Reposted from SHP board... ...thanx to Tony0911 :
AN UPDATE WITH JOHN CLARKE
Vice President, Business Development with CGX Energy (As of February 1, 2012)
John Clarke was Canada’s top- ranked oil and gas analyst back in 2003 and 2004. Now he is in a very interesting position as a Vice Presi- dent with CGX Energy and a director of Shoal Point Energy, two stories that we think are going to be very promi- nent in the oil and gas business this year. CGX for its high risk/high re- ward drilling offshore Guyana, and Shoal Point Energy for its explora- tion and engineering challenges for an oil shale play in West Newfound-
land. Tiny Shoal Point has a 100% interest in what could be tens or hundreds of billions of barrels of shale oil that may or may not be producible or commercial.
David Pescod: Mr. Clarke, looking at the two plays right now, first CGX Energy should be spudding two wells in the next few days, how long for results?
John Clarke: The first well, Jaguar, in which we have a 25% interest and is operated by Repsol on the Georgetown License, is expected to be a 180-day well program, drilling to 22,500 feet to the Turonian, and so we will have to wait a little bit for the results on that one. The second well, which is on our 100% interest Corentyne License, is the Eagle Shallow well targeting Eocene and Maastrichtian pros- pects, and we expect that program to be finished within 60 days, so news can hopefully be expected by April.
DP: Onto the other story – you are on the board of direc- tors of Shoal Point Energy and you were giving some sug- gestions that it looks similar to other shale plays.
JC: That’s a good question David. I think it’s unique for Canada, but the analogies obviously are in the thick shale sections of Argentina and elsewhere. This is similar to the Bakken or Eagle Ford, but it’s bigger in terms in the thick- ness of shale that is being tested.
The company has just acquired 100% of a block just north of their already big acreage, so they basically control the whole of the Green Point Shale play which is the target of interest. They are currently sidetracking a well down to the prospective TD and we will run tests at that level and then back up the hole in areas that look prospective from previous logging and core samples. Any flow of oil from the tests at TD or from multiple zones that were previously recognized as prospective while drilling and in core sam- ples etc., will be extremely positive and should enable Shoal Point to be awarded a significant discovery license (SDL) by the regulatory body in Newfoundland.
DP: There is a lot of talk about what the impact might be if this well actually flows on its own...
JC: I think it’s similar to other plays where you happen to have an acreage position, and through hard work and ser- endipity it happens that a major play breaks loose. No one really considered the Neuquen Basin in Argentina as a game changer in the past, where typical oil production and reserves were relatively modest. Suddenly the shale play is discovered, and resource estimates appear with billions of barrels and TCFs of gas in place and billions of recoverable BOEs and the value is measured by acres of coverage and is extractable with new technologies such as horizontal drilling and fracking! In this case the Green Point Shale lies at home in Canada, which has a more competitive fiscal system than Argentina, and we are very, very excited about it. We need to establish oil flow and we need to get an SDL, and then we can take stock and say how many billions of barrels of oil we can potentially re- cover. This is a very exciting, high upside story.
DP: What are some of the other questions should be asked on this Shoal Point play?
JC: Well that’s an analysts question for sure David – we have to get results from this well before we can answer what needs to come next. Logically the play will require multiple wells to be drilled over a wider area, and also fracking would be contemplated to increase flow rates and reserves drainage. Shale plays whether for natural gas or in this case oil, are currently very big news and are at- tracting the attention of the Global majors whether in Can- ada, the USA or Argentina, which have an appetite for bil- lions of barrels of reserves. The questions then turn to what are the potential reserves, how are those to be com- mercially extracted, and which companies would be most likely to have the skills and deep pockets for exploitation!
Shoal Point is a small company, we have a tight management group, and these plays require unique engineering ex- pertise. Exploitation is the next leg and we will be looking at the best way to achieve this ... We could look at a num- ber of future scenarios, but the main agenda now has to be demonstrating success from the current well drilling.
DP: How would one describe this play then as compared to CGX Energy which is involved with conventional oil ex- ploration? Shoal Point is more of a resource engineering concept ... Is that correct?
JC: Well not exactly, it’s still exploration, because you have to prove the system before you get to exploitation, so in the case of CGX Energy, we are actually targeting billion barrel targets for conventional light oil and you don’t have to drill a lot of wells to prove that. On the other hand the CGX wells are very expensive, and range from $160 million for the deep test at Jaguar, to $50 million for the Eagle Shallow well in Guyana. In Shoal Point’s case, we are working in western Newfoundland where there is little infrastructure and no oil shale expertise in place, so one has to prove the concept and then look around and say, who can benefit most from this? For both companies the key question for a success case is similar - Do we raise the money to go alone or do we identify a strategic partner to continue drilling up reserves to the development stage? In terms of financing and creating shareholder value, we are at the bottom of the value S-Curve for an E&P company and need to make discoveries, turn resources into P-1 and P-2 reserves to get full valuation for what we know is there.
DP: If you had to buy one oil stock, other than these two, what would it be?
JC: I had picked Ithaca Energy (IAE) for a while and that seems to have done okay...whether they are taken out or not, the rumors are on the streets so it’s obviously a target. It fits in with many companies in the UK North Sea. Any- way I’ll stay in this area and go with an old friend of mine from Texaco days whose been building an independent E&P company for a long time now...Stephen Greer at Antrim Energy (AEN). Antrim is producing in Argentina; it’s close to production and development on several fields in the North Sea where the fiscal system is good, so Antrim should en- joy strong cash flow in the near term. So I’ll swap from Ithaca and pick Antrim. As far as a second pick, John Clarke mentions Sterling Resources (SLG) and folks, I think it’s going to be interesting when Sterling gets around to drilling off- shore Romania in two or three months...it may not be on a scale of CGX energy offshore Guyana, but it’s big!
DP: Thank you very much John!