Post by
GreatSwami on Aug 18, 2014 4:44pm
Lets pause for a little reality please...
What is the history here?
POP the company has spent something close to $8.9 million dollars and has drilled 7 wells of its own plus one well as a GORR holder (Bromhead). What has it got for its money so far (having drilled on what it believed was the "best" of its properties? It had about 15 bopd... That's what it got for nearly nine million dollars. 15 bopd from a pair of Viking water wells that produced a little oil too? (Don't believe me look on sedar - see the companies own documents - read it for yourself!)
They did manage to twist someone's arm into drilling a well for them at Bromhead. This is a highly touted property of theirs and ARC farmed in - drilled a well - barely broke even - dropped the option to drill more wells on the proprty and walked away? POP so believed in their property value they took a GORR on the well and never went for a straight up working interest. I cannot blame them - I would have done the same thing - get all the reward for no risk?! Makes perfect sense.
Then we have the J11 and the J19 properties at Minton, These they thought so highly of they sold the one (J11) for $105,000 plus a retained 7.5% GORR - which basically means no one will drill this property! They also dropped the J19 land block at Minton as the Saskatchewan Government told them to pee or get off the pot - they belived in their property so much that they dropped it...
Now we come to Rosebank - and here they actually drilled their own well based off their best seismic understanding and what did they get? You guessed it - another big fat nothing!
The expected Frobisher porosity turned out to be completely absent (tight) and the Alida bed porosity - while well developed - proved to be much more water than oil bearing and proved entirely uneconomic? Yes this is their best attempt at exploiting a property that is now very highly touted as being a key part of the Korean farm in? OK! I understand this - I think?
Lets move on to Milton and the great Viking play. They drilled five vertical wells here only two of which really had any associated production of consequence. They spent 6+ million bucks here tring to prove they have something commercial and what do they have? Yes thats right - they have less than 15 bopd as of last numbers released and that figure is likely to have dropped to subeconomic to produce by the time of this writing.
I have looked at the 10A-15 well in a lot of critical detail. Yes they hit the mother of all conglomerate zones here. Yes this well has almost the best Viking permeability (in the conglomerate) in the region. But what do they really have? Yes that's right they have a water well that produces some oil and some gas!
Up to August of 2013 the 10A-15 vertical Viking well had produced 7300 bbls oil and 17500 bbls of water and as of the last figures the oil is declining fast and the water production holding steady. the last production data from August 2013 shows the oil cut declining fast at 15 bopd (down from 25bopd in July after the well had been left shut in for pressure recovery for nearly 6 months) The water production was 33 bwpd and increased to 35 bwpd. The other wells in this area? They were even more water wet and less oil wet! looking at the production profile of this well it would appear that the ultimate maximum oil recovery if taken to its academic (not economic) limit is perhaps 13-15000 barrels of oil (including the 7300 barrels already recovered?) This is public domain data folks! This is not bull squat!
Note that this result is from what may be considered to be the best quality reservoir that is expected to exist in this region???
Now not to put too great a soin on this - this could be turned into something that could potentially be marginally economic when drilled horizontally - it could be? But then again - on the other hand...
So much for Milton and the Viking - no matter who drills this play and no matter how economically they drill this play - the economics of the best case possible are marginal...
Lets move on. Manor - the Spearfish play. They have a section in play at Manor. It is sandwiched between a proven super productive area to the east (I know - I drilled many of the most successful wells there) and a marginal pool to the west. This pool was intensively drilled in the early to mid 90s using the latest technology horizontal drilling techniques. Then Bulldog came along and drilled a whole lot of marginally economic wells on the remaining land base and then Crescent Point took them out and carpet bombed anything else that was prospective here with less than stellar results. (This is all Public Domain data folks - this is not imagination!). POP holds a section of land here - a section that no one even in the frenzied 90s believed worth drilling and no one subsequently either? Not even by Crescent Point who have a bit of a reputation for leaving no stone unturned! I know the Spearfish here - it is one of the most complex and exciting plays I have ever had the privilege of drilling and seeing in a huge amount of detail over several years. POP have nothing here! Well that is not strictly true - stochastics with this sand play suggest caution - but the possibility of them having anything "significant" here is very very very low...
Lets move on to South Reston - the lodgepole waulsortian mound that they themselves (together with GSR at a 50% working interest) drilled their own vertical test well into. This vertical test well in their own published news releases they themselves recognise as completely unecomic to exploit with any vertical well technologies? The low porosity (10%) the high water saturation (51% +) and the extremely low apparent maximum permeability of 0.6 milliDarcies - all thes features suggest that it will be impossible (?) to produce economically with vertical wells - and without knowing more it suggests that it will be challenging to find any economics horizontally as well?
Lets summarise this. Milton is watery and of proven marginal economics. South Reston is very marginal economics - if indeed it can be economical at all?. Rosebank they drilled already and proved a tight Frobisher and a wet Alida in one of the most propitious locations? So what truly is left here? Bromhead - they farmed out the greatest interest to ARC - ARC drilled a subeconomic well and basically walked. Minton the either sold (retaining a GORR if it is ever drilled?) or simply gave up because the Saskatchewan government told them to drill or p@$$ off - and the dropped the land - that is how much they believe in themselves...
My question for the illuminati of this board - can you please tell me why the Koreans have been duped in to paying to farm in to any of this stuff based off what we already know here? I can see the attractiveness of the diversified land spread - a little bit of this here a little bit of that there - but all this land has been picked by the same guys that have so far failed to recover even a tiny fraction of the nearly nine million dollars expended here on the drilling of several wells???
Why should we believe that what they failed to achieve in the past is going to suddenly and miraculously turn around for them ? Yes I agree it is one heck of a coup to have managed to hoodwink a bunch of foreigners using all kinds of brilliant people on the board of directors (who are all paid to spin a nice story by the way) to attempt to add integrity where none has been demonstrated to exist by the efforts of their own drilling attempts...
Forgive me for being a dumb a$$ - but please tell me what it is I am missing here? Other than a simple Oyel Patch Ponzi scheme?
Thanks in advance.
GS