ARHT Media Inc V.ART.H

RE: RE: Information

[GreatSwami]

The link as you say has some interesting pictures and sketches. Also the comment about recovery factors from fractured carbonates being much greater than that from matrix porosity was worth noting.

The comments from ??? about how much drilling mud was lost to the fracture plumbing at Miran is also very interesting - thanks for that! (Not in the technical presentation). Those losses make more sense in the fact they were drilling in a gas condensate reservoir rather than an oil filled one. Although you can get huge losses to oil filled fractures as well if you are very heavily overbalanced - which is probably what they were when drilling into the Shiranish at Qara Dagh? Thats also why they know they have permeability in the Shiranish and why they set the 7" liner where they did. (So they could put their mud loss problems behind pipe and move to a more appropriate mud weight for continued deeper drilling through the remaining Shiranish and into the Kometan).

The flow rates are going to be an indication of how connected the fractures are and whether or not they actually encountered a decent fracture network. (That is what is so important about that sketch in the technical report - it shows how variable the fracture plumbing can be from place to place and the fact that the crestal position of such structures is often sub optimal for hitting lots of them). But realistically if they have hit anything in the way of a decent fracture network with the kind of pressures expected at such a depth you will not be hearing of any 5,000 bopd (or less) test results!

As for the timing of the Niko share purchase - while I see the interest in such things - I also see that however that was arranged it would have had to pass the "smell test" so that it cannot be misconstrued as buying with insider information. So read into it what you will - if there was any obvious conflict of interest with who knew what and when there would be an investigation. Sometimes the timing of these things truly is coincidental. If there was any detailed test information available - and it was leaking - there would be volume buying all around. My feeling is that while insiders always know more about what is happening - they have all the blow by blow daily operations and technical tea leaf reading after all - a buy order like this would done only if it is clear that the insiders do not have any definite test result that they know and the great unwashed are unaware of. They must be in the same "Twilight Zone" of ambiguity as everyone else. (The usual course of ambiguous daily operational information flow notwithstanding!)

In other words - you here reading the various explanations of the minimalist tea leaves on this BB probably "know" or have access to - as much definitive information as anyone else - and accordingly have the ability to make the same, similar or contrary decisions. (It may be tough to prove anything else?)

My take on them drilling deeper is that they misread or were uncertain of just exactly what they had for stratigraphy by the time they had hit the TD of 3,908m. (Sometimes the samples can be confusing or ambiguous as regards detailed interpretation). When they ran their wireline open hole logs they were able to confirm that they had the Shiranish (and most likely the Kometan?) and that a further few hundred metres would give them the Qamchuqa too - all for minimal extra time and pain. It would make sense to test what they already had in the open hole section from 3,558-3,908m - although I really doubt that they would have done anything yet to perforate and test any of the behind pipe known permeability and hydrocarbon bearing zones. (The Shiranish top 143m and the two Aaliji zones).

They will test them in due course when they have drilled deeper and retested the new open hole section.

What will the news release be? There really are only two scenarios I can see - others may have more possibilities I suppose.

The first is that they have completed tests over the open hole section below 3,558m and are able to provide fluid composition and flow rates with some idea of minimum potential size.

Or that they had encountered all kinds of difficulties testing due to mud losses, tool failures etc - and that while they have some information on formation fluid data and flow rates - that the results are still somewhat inconclusive and further testing may be required?

I have no great opinion of what happens to the SP - I look at the muted response of Shamaran's SP after announcing their oil find at Atrush and am somewhat puzzled - maybe the upside was already priced in there as there had been a good run up during drilling - unlike here?

GS