What the announcement means

[trans]

Northoil,  I'm not buying your hypothesis .  From my ioc experiences, it appears incomplete and not consistent with prior wells ioc drilled and their history. Especially the water line thing.   IOC goes to limestone, stops and sets casing, other stuff needed before entering formation.   They generally go 300-600 ft into formation for first DST, and some wells continue to have DST's lower, I am withholding judgement on your conclusions, respectfully.     trans

[Dr. Wu]

The Bernstein trip begins next Monday in Singapore.  Historical protocal shows IOC will (and should) put out an update prior to those meetings.  So why would the company issue this update today rather than just wait until Friday or Monday?

A) Mgmt sees this as a meaningful advance in drillng operations, like what they see and feel its press release worthy

B) Mgmt caught an earful over their drilling silence of the past months and are making amends

C) Inquiring minds want to know - govt, banks, partners and its best to get it out before Kinsha the roughneck calls Duma or some Gulf official pops off.

D) They're setting expectations before another update is issued prior to Mon's investor meetings

[Putncalls]

It's material. There were concerns about that darn shale. We know that CxHy has been observed in WBR. Now there is one question for the two wells. Is the energy economically recoverable?

If it is, does that change the 1/10 statistic being used?

[Getitrt2]

Re: market ups and downs and IOC leaks. (Admin and getitrt2) I recognize your arguments and know I could be wrong about the leaks, but I'll stand by it.  The market didn't decline that much, and since IOC has no production, it's hard to see oil prices causing such a steep decline.  Maybe it did.   What sold me, though, was the last few days of trading.  Several days of multi-point increases with no public news, followed by positive news.  That spells leak to me.  BTW, oil companies have people in their organizations with the job title of "Scout".  Guess what they do?

Re: my screw-up on Bobcat - I've apologized and sorry to have wasted your time, but I did post the correction before you posted the lecture.  Also, you want " Thoughts from our experts?".  I pretty much are one. You're totally right that they will continue to drill the objective at Bobcat.  Let's hope they find something.  But Raptor is finished drilling.  When you test a formation, you shoot holes (with actual bullets) in the pipe to let the fluids in.  The pipe safety is then compromised and although you squeeze cement in the holes, it's not a situation you want to continue drilling in.  It can be chanced, I suppose, but the safe way is to come up the hole - above the test zone - drill out a widow and sidetrack.  It's crazy and expensive.  No - you drill first; when you're all done, you come back and test.

Saying "The market didn't decline that much" is meaningless when you're comparing the Dow and the S&P (the "market" to small global E&P companies, basically all of which were down much more.  That also applies to the initial rebound, and "Several days of multi-point increases" is an exaggeration.  IMO, the comment about oil company "scouts" in PNG is not even worth a response.  The stock moves yesterday and today also belie the idea of leaks being a primary cause, although I am not saying anything is impossible.

Since you seem to want it, SORRY I studied and thought about and posted my response/correction ("lecture" as I had time, without first going back and looking for a correction from you before clicking the button.

I'm sure you have more experience with drilling than I; but as others have pointed out, IOC has not always followed your recipe, and I feel sure there are reasons.  No apologies for soliciting comments from "other experts" here with a record of careful study, research, and thought before commenting, in addition to extensive knowledge and experience, and solid trust built up over years, like Petrengr1.

Nothing aimed at you, just seeking to find the facts and the truth and share it with fellow shareholders.

[Getitrt2]

It's material. There were concerns about that darn shale. We know that CxHy has been observed in WBR. Now there is one question for the two wells. Is the energy economically recoverable? If it is, does that change the 1/10 statistic being used?

Agreed, Putn, on the PR.

However, I have never accepted the "1/10 statistic" as applicable for IOC, and been in various arguments about it.  It's true that Hession has cited it more than once as a global exploration statistic, probably trying to tamp down sky-high expectations.  On the other hand I don't think he has ever cited it as specifically applicable to IOC in PNG, and in fact has stated that IOC has had a better record so far, and he and others have said many things that have created higher expectations.  Obviously, let's hope the latter are correct, as I believe.

[trans]

Northoil,  I'm not buying your hypothesis .  From my ioc experiences, it appears incomplete and not consistent with prior wells ioc drilled and their history. Especially the water line thing.   IOC goes to limestone, stops and sets casing, other stuff needed before entering formation.   They generally go 300-600 ft into formation for first DST, and some wells continue to have DST's lower, I am withholding judgement on your conclusions, respectfully.     trans

I have to post this........guy on IV found the A1 data (its too far back to be on IOC's website)....A1 had 3 DST's and it wasn't bottom of hole as Northoil says in Raptor this am.   I am wondering if this guy is a short plant......too much of his posts earlier don't make sense......go check investor village .  I'm only concerned because I want straight info, not shots in the dark.....trans

sorry northoil , but you bear closer scruitiny

[petrengr1]

Back on Sept. 30th they were preparing to set 7” casing at the top of the pay zone at Raptor-1. So now they have set their 7” casing and cemented it in place and drilled ahead in the pay zone for 200 meters (656 feet), probably with a 6” bit,  and have run logs. They say the logs indicate the presence of hydrocarbons. In these highly resistive limestone zones the logs are not very good if the porosity is low as we saw at the bottom section of Triceratops-2. The higher the porosity is the better will be the quality of the log data. We don’t know if they took any cores but it is probably likely so they should have some additional data in addition to the logs. Also the mud logs and cuttings analysis will provide some additional insight as to what we might expect. If they found good porosity at the top of the zone like  we did at Antelope then the testing should be definitive as to type of hydrocarbon, flow rate and reservoir quality. If the formation is low porosity with some fractures we could still get a high flow rate, particularly if it is gas.

It is not necessarily true that we are through drilling at Raptor because we are planning to test. They did not say they are running another liner. They could set a packer inside the 7” casing and test the entire 656 feet of open hole. The limestone should be much thicker than 200 meters and they probably do not know if they have yet penetrated the gas or oil/water contact. If they test the open hole interval and find hydrocarbons with no water they will drill ahead. Eventually they will log again and run a 5” liner. Hopefully they will be through the pay zone at that time and they will then proceed to test the lower zones inside the 5” liner to evaluate various zones and locate the gas or oil/water contact if one is present.

As we see at Bobcat-1 they have set a 5” liner and plan to drill ahead into the pay zone below the 5” liner. This means they will be using something like a 3 7/8” - 4 1/8” bit. A very small hole but big enough to evaluate the reservoir. This is about the size hole we used at Antelope-2 for the two horizontal holes. I am not going to go back and look but I think we drilled up to 3,000 feet+ of 4” hole. Now that we are through the shale and have it behind casing we should be able to keep the hole open and complete the evaluation of the reservoir in a reasonable period of time.

[Getitrt2]

Thanks a bunch, Pet!!!

Well, Northoil, any other comments or complaints about my interest in analysis and comments from "other" trusted experts here?

[jft310]

History is repeating itself with the latest press release . Phil would drill through the shale enter the reservoir rock rock and run a DST .
What's most interesting is several persons emailed Dr Hession and asked him to follow the historical model and he did .
Comments about hitting the gas water contact are NOT supported when one takes the time to study the history of Interoil drilling.
Further some need to read Macquarie, Bernstein and Credit Suisse to understand why institutions bought thus dip !!
Why invest in a company without understanding what you own and the proper timelines for stock appreciation.

[ArtM72]

The Bernstein trip begins next Monday in Singapore.  Historical protocal shows IOC will (and should) put out an update prior to those meetings.  So why would the company issue this update today rather than just wait until Friday or Monday?

I think you hit it here, Doc.  It seems to me that with Berenstein on the way Hession was more or less forced to reveal the status of these wells before there was any serious commotion about non disclosure following what the Berenstein group would likely have discovered.  It seems there isn't a person on this board that doesn't think today's release is material.

Maybe we should all chip in for another Berenstein fact finder before Christmas.