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.
