RE: RE: 2011Re: MMT - Mart Resources
All of the UMU-6 well's primary objectives, including the XIII, XIV, XV and XVI sands were hydrocarbon bearing with preliminary results indicating gross oil pay of 40 feet, 24 feet, 6 feet and 18 feet from these sands respectively. A deeper XVII sand was also encountered with initial results indicating 8 feet of gross oil pay. The XIII, XIV, XV, XVI and XVII sands were not assigned reserves in the Company's most recent NI 51-101 reserve report.
By way of comparison, currently-producing Umu 5 is producing 2100 bpd after a year of production with no water from a single 16' sand (# 12 sand). The well IP'd at 2400, so low decline. Umu 5 will be recompleted with dual tubing to enable production from at least two sands at a time, with corresponding rise in production. MMT is modelling 3000 bpd per dual-completed well, but I think that is conservative (as does the company).
All future wells (including Umu 6) will also be dual completed. And deeper sands are expected to be cleaner, so presumably capable of higher relative flows. About the only disappointment that I could possibly be picky about is that the lowest sands (15 and 16) weren't as full of pay as they might have been. That said, the pre-drill worry was that they were wet and this news put that doubt to rest. But there was also better than expected news in that the 13 and 14 sands were thicker than I expected and that a new sand (No 17) was found to be oil bearing. Also a few higher sands had pay. And all these new sands will now be included in reserves, so a hefty bump up coming.
The UMU-6 well also encountered hydrocarbons in the XI and XIIc sands with preliminary results indicating gross oil pay of 14 feet and 18 feet respectively. The previous Umusadege wells did not contain material hydrocarbons in these sands. Pressure data and fluid samples are currently being obtained which will be followed by the running of 9 5/8 inch production casing. It is expected that the UMU-6 well will be completed as a dual tubing string configuration allowing for multiple zone testing and future production from multi zones. The current UMU-6 site includes a three well drilling pad which will facilitate two more wells being drilled from this location. It is anticipated that the next well, UMU-7, will commence drilling operations after the completion and production testing of the UMU-6 well.
So 3 wells back to back from one existing concrete pad. All which are roughly targeting the center of the field and should roughly find the same pay as Umu 6. They are supposed to recomplete the two existing producing wells (Umu 1 and 6) with dual tubing, but I'm not clear if that will happen after Umu 6 is completed, during the drilling of Umu 7, or after all the new wells are drilled.
I really think MMT has a legitimate shot at producing 20K bpd gross (10K net) by end of '11. MMT gets a premium to Brent, so very profitable production. 10K bpd at $65 netbacks is ~$225MM or
.70 a share. Royalties do bump up in a sliding scale but I think from ~16% is max rate. Current sp is
.65. I'd be disappointed with a double and happy with a triple or better...
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