Some people will never learn…
In an article we published yesterday we showed you gross inadequacies in a quoted anonymous source in an article from April 5th on the Blodget website bussinessinsider. Our criticism has taken hold, because today they try a riposte. A pretty bad one (here for their article)
Now they argue at that the, in their view “misleading” company presentation from December 2008 was talking about Elk2.
It really isn’t. It can’t, for a very simple reason. Let’s confront you again with the whole quote that Blodget’s anonymous source take from that December 2008 presentation that is so “misleading”, according to Blodget’s anonymous source:
- A December 2008 presentation argued that these reservoirs were thousands of feet (indeed over over a thousand meters) deep. To quote:
- “The carbonate limestone’s have a proven thickness, porosity and deliverability in PNG that qualify as a world-class reservoir…
- The deep marine carbonates range from 900 feet (300 meters) to over 3,000 feet (900 meters) thickness…
- The carbonate reefs have thicknesses from 3,000 feet (900 meters) to over 5,900 feet (1,800 meters)”]
Note that the Dec08 presentation talks about carbonate reefs.
1) The first important thing to note is that there are no reefs in Elk. Nor has InterOil claimed there are. So the December 2008 presentation, the one that is “misleading” according to Blodget’s anonymous source cannot speak about Elk. It describes the whole Elk/Antelope structure. Blodget’s anonymous source is misleading (or worse).
2) The new article is right that Antelope had not been reached by the drilling bit (that would happen at the 31st of that same month, although at Elk4 the Antelope structure was already hit, but not the reef part). However, the Dec08 presentation nevertheless already speaks about carbonate reefs (and not for the first time, InterOil has mentioned this more than once before).
This is based on InterOil’s geological model, which is based on seismics and previous drilling. There were critics of this at the time, most notably Ross Smith, but funny enough, even they reluctantly had to concede that InterOil’s model turned out to be right as early as Jan09 when drilling had confirmed the existence of the reef and even dolomite (and note, this was far from when all testing had been completed at Antelope1). And the resource did indeed turn out as thick as InterOil claimed to be in that December 2008 presentation. (check page 15 of InterOil’s March 2010 presentation to a Raymond James conference)
- Elk1 Gross payzone 620ft, net payzone 88ft
- Elk4 Gross payzone 600ft, net payzone 166ft
- Ant1 Gross payzone 2600ft, net payzone 2277ft
- Ant2 Gross payzone 1224ft, net payzone 1175ft
You see? These are, well, really huge payzones, ask OilSearch. Antelope dwarfs anything they have.
Henry Blodget’s anonymous source wants you to believe that they could not have argued this because Antelope had not been drilled yet. This is clear nonsense.
- There was other information available at that time, most notable seismics
- Drilling at Elk4 had already confirmed the Antelope structure (but not the reef)
- The writer wilfully obfuscate between resource thickness and net pay (the latter is resource above a threshold porosity)
- Most importantly, InterOil’s 2008 claims have been proven right by subsequent drilling.
And just for fun, we went back to the Aug 16, 2008 Revised Elk2 Technical Update
- ~ 4,452 feet (1,358 meters) of indicated hydrocarbon column from highest known gas in Elk-1 to lowest indicated hydrocarbons in Elk-2.
- Targeted reservoirs – Puri and Mendi Limestones – significantly thicker than pre-drill estimates.
And from p.8
- Gas to surface confirmed – 2,507 feet column
- Additional 1,998 feet reservoir drilled with gas shows – confirms ~ 4,452 feet Gas Column
And be sure to check the picture on p.7. You’ll see that the resource column 4453ft (or 1358 meters). Which is what they were talking about in that December 2008 presentation. Then to use the net payzone from Elk1 (88ft) to argue that this is misleading, as Blodget’s anonymous source does, is, well, misleading!
End of discussion.