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Raymond James comments on InterOil November 13

November 13th, 2009 · 2 Comments

Equally positive..

InterOil Corp. (IOC/$48.39/Market Perform): Positive Datapoints Gleaned from
Antelope-2 Logs; Moving On to Liquids Zone

  • InterOil announced that it has successfully run intermediate logs along the upper section of the reservoir at Antelope-2, encountering gas and gas liquids throughout the entire vertical interval (1,224 feet). There were three key conclusions from this latest test.
  • First, the net to gross ratio was over 96%, surpassing the 90% observed in Antelope-1. This ratio measures the amount of rock that holds sufficient porosity to be considered “pay”.
  • Second, porosity levels averaged over 14%, also better than the 8.8% encountered at Antelope-1.
  • Third, the presence of dolomite throughout the entire section, particularly at the base of the log, bodes well for the porosity levels in the lower section (which is the condensate-rich zone).
  • Looking ahead, the company is gearing up to do a full production test on the upper section at the beginning of December. This should be a rather brief test, with results expected within about a week. The company will then drill through the base of the gas column into the more condensate-rich zone, including the potential oil leg.
  • Bottom line: Positive read on this interim well report. The log results at Antelope-2 have come in better than encountered during the testing of Antelope-1. We would expect the shares to react favorably today, but the flow test in three to four weeks should yield much more impactful datapoints relating to the field’s resource potential

———[End of article]———

We add that the chances of producing oil have significantly increased, and the liquids stripping plant now seems a foregone conclusion.

Tags: IOC · Research Reports

2 responses so far ↓

  • 1 Michael McRae // Nov 13, 2009 at 7:31 pm

    Anyone else confused by the this statement?

    “Looking ahead, the company is gearing up to do a full production test on the upper section at the beginning of December. This should be a rather brief test, with results expected within about a week.”

    Michael

  • 2 Brent // Nov 13, 2009 at 8:03 pm

    I assume they meant to say that since it is a brief full production test, the results would be expected within about a week of initiating the test around the beginning of December.