RE: RE: RE: Interesting?No that is not accurate. You can't account for "reserves" or drill "development wells" unless it is highly-likely that the oil body intercepted will be economic. There's three categories: P1, P2, and P3 which can all be understood by researching here:
https://www.albertasecurities.com/securitieslaw/Regulatory%20Instruments/5/2232/COGEHs.5DefinitionsofOilandGasResourcesandReserves.pdf
In other words, it is highly likely that POP will hit on all the targets outlined by Chapman, but what is not known is exactly what they will encounter at the other end of the pipe.
Results from 10A-15 are very encouraging and in fact a high quality reservoir, the flowrate is increasing, the oil is very light, around API 30, and the porosity and permeability is world-class. So the other holes are likely going to be very good as well. The deposit is of EXCELLENT quality, it is just not massive. In the Gold world, you could liken it to a high grade deposit of a few million ounces as opposed to some low grade, bulk tonnage monstrosity with only marginal economics.
The disclaimer you see at the bottom is standard boilerplate--it is not a specific commentary on the likelihood of POP hitting on step out wells. In fact it is silly to suggest so--as we already know 5 more have been cased and flow tested on J5 and are being put into full time production.
There are many reasons why the stock is soft, most of which have to do with the market. it also seems that pretty much every investor here is a junior mining player who has little O&G experience, so this company and what has done is confusing to people. The reason why they don't drill horizontally is it would be the wrong way to access this oil pool, which is why Chapman told them to go in vertically. A simple analogy: Both canoes and cars will help you travel across the surface of the Earth. But you don't drive in the river and paddle on the freeway. In other words, it is ridiculous to use the wrong technique. And tell me, how in God's name could they flow test wells and tell the market they would be put into production if they were dry holes? The only reason the holes aren't ponding out barrels right now is it takes money to build the infrastructure up to the point where all the wells come online. Which is why they are financing. Once that's done they'll be able to jack up production and cashflow and it will appear in the next quarterlies.
Please understand people that this is all just INDUSTRY STANDARD PRACTICE!
I say it again: $5M dollars spent, 6 months of work = 100% success on two separate targets now producing 115 bbl / day light oil with typical netbacks of 90%.
Six months work to get to a point where the company cashflows six figures a month.
I'm willing to wager we are going to see a very busy Q1 and beyond and the stock will rally through the first 3 quarters of next year without even breaking a sweat.
Anyone with a brain will be pounding down their doors tomorrow to see if there is room in the financing. Good luck!
James Hudson, Alpha Flight Portfolios Inc.