ARPETROL LTD V.RPT

Jack Up Rig Drilling

[TheRock07]

Doc, thanks for reminding me of this option.<br /> I went back to my notes and Ian did mention it as a clear alternative to drilling a step=out well.<br /> <br /> The 2012 deviated well.......drilled at a 75 deg angle &nbsp;from an onshore pad....was 2.8 km long.<br /> <br /> The large rig was brought in from Houston, costing $3.4 million to mobilize.<br /> <br /> Drilling time was estimated at 45 days at a cost of $150,000 per day.<br /> <br /> Total drilling and development costs were estimated at $16 to $18 million<br /> <br /> There are more than a dozen offshore gas field in this basin, so jack up rigs would be available locally.<br /> <br /> What about total well costs ?<br /> The Springhill reservoir is at 1600 m and in very shallow water less than 0.5 km from the original onshore drilling pad.<br /> <br /> My research has shown that 300 ft jack-up rig currently costs about $100,000 per day.<br /> <br /> I use $125,000 per day just to be on the safe side.<br /> <br /> At 1600 m, drilling time will be about 25 days, perhaps a bit less as vertical drilling is much simpler.<br /> <br /> Drilling costs per well would be about $3 million.<br /> <br /> Testing and completion will cost another $1 million.<br /> <br /> Mobilization costs should be modest, say $1.5 million, given that there are quite a few jack-up rigs in use in that basin area.<br /> <br /> Pipeline costs to the processing gas processing plant ...less than 0.5 km.....should be no more than $1.5 million.<br /> <br /> An unmanned production rig will be needed to produce the well.<br /> <br /> I have yet to fully research this, but $5 million might be reasonable.<br /> <br /> Add it all up and total drilling costs are estimated to be about $12 millioin.<br /> <br /> Jack up rigs are essentially mobile barges, so getting to the second and third wells can be done quite quickly..less than a week.<br /> <br /> That is, for a total of about $35 million, the use of jack up rigs should be able to drill and complete 3 wells in a period of &nbsp;6 months to 8 months.<br /> <br /> These wells would be able deliver about 6000 boepd.<br /> <br /> This reservoir is estimated to contain between 14 mmboe and 18mmboe, which means an RLI of about 8 years, with exploration upside.<br /> <br /> These wells in combinatioin, would qualify for the $7.50 per mmcf incentive program, now available.<br /> <br /> Combined with liquids, the average per boe would be about $50 per boe.<br /> <br /> That will produce about $110 million US per year in gross sales, with cash flows easily above $60 million US.<br /> <br /> Lets assume a 50/50 JV, with RPT fully carried for drilling and development costs.<br /> <br /> Thats $30 million US per year in cash flows that would justify a market cap of about $200 million or about $8 per share/.<br /> <br /> The onshore concessions plus the cash flows from the gas processing plant would be incremental to this.<br /> <br /> The current gas processing plant is fully utilized.<br /> <br /> Given that there are several large offshore gas discoveries ( 30 to 100 km offshore ) under devlopment and that &nbsp;FV offshore production will require a 50 % increase in gas processing volumes ( unless RPT displaces one of its current offshore customers..which is very unlikley ) at some point an expansion of the gas plant will be needed.<br /> <br /> Unless, RPT is fully taken out, by one of the offshore gas producers of which 3 are its customers.<br /> <br />

[TheRock07]

Doc, thanks for reminding me of this option.  I went back to my notes and Ian did mention it as a clear alternative to drilling a step=out well.  The 2012 deviated well.......drilled at a 75 deg angle @from an onshore pad....was 2.8 km long.  The large rig was brought in from Houston, costing $3.4 million to mobilize. Drilling time was estimated at 45 days at a cost of $150,000

[2j3kl]

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