I'm really getting this gut feeling

[Optionray]

that we hear the status on all three wells between now and the shareholders meeting.  I think they will have to give an update before hand and will probably wait as long as possible so that they can acquire up to the minute reports to report on at the shareholders meeting.  Sure is going to be sweet reviewing all three updates (the suspence is killing me).  Heck, we may even hear something at the next meeting discussing the setup/staging of the next drilling area.  Bet we are in for a few surprises (good).  If I was MH, you can bet I would try to energize everyone (especially after December) at this meeting.

1) Next drilling area about to be staged

2) Loan extension finalized

3) Clarity on selling part of license

4) Another estimate of 2-3 t's based on preliminary results from drilling.

Hope I'm not being too optimistic, but these things wouldn't surprise me, and they should would energize me.

[Kaliboo]

that we hear the status on all three wells between now and the shareholders meeting.  I think they will have to give an update before hand and will probably wait as long as possible so that they can acquire up to the minute reports to report on at the shareholders meeting.  Sure is going to be sweet reviewing all three updates (the suspence is killing me).  Heck, we may even hear something at the next meeting discussing the setup/staging of the next drilling area.  Bet we are in for a few surprises (good).  If I was MH, you can bet I would try to energize everyone (especially after December) at this meeting.

1) Next drilling area about to be staged

2) Loan extension finalized

3) Clarity on selling part of license

4) Another estimate of 2-3 t's based on preliminary results from drilling.

Hope I'm not being too optimistic, but these things wouldn't surprise me, and they should would energize me.

It's plausible, but I don't think they would go 50% over on Wahoo on the time estimate for this purpose.   As I said elsewhere this is causing another credibility issue.  I work for a SM.  Exploration is highly uncertain.  The combination of drilling and evaluating an exploration well is a lot of operations to conduct.  The other two wells have 90 day estimates.  I was suprised this one is so low, however, I didn't dig into the details.  They may be task saturated as the industry tends to lean strongly in that direction when it has plenty of opportunities to pursue.  That means staff are overloaded.  Ramping up from zero to 3 or more rigs simultaneously is a tremendous effort for this size of company.  The industry used P50 estimates, meaning there is a 50% probability it will take less/more days and cost.  To exceed your P50 estimates by 50% is a clear indicator that they did a very poor job on this estimate and didn't know what they were doing.  So the cost  are way over as well as the time and the end is unknown.  When you are burning through capital like this and have lost credibility on  your estiimates, you owe those who have provided the capital and own the company (we shareholders) a timely update.  Plain and simple.  Not doing so is creating another credibility crisis for Hession.  How does he think he's going to be received when he finally provides an update of very bad news and a huge over expenditure after it is over?  I can't see him doing this without really good justification.  Investors know this is a high risk/reward activity.  If he is holding back with a long delay for some future surprise effect or to water down bad results with some better results from another well, then that is not right.  He should report when the work is done and outcome is known.    The only sensible reason for the delay on the update for Wahoo is that there is strong evidence of hydrocarbons that make him think this is a viable discovery, but they are overwhelmed with problems e.g., well control and hole stability.  He doesn't want to lose the well and report out that there was a big HC zone but he lost the well.  So he's in a lose / lose situation on reporting.  He will stretch it out as long as he thinks they can save the well and as long as he is convinced there is a discovery.  If that is his reason, then I can understand and support the delay.  He doesn't want to say, I had this huge fish on the line but it fell out of my hands.

[calvin grad]

Explain we'll control and hole stability please

[admin]

["If he is holding back with a long delay for some future surprise effect or to water down bad results with some better results from another well, then that is not right. He should report when the work is done and outcome is known."]

Isn't this a material event and aren't they required to report within a set time limit?

[trans]

How about another scenario:  The beginning difficulties with 3 crews running could now have been overcome and they're drilling and testing at least one well for now.  This could be possible, could it not?

[admin]

["The only sensible reason for the delay on the update for Wahoo is that there is strong evidence of hydrocarbons that make him think this is a viable discovery, but they are overwhelmed with problems e.g., well control and hole stability. He doesn't want to lose the well and report out that there was a big HC zone but he lost the well. So he's in a lose / lose situation on reporting. He will stretch it out as long as he thinks they can save the well and as long as he is convinced there is a discovery."]

While losing a well certainly is a setback, if there are hydrocarbons I would say the positive (a new discovery) could easily outweigh the negative (the cost of drilling and efforts to control the well, the time lost). Plug the well and drill another one, or is that too simple?

[sageo]

Kaliboo - Great post ! Thanks for your thoughts. Yes, drilling 3 wells simultaneously does tend to spread your staff very thin. The possibilities for problems (especially in our kind of geologic circumstances) is certainly there constantly.Since we are getting "nada" each passing day, I am slowly losing confidence in Mr. H......sure hope that will change "shortly". ( notice I didn't use soon) !  Good luck.

[Kaliboo]

["The only sensible reason for the delay on the update for Wahoo is that there is strong evidence of hydrocarbons that make him think this is a viable discovery, but they are overwhelmed with problems e.g., well control and hole stability. He doesn't want to lose the well and report out that there was a big HC zone but he lost the well. So he's in a lose / lose situation on reporting. He will stretch it out as long as he thinks they can save the well and as long as he is convinced there is a discovery."] While losing a well certainly is a setback, if there are hydrocarbons I would say the positive (a new discovery) could easily outweigh the negative (the cost of drilling and efforts to control the well, the time lost). Plug the well and drill another one, or is that too simple?

That's pretty much the case but unfortunately the problems can begin before the entire pay zone is drilled and as a result a very incomplete picture is in hand.  E.g., they may have gotten 50 ft into a large HC bearing zone when all hell breaks loose.  The pore pressure/frac gradient prediction may have missed resulting in a  big kick and/or lost returns and/or stuck pipe and/or a hole collapse.  The PP/FG prediction is the essential tool needed to determine mud densities, casing points, max circulating rates, etc.  In exploration areas these predictions are highly uncertain.  Hence the term "wildcat."  Because when things go wrong, that wildcat can kick your Xxx.  I've had my own well from hell working 24 hrs a day to figure out how to recover without junking the well.  It can be really rough especially when working on site. If there are unusual stratigraphic pressure anomalies, they could have used up their casing contingencies for such situations.  That can mean you P&A the well and come back later with a new improved design. It happens.  Note that a really bad wildcat ain't letting go of you until she's had enough.  So that scenario with big gas and/or oil kicks may give nice indications they are into something potentially good, but they would have very little info to assess the size.  Such a scenario might give MH a reason for delay and excuse him.  They could also be fighting problems on all 3 wells simultaneously.  We already know the other 2 have had (or maybe still are).  Now you are talking major crisis time.  You forget updates until most things are back in control.  This is all plausible rational explanation.  Life in the oilfield.  Hoping this makes waiting more tolerable.

Kaliboo

[admin]

Ok, thanks for the explanations Kaliboo, you're experience is highly valued here.

They almost lost Elk1 and spend several weeks trying to recover it, if I remember correctly. It was never drilled to full depth

[Kaliboo]

Explain we'll control and hole stability please

That's a lifetime career for some people.  In simple terms drilling into the earth is an act of balancing earth stresses and pore pressures.  From surface to TD the pressures and stresses are nonlinear.  Petrophysicists make pore pressure/frac gradient predictions so drillers can design the mud and casing programs to get the well down.  If the mud at any depth is too heavy or pump pressures are too high, you can unintentionally frac the mud into the earth (sometimes followed by a blowout).  If it is too light, you can take a kick (i..e, the pressure exerted by the mud column is less than the pressure in the earth so the well starts flowing).  This too will lead to a blowout if you don't re-establish well control.  In some cases the mud can be too heavy and cause the drill pipe or casing to get stuck while running into the well.  Also if mud pressures are too low there may not be enough stress exerted by the mud to keep the hole open.  It will slough in.  As I noted in another posting on this chain, the uncertainty in drilling is greatest in exploration wells.    Ideally while drilling you want volume of mud pumped into a well = volume of mud that comes out - volume of the cuttings and fluids of the drilled section.  Usually you have less mud coming out than going in due to seepage.  Hope that helps.  The Society of Petroleum Engineers has a great reference site where you can get much better definitions.  Try this:    http://petrowiki.spe.org/PetroWiki%3ACopyright