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Where IOC is at an educational piece for those need to get on board you know who you are..The basis of this discussion is the conference call charts-you might need to print yourself a copy in order to folllow along http://www.interoil.com/presentation/Elk... Let’s have a look at some of these new charts and see if we can find anything new or interesting here. Chart 5 shows a preliminary location for Antelope 3 and 4. This chart shows they plan to have the first 4 wells in the Antelope “Reef” to be in a line about a half mile between wells. The final locations have not yet been determined since they are “fast tracking” that decision. If Antelope 2 is successful then there should be no way the next two wells can fail to be similar to Antelope 1 & 2. Chart 6 shows it took them 3 months and 1 week to drill Antelope 1. They then spent 5 months + testing and completing the well. There is much room for improving or reducing the time required to drill and complete these wells. We should see wells being completed much quicker than 8+ months in the future. Chart 7 shows the condensate yield varies with depth from 13 to 22 bbl/MMCF. Since the “big test” was reported to be 13 bbl/MMCF from the upper part of the very porous reef, we can assume the 22 bbl/MMCF came from the lower part of the hole. Remember the high gas volumes will come from the reef in the upper part of the hole so we have to expect most of the gas will have 13 bbl/MMCF. On chart 11 they point out that the recovery of condensate through a processing plant will be 45% higher that the condensate ratio measured on DST’s. So they are not getting the increased condensate ratio of 22.4 bbl/MMCF from finding richer condensate levels lower in the formation but from more efficient recovery condensate recovery from the leaner gas where the high gas volumes will come from. This higher recovery is achieved by the design of the plant, part of which is stage separation of the gas and liquids by dropping the pressure in 3 or more steps or stages. This will result in a very volatile liquid some of which can be expected to evaporate during handling and transport by barge. Chart 8 confirms the upper condensate rate of 13 bbl/MMCF (5000 BCPD/382 MMCF). The reef/dolomite zone is reported to have porosity of 13 to 30% porosity. I believe this is the first time porosity as high as 30% has been mentioned in information from IOC. The overall limestone zone is reported to have a average porosity of 7%. The upper and lower transition zones mentioned are the lower zones in the reservoir where we have been trying to run DST’s. This is the area of the reservoir where the fluids are transitioning from gas to oil and from oil to water (or gas to water, they are apparently not yet sure which to call it). I believe the upper transition zone referred to here is from what they are calling the bottom of the gas zone at 2368 meters to the top of the zone tested by DST #13 (which tested oil with very little gas) at 2402 meters (34 meters). This zone is reported to have a porosity of 5%. There was some argument on this board about this zone having very high porosity but someone told you it was 5% on May 9th here: http://messages.finance.yahoo.com/Stocks... I believe the lower transition zone referred to on chart 8 is the zone from the top of the zone tested by DST #14, 2420 meters to 2486 meters where they are estimating a possible oil/water contact (66 meters). This zone is 4% porosity. You can visualize these zones by looking at chart 10. Chart 15 says we will get another resource estimate (calculation of Antelope reserves) by GLJ after the completion of Antelope 2. I would expect the new resource number to be more than double what they reported with the effective date of December 31, 2008. Of course this statement assumes they will find the reef as indicated on the present seismic interpretation. 2 Chart 15 also says “Interoil has accelerated planning and studies for the early monetization gas cycling and condensate stripping project”. This seems like strange wording when you look at charts 37 through 39 where they say “The EDG feasibility study and associated economics indicate a robust project”. I guess they can’t say the project is a “go” until they have approval of the government, partners and management plus a plan for financing. I find the pictures beginning on chart 15 interesting. I am glad to see evidence that they are building roads between locations and have acquired the “Morooka” tracked vehicle to transport some of the equipment between locations without the use of helicopters. I believe they need several of these to reduce the very expensive helicopter transport. They will also need similar tracked vehicles for the pipeline installation but these will probably be provided by the contractor. Over time they will need to upgrade these roads by improving the base for wet weather so that wheeled vehicles can be employed. The well bore diagram on chart 20 reveals in detail what has been done down hole. We can now see the actual depths of the various components for the first time. We can see that we have 2 7/8” production tubing with a completion packer at 2300 meters. Also of interest is the TOC (top of cement) behind the 7” liner at 2143 meters. This puts the top of the cement well below the bottom of the high porosity dolomite so the flow from the upper part of the gas zone should not be restricted or damaged by cement when it comes time to open it up for production. Charts 22 and 23 give us a good idea of their plans to acquire more seismic data this year. You can see how the lines will be laid out north-south and east-west on chart 23. I wonder why the lines extend so far to the east? That is just for you to think about. The most important part of this presentation is found on charts 24 and 25. If they can get these deals done this will be another turning point for this company. Some folks are trying to read the tea leaves here and place a value on these assets. I confess that I do not know but if, as it has been suggested on this board, the 2.5% blocks are valued at $500 million we are talking about big bucks for the valuation of the company. I leave the math to you. Again, the ownership of all of the gas, condensate and oil is clearly stated on chart 25. It is of interest to note that IOC will retain a controlling interest. I would expect the IPWI partners and Petromin to always vote with IOC. The IPWI Partners plan to farm-out 50% of their interest and IOC will farm-out 43.3% of their interest. I assume IOC is negotiating for all of the parties involved so all of the money received will not go to IOC but will be split in accordance with the farm-out agreements. Chart 27 presents the Antelope 2 objectives. On the conference call it was stated that they plan to hit the top of the reef 200 meters lower than Antelope 1. While reading chart 27 you need to be looking at the Schematic on Chart 28. You will see that the top of the reef slopes down dip toward Antelope 2 and that the thickness of the reef remains about the same. As you know we are looking for better porosity at the level of the oil zone. If we use their picks of the gas/oil contact at 2368 meters and the oil/water contact at 2486 meters (which is somewhat lower than I would pick) then we have an oil column of 118 meters (387 feet). Of course it is all in very tight rock in Antelope 1 so they have not been very successful in getting significant oil volumes (at least none reported). So we are looking for higher porosity in the oil zone which is at about -7114 feet sub sea to -7501 feet sub sea. The bad news is if we hit the top of the reef 200 meters lower in Antelope 2 as compared to Antelope 1 then the bottom of the reef will only be 200 meters lower which is not enough to get the oil column into the reef porosity. The oil column is about 400 meters below the bottom of the reef in Antelope 1. So we will have to hope for better porosity in the limestone at Antelope 2. The good news is that there is better porosity within 200 meters below the bottom of the dolomite. Chart 8 says the average porosity in the limestone is 7%. That means that there must be some porosity above 7%. We know the bottom is 4-5% so there must be some up to maybe 10% to get the average to be 7%. I believe if we can get some zones of 10+ porosity in the oil zone we will have a significant commercial oil discovery. |
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