Triceratops Field-A Pre-drill estimate of gas initially in place.

[petrengr1]

Disclaimer!!! THE WORK DONE BELOW WAS DONE BY A NOVICE RESERVOIR ENGINEER WITH NO DATA AVAILABLE. I HAVE NO LOGS, NO CORES OR ANY OTHER DATA FROM THE TWO EXISTING WELLS AND NO WELL HAS YET BEEN DRILLED INTO A REEF AT TRICERATOPS. ALL NUMBERS ARE BASED ON WILD GUESSES AND ASSUMING SOME SIMILARITY TO ANTELOPE FIELD.

I have assumed the gas/water contact will be at -1,500 meters sub sea and used the Phase 3 map at http://www.interoil.com/presentation/201..._Final.pdf chart 14.

I have split the Triceratops Map into several sections in order to estimate the reserves. Here is the breakdown:
I split off a 2 km wide strip along the strike line shown on http://www.interoil.com/presentation/201..._Final.pdf chart 18. (Pay close attention to the small map in the bottom left corner of chart 18 and note that all of the purple area is water bearing.) I then split that into parts starting from the East end.
Part 1 is 3 km x 2 km x 457 meter gas column.2,742 million cubic meters gross rock volume. Reef.
Part 2 is 3 km x 2 km x 157 meter gas column. 942 million cubic meters gross rock volume. Non-reef.
Part 3 is 4 km x 2 km x 671 meter gas column. 5,368 million cubic meters gross rock volume. Reef.
Part 4 is 2 km x 2 km x 457 meter gas column. 1,828 million cubic meters gross rock volume. Reef.
Part 5 is 2 km x 2 km x 500 meter gas column. 2,000 million cubic meters gross rock volume. Reef.
Part 6 is 9 km x 2 km x 549 meter gas column. 9,882 million cubic meters gross rock volume. Non-reef.
Next I estimated all of the Western block not included in the 2 km strip along the strike line.
Part 7 is 7 km x 10 km x 549 meter gas column. 38,430 million cubic meters gross rock volume. Non-reef.

This may be about the area looked at by Knowledge Reservoir as this adds up to 61,190 cubic meters of gross rock volume. Knowledge Reservoir estimated 58,059 cubic meters.

Now by averaging some net/gross pay and porosity numbers from the GLJ Antelope report I estimated the pore space in the above gross rock volume.
Part 1 reef estimated to be 50% high porosity and 50% medium porosity reef with average net/gross of 80% and an average porosity of 12.1%. Part 1 pore volume: 2,742 x 0.80 x 0.121 = 265.4 million cubic meters.
Part 2 non-reef is estimated to have net/gross of 11.1% and porosity of 6.1%. Part 2 pore volume: 942 x 0.111 x 0.061= 6.3 million cubic meters.
Part 3 reef estimated to be 50% high porosity and 50% medium porosity reef with average net/gross of 80% and an average porosity of 12.1%. Part 3 pore volume: 5,368 x 0.80 x 0.121= 519.6 million cubic meters.
Part 4 Reef estimated same as Part 1 above. 1,828 x 0.80 x 0.121= 177.0 million cubic meters.
Part 5 Reef estimated as same as Part 1 above. 2,000 x 0.80 x 0.121 + 193.6 million cubic meters.
Part 6 Non-reef estimated same as Part 2 above. 9,882 x 0.111 x 0.061 = 66.9 million cubic meters.
Part 7 Non-reef estimated same as Part 2 above. 38,430 x 0.110 x 0.061 = 260 million cubic meters.
The total pore volume is as follows:
Part 1 265.4 million cubic meters (Reef)
Part 2 6.3 million cubic meters (non-reef)
Part 3 519.6 million cubic meters (Reef)
Part 4 177.0 million cubic meters (Reef)
Part 5 193.6 million cubic meters (Reef)
Part 6 66.9 million cubic meters (Non-reef)
Part 7 260.0 million cubic meters (non-reef)
Grand Total = 1,488.8 million cubic meters.
Knowledge Reservoir’s number before Phase 3 seismic was completed was 1,361 cubic meters for their most likely case with gas in place of 4.594 TCF.
So my gas in place is 1,488.8/1,361 x 4.594 = 5.025 TCF. By doing it this way I am accepting the gas saturation/water saturation numbers used by Knowledge Reservoir.

Now lets look at the additional reef found by the Phase 3 seismic.
I estimated the Eastern Lobe that was not include above as follows:
8 km x 3 km x 500 meter gas column. 12,000 million cubic meters gross rock volume.
I estimated the Western Lobe that was not include above as follows:
8 km x 2 km x 457 meter gas column. 7,312 million cubic meters gross rock volume.
Now let’s calculate the pore space just as we did for the reef in Part 1 above using 50% high porosity and 50% medium porosity for the reef with a net/gross of 80% and an average porosity of 12.1 %.
Eastern Lobe 12,000 x 0.80 x 0.121 = 1,161.6 million cubic meters.
Western Lobe 7,312 x 0.80 x 0.121 = 707.8 million cubic meters.
Grand Total for Eastern and Western Lobes not include in Parts 1 through 7 = 1,869.4 million cubic meters.
Since this is all considered to be reef the gas saturation will be higher and the water saturation lower than Knowledge Reservoir used because of the large volume of non-reef rock used in their calculations. But for the purpose of keeping it simple let’s just estimate the additional GIIP (Gas Initially In Place) as we did above by “ratio-ing” our number with Knowledge Reservoir number. This makes our number very conservative.

So the newly discovered reef(s) might contain: 1,869.4/1,361 x 4.594 TCF = 6.310 TCF.

My new number for gas initially in place (GIIP) for all of Triceratops shown to us so far is 6.310 TCF + 5.025 TCF = 11.335 TCF. (You might find it of interest that the GLJ volumetric model for Elk/Antelope on page 41 of 66 of their Dec 31, 2009 report shows a gas initially in place number (GIIP) of 11.4237 TCF.) So according to my calculations the new Triceratops Field may be about the same size as Elk/Antelope on a GIIP basis. As you can see this number is 2.47 times the original Knowledge Reservoir GIIP number for Triceratops. Due to the more shallow depth and lower pressure I expect the Triceratops condensate volume to be lower than Elk/Antelope. I also believe the recovery factor at Triceratops will be lower due to a larger percentage of the gas being in tighter low porosity rock.

If we give ourselves an 80% recovery factor and 10% reduction for removal of liquids and impurities and 10 % usage for fuel we would have a sales gas volume (LNG) of 11.335 TCF x 0.80 x 0.90 x 0.90 = 7.345 TCF.
These numbers are all 100% and not reduced to IOC’s 58% ownership. So, net IOC would be 4.26 TCF.

I think IOC will need to extend the two seismic strike lines to the west and get a couple more dip lines across the Western end of the Field to see the limits of the Field in that direction. So far they have not indicated that they think there are any reefs on the Western side of the field.

[trans]

Truly outstanding work, thanks a million, peteng!

[ebster123]

Peteng, thanks again for the awesome work. Given you chafe in the estimates, does this assume that instead of T2 being 2-4 times E/A these numbers are 1:1 of E/A? Also, if we go from $.50 per mcf valuation now, and your numbers assume a doubling of reserves (equal to E/A and not 3-4 times as others have stated) does this theoretically double our pps once T2 is established. And then if we have a SD at at $2.00 or $2.50 per mcf what do you expect for pps? Thanks again Peteng!!!

[petrengr1]

ebster-Sorry, I have no qualifications to estimate the value to be placed on the gas in the ground or the expected stock price movement. I will let other more qualified posters make those judgements.

[admin]

That must have taken a considerable amount of time, thanks for the effort, Pet, much appreciated. Exciting stuff, even if numerous disclaimers pertain to it. We'll soon find out whether there is indeed a reef and then the most important of these disclaimers can be removed, I guess.

[ebster123]

Pet, I know you say you are making assumptions but man, your ability to dissect the available information and make a presentation like you do is truly amazing. Thanks for all of your hard work and effort. I hope you know my additional questions are just that and I understand you limits in answering. Again, thanks for what you provide to the MB!

[strategyguy536]

pet, thanks very much. Excellent work. I am finding it difficult not to get excited, awaiting word of found NG at Tri-2, and the details. Another couple of weeks?

[sageo]

Pet-Want to add my thanks to all the others!I read your disclaimer after I had already added a few more shs.this AM,so I can't complain to anyone.(if lumps come,my spouse will remind me)GLTA.

[jft310]

An email from the man Dave Holland states he thought best guess Triceratops would have 3-4 times the NG of E/A.Posted on yahoo that email. I somehow think he knows more then anyone else. Why???He has more data to base his estimates on.
I truely appreciate Pet Engin thats not what I am saying. But why does Dave Holland say 3-4 times E/A.???? I leave that for you to answer. Further several years ago Phil told us on several CC's that IOC had enough condensates for a CSP but the public data did not support that conclusion. How did that turn out I ask????
I am sure the quantity of NG at T-2 will come up on the 19th. Maybe more data to support his Dave Holland's thoughts.I love the idea Pet thinks 11 T's but that's with all the information he has available. I go back to the Dave Holland email and ask why does he think 3-4 times E/A.No one knows till we drill of course.

[Palm]

Great work Pet, and it's very comforting to think we have at least the prospect of another Ant reservoir. I know management has an advantage of more data, etc. but do you think Dave H might have been using the Highest estimate that KR used for its first estimate and then extrapolated for the additional size after they did more seismics? It wouldn't be the first time they did this; I believe Henry has many times used the High number when mentioning E/A. That's my gut unless there is more seismic work that has been held back until they can get more interpretation done.