In the past I have been rather harsh on Petro One's chances of success - and that was with good reason. The fiasco over the Korean financing was not something I really predicted - that merely compounded things that were already problematic - I actually thought it would go ahead as planned - at least until the drilling results came in and thoughts changed based off material results.
With their closed financings so far they have barely got the funds to pay themselves their annual G & A (?) and to (mostly?) get out of debt, plus maybe finish the testing of the South Reston well plus drill the first Milton J5 horizontal well. This first well is by the terms of the financing agreement 100% to Petro One's interest and no doubt they will pick their most effective target here to get some exciting production IP values. Their 10A-15 vertical well actually had one month with a 200 bopd production before the water issues began and production fell off a cliff. (That conglomerate they hit is a superb conventional reservoir after all). The puzzle is why none of the other wells had any such luck? Howver if they can get a good slice of their first well into a sweet part of that conglomerate there is no reason that they cannot get similar (?) IP numbers - however in their 3 section land holding here at Milton - they really have no easy way to get away from their water issues. They do not have any money for drilling anything else at this point. They need to be really successful at both things they attempt here if they wish further funding to come in?
For comparable production results the stories behind both Rock Energy and Raging River are quite useful. However both these companies have huge land holdings here in the Viking in a diversity of places numbering hundreds of sections of Viking P & NG rights and the results of literally hundreds of drilled horizontal Viking wells. (Petro One only have their 3 sections of Viking P & NG land and their chances of growing that land base is slim to none. Although I do see some Farm In notes in the various News Releases for perhaps a further two sections?)
Raging River produce a 250 well average type well production profile for their horizontal wells that shows an average first month IP of 56 bopd, dropping steadily to 37 bopd after 120 days, 26 bopd after 240 days, 19 bopd after 360 days and 15 bopd after 480 days. Most of these wells have low water cuts and hence the operating costs are low. Petro One's property with its 6 existing vertical wells shows that water production is a big issue - and as the average oil production comes down the operating costs per barrel go up tremendously with this excessive water production. (The 10A-15 vertical well shows an average water cut of 70.6% over the first 4 years on production - so it would be safe to assume similar numbers for most of the wells they try here).
I do not think any of the Rock Energy wells nor the Raging River wells have this water issue - and hence they are economic even at these low productivity numbers and at $100+ per barrel oil and an average of $900,000 per producing well for drilling and completion costs. (Benefit of large drilling program cost savings). Petro One will be lucky to get this first Hz well drilled and completed for much under $1.5 million. (Just isn't going to happen any cheaper) - and now of course the price per barrel has dropped quite a bit and looks set to remain that way for a while here?
I think this is where the SP softness has come from - they need spectacular first well results at Milton and a successful and exciting test result at South Reston. While I am sure they can get an impressive IP result at Milton - it ain't going to last long - so if you are in for that drilling be prepared to get out on any price spike.
For the record I had very high hopes for a drilled well that was finally being completed by Dualex and Africa hydrocarbons in Tunisia. The results came out last Monday the 20th October and the well was a complete bust - and I personally went right over that cliff and lost my shirt and underpants... So I do not claim infallibility here and I simply post this as I wish to simply get this out there before someone else posts the same thing. For the Dualex well at Bouhajla it turns out all my expectations were monumentally wrong - and because of that I got my head handed to me on a plate. The only consolation I have is that all the insiders of both companies were equally if not more shocked by their completion result. I am certainly not infallible but again what I posted about the wells at Milton - they are all out there in the public record for anyone to look at and the records of two of the biggest neigbouring players are out there too. So you do not need to take my word for it - just go ahead and look at the neighbours results - look at what Petro One has found with their vertical wells here and do your own reservoir engineering math. It truly is hard to see how this will fly as a super prospect? A very marginally economic one - yes quite possibly - but anything else really does seem impossible from the numbers.
GS