Chincontepec Info In discussions with ROE Mnagement I covered sevearl aspects of the business.
The work program for the Amititlan block was all completed successfully, all within the proper timelines and at a cost budget that impressed Pemex. This was not ROE going in and just drilling, ROE discussed and debated every well with Pemex and thoroughly impressed Pemex at every step. This approach is about business development and a successful long term working relationship with PEMEX
The Contract Migration application contains the development plan for the Chincontepec. This plan, like the one for the Upper Jurassic was developed in conjunction with Pemex. The Chincontepec plan is described as fluid and subject to change as they obtain drill results.
In the initial drilling program of 17 wells there were no horizontal wells. ROE & Pemex selected drill sites were the seismology showed that the drill would encounter 3 to 5 sand packages and they did directional drilling to go through the widest parts of each sand package. The wells were then fracked and brought into production. The completion techniques varied from well to well and the techniques used in the last 3 to 4 wells resulted in the best production performance.
There was no horizontal drilling. It was described that the oil sands that are being intersected are not homogeneous across Amititlan and it is best to line up the 3 to 5 sand packages and drill through them and frack for production than it is to select one zone and do a horizontal drill. ROE has had lots of debates with Pemex about the possibility of horizontal drilling. The conclusion is that if the oil sand in an area is thick and productive, then you could drill horizontally across the sand.
In the future, once the production drops, they will likely do, as in other jurisdictions, select the wider of the sand packages and drill a horizontal, but that is well off in the future.
The whole of the drill program was also designed for the maximum appraisal value so every well increased ROE’s knowledge of the field.
The drill program, as it has been developed for the presentation for migration is to drill at least 280 wells over a ten year time frame. These well sites have all been examined, researched by ROE and PEMEX and the other partners and have been approved. The plan is fluid, can be expanded or can be intensified in various areas. The plan calls for 10 to 15 horizontal wells depending on the results.
The reason for the fluid nature of the plan is that there is still a lot of learning being done. With the 17 well program the production from the wells had a wide variance with some as low as about 30 BOD while others were in the 200-300 BOD.
I asked about payback and asked if payback for the whole program would be about 9 months as a good guess and was told that was not correct,and that for payback for the whole block the better guess should be just over a year.
The Chincontepec is a huge oil bearing formation estimated to contain at least 4.0 billion barrels of oil but the sands are not continuous across the block. The Upper Jurassic shale formations at each of the stacked zones are virtually all continuous across the whole of the Amititlan block. The main emphasis on development will be on the Upper Jurassic shale.
The development plans were not only developed for the migration approvals but were developed to provide to the various potential financial groups and these potential finance groups organizations have all been going through them and doing their due diligence.