That said the E/A gas value goes up as the time to A LNG declines. Next year at this time the E/A gas should be worth 65 bucks given todays data.

I dont understand.  what you said about 20ts  Seems to me that one could assume  a future price of  9.00 per mcf. Thats total revenue of 180 billion. Lets say plant cost 15 and pipeline is 5.   XOM says theres  cost 23.but not sure if that includes interest or not.

180 less 20 is 160.   Oil offsets production costs..  Lets say interest is30 billion. Now we have left 130.  Ioc share is 35.  What is the present value of that 35

It seems to me the more Ts that are proven the more likely  that FID will be a go.. More Ts would seem to reduce the unit costs of pipeline

I understand that Antelope Deep is included in PR15 and agrrement with Total encompasses any resouce at Antelope Deep.. What about Raptor and Bobcat? Does IOC retain their current percentage or do OSH and Total need to purchase interest from IOC?

I do not believe Antelope Deep is in the Elk Antelope agreement unless there is communication on pressure tests.  Hession said he hopes they are in communication, but he stated with the ridge between them it is unlikely. Hemi, I believe you were standing near Hession after the meeting when he stated this.  Can you confirm?

CF

[Getitrt2]

Antelope Deep IS in PRL 15 and the agreement with Total, and as a potential gas source for the LNG, but as a separate bonus arrangement unless "in communication" with E/A.

[Getitrt2]

Petrengr1,

Did you notice in the 7/3 RJ "Brief", they said, "It would be rather academic (and, frankly, useless) to talk about anything resembling results before the wells reach total depth and can be tested, so the market will simply need to be patient. That said, these are all multi-Tcf targets, and Raptor has liquids potential in addition to gas.". Also, I feel sure you are aware that on the Raptor slide of the May 14 presentation, and I think others, they indicated, "First test of new trend near Puri-1 oil discovery"; but my impression is that the oil flow there did not last. It seems to me that all this is relevant also to the plans to drill Puri Deep and Kereru Deep on the Raptor trend in the future, as you indicate. I know there's a hesitation to talk about oil at this point, but it's mentioned in previous presentations and apparently is coming up at roadshow presentations and meetings. Any comments you care to make on all this?