Saturday, July 28, 2007 8:26:44 AM
Big Mur, I definitely agree with your viewpoint...
All I'm trying to say in my ever-wordy way, is the biggest $$ potential isn't in extracting all the oil. It's accumulating and proving the assets.
This is all an attempt at expressing my viewpoint on this and what I believe is more important. Take it with a grain of salt. But I do believe that as long as folks still keep thinking short term, and strictly production, they're missing MOST of what Hemi has going on.
I posted a bit about Hemi's gas in this post...
http://investorshub.advfn.com/boards/read_msg.asp?message_id=21544879
and their oil in this post...
http://investorshub.advfn.com/boards/read_msg.asp?message_id=21554936
and neither of them include any oil shale figures.
Just trying to back up and further hammer home the point you are trying to get across Big Mur (not that you need help... just providing additional wording in my own wordy way. LOL!).
For those who don't want to click anything I'll copy and paste the above links below
++++++++++++++++++++++++++
Look at Hemi's proven reserves of OIL $100mil+
I'll also talk about probable but the proven is what many like to look at.
I posted the below a while back so some of it is outdated (example, I mention oil being $55 a barrel but I believe it is now over $62) but I thought after today, this would be a nice reminder :)
-------------------------
"Read between the lines" of what Hemi has in store...
Some new investors and even long timers may not have yet connected the dots for what Hemi is doing in Woodson County Kansas (which is just one of many areas where Hemi has acquired land).
There are some important things to realize when connecting the dots... First, the oil under the 5 leases in Woodson County for which we have a reserves report has blanket formations. Blanket formations extend laterally over large areas. Meaning, what is under the ground right here is likely the same way over there. Second, many of the leases Hemi has been acquiring in Kansas are contiguous to the 5 leases mentioned above (meaning they are touching or next to them).
Knowing the above, we can "look ahead" so to speak.
The 5 leases above make up ~2000 acres. This is 3.125 sq miles. Hemi now controls 11 sq miles in this blanket formation and should have finalized the paperwork for 17 square miles by the end of June (see PR). Keith has mentioned wanting to go for 40 square miles but let's just stick with the 17 square miles for now. 17 square miles is 5.44 times more than the land we have the reserves report for. It has already been stated in press releases that Hemi believes, based on numerous records, cores, past history, etc. that the land around the 3.125 sq miles the 5 leases make up will have similar reserves. Also to note... the reserves report does not even contain all existing pay zones (even more potential reserves... see below).
So, lets do a little math. The current INDEPENDENT reserves report has proven reserves of 2.15 million BOE and probable of 5.1 million BOE for a total of potentially 7.25 million BOE.
If you talk only about the proven reserves and take 2.15 million BOE and multiply it by 5.44 (remember, blanket formations and contiguous leases... Keith acquiring contiguous leases is no accident) it is my opinion we will likely see at least 11.7 million BOE proven in the not too distant future. Oil is going for around $55 barrel in Kansas so at that price, it is not unlikely that we could have more than $643,500,000 in proven reserves once we start drilling these other leases. Now, throw in the probable and you are looking at the potential for over TWO BILLION DOLLARS worth of oil and just in Woodson County! This doesn't include Montgomery or even all the other states... and you wonder why so many people think this is undervalued? The above also doesn't include the block of leases Hemi just acquired with all the gas (above is just oil!).
Now, just let me hit you over the head with a 2x4... the reserves report doesn't contain the deeper zone, the Mississippian. It contains the other 4 shallower pay zones but not this deeper zone. Hemi has not yet drilled to that zone. BUT, production of oil and gas does exist from the Mississippian within a few miles all around and in all 4 directions of our contiguous Woodson County leases. What's it mean when others all around you are producing gas and oil from this zone on all your sides? Means you don't need to think too hard about good production coming from the Mississippian on Hemi's contiguous leases as well. AND, once this happens, it will be added to the reserves report making it that much more impressive.
Bottom line, Hemi is sitting on a ton of gas and oil with a ludicrously low market cap. Congrats to those who have done their DD and can extrapolate the above as well. Granted, the above is extrapolation... but not unreasonable extrapolation. For those who want to wait until Hemi actually proves up this land, don't expect to pay anywhere near these prices once this happens. Read the press releases closely, do your DD, and you can see that Keith and crew are building something that is going to be very big and I, for one, am very excited to be a part of it.
+++++++++++++++++++++++
Hemi's proven oil reserves and tobe proven GAS reserves...
We all know Hemi has oil and a ton of it but very few actually ever understand or talk about the huge tobe proven gas reserves on Hemi's leases. xtrapink talks about it a bit and even mentioned the below in the post I linked to this one...
My opinion is that oil production is the "low hanging fruit" right now, even though the natural gas (NG) and coal based methane (CBM) gas may hold the keys to a dramatic increase in the estimated worth of Hemi's Kansas reserves. Think in terms of BIG numbers when you imagine the potential impact of proving up NG reserves in Woodson County.
I thought I'd go through some of Hemi's older PRs and interviews and see what I could come up with. When piecing it all together and adding it all up, it is incredible the amount of gas Hemi has yet it gets so little attention.
Here is what I have been able to piece together just from what Hemi has put in print. Keith has been known to hold back a bit on things he thinks are very big and if what I've come up with below is holding back we are going to be in for some very exciting times.
------------
Hemi has talked about some promising gas in Sabine County, TX as well as two oil and gas leases totaling 640 acres in North Dakota. Hemi has also talked about existing gas wells on their leases in Montgomery and Woodson Counties in KS
In Sabine County, TX, Hemi has 360 acres with 3 adjacent oil and gas leases. Wells in Shelby County that are about 4 miles to the north average over 2,000 mcf/day. The average well is producing over $400,000 per month when using $7/mcf. These gas wells and gas fields have a slow rate of decline and have an economical life of over ten years.
In North Dakota, there are three other leases adjoining Hemi's lease on three sides and have five producing gas wells, owned by other companies, which are within one mile and less of the Hemi lease. Each one of these five wells have an approximate revenue of $4,000,000 or more over an economically viable life of ten to fifteen years.
Now, in Kansas, Hemi has told us quite a bit about the gas under the leases but is also holding back quite a bit as well. That's the impression I get when reading the press releases, emails, and listening to the interviews. Many view Hemi as an oil company because, for right now, all they are selling is oil. But, if you look at just what we know about their gas it is pretty incredible. Hemi's gas could end up being very very big.
In Montgomery County, Hemi has a shut-in gas well at a depth of 1250 feet that is commercially producible. This lease also has two gas zones. The well and the gas zones make developing the gas formations "financially obvious". After mention of this well was made, Hemi talked of new research locating natural gas wells that were drilled from 1950 to 1980 on the Montgomery County leases. They were originally drilled as oil wells but instead of finding oil, the developer found natural gas. These wells open flow tested at 300 to 400 mcf/day. These wells are in the Mississippian formation. Hemi has talked of at least 3 of these uncompleted gas wells existing. Hemi then went on to tell us they have acquired additional leases that will be their most valuable leases with reserves of all their Kansas lease holdings. This is referring to gas value. Since the reserve report for the 5 contiguous leases has independently proven reserves in excess of $100,000,000 then this new gas find would be valued in excess of $100,000,000. Now, after listening to the 6/12/07 Wallst.net interview, one can learn a little more about just how valuable this find actually is. This gas find is not contiguous to their oil leases to the south. Existing wells on the lease were drilled from 1916 to 1930 with 5 pay zones 800' to 1200' deep. Newer wells were also drilled around 2002. Research data has shown the wells drilled in 2002 flowed similarly to the wells drilled from 1916 to 1930. Now get this… the pay zones in one well could flow at 7,000 mcf/day to 15,000 mcf/day! However, it wouldn't be possible to produce all pay zones at one time so one wouldn't expect to get that high of flow out of each well but these would still be very prolific gas wells. The field where all these wells are located has never been declared and Hemi intends to name it the "Hemi Field". So, similar to the Humboldt-Chanute oil field, Hemi could be in the history books with their "Hemi Field". Keith believes this oil find will "totally validate Hemi's existence" and is what they've been working for for years.
So, for Kansas, there are several wells in Montgomery which open flow tested at 300 to 400 mcf/day so if you say there are only 3 of these wells you could say 1000 mcf/day for these wells (be sure to check out xtrapink's further number crunching in post 10090!). Then, who knows how many wells there are on the new leases that have been defined as having prolific gas? The plural "wells" is talked about as being drilled from 1916 to 1930 and again wells is plural for the ones drilled around 2002 so one can assume at least four of these wells exist. Since just one zone flows at 3,000 mcf/day, if you just use the 3,000 mcf/day number for just 4 wells that would be 12,000 mcf/day (likely very conservative). Tack on the 1,000 mcf/day from Montgomery County and you've got a conservative number of 13,000 mcf/day for wells that already exist. Gas is going for around $7/mcf. Do the math. Even using conservative numbers, this is $2,730,000 worth of gas per MONTH. That's nearly $33,000,000 per year worth of gas coming from a debt free pink sheet company! If Wilshire comes into the picture and provides funding as talked about previously, all this would be done and the company would still be debt free. The current market cap of the company is under $15mil. Sound crazy and pie in the sky? Keith said in the interview that if all goes well, the infrastructure to get this built could happen in 6 to 12 months. With the amount of natural gas under Hemi's leases and the price of natural gas, it isn't a stretch to think the bigger money would go after this.
Keep in mind, all that is talked about above is what has been put in print or talked about in interviews. Keith has stated a number of times he is not going to show his entire hand until he is ready. If the above is what he is willing to talk about, one has to wonder what it is he is not yet willing to talk about :)
Even if Hemi has no intentions of immediately going after this gas it will add tremendously to Hemi's reserves and independent proven reserves are what primarily makes up the value of these type companies. Keith has been spending extra money when drilling and getting core samples and having these sent off and analyzed. Why? He has already drilled the hole but is trying to learn how better to drill the next well plus, IMO, using this information to prove up additional reserves. Don't forget too that our current independent reserves report doesn't include all the pay zones.
Anyway, I know we all talk about Hemi's oil but often, it seems, overlook this very valuable gas. I connected some of the dots from all these press releases and interviews and just wanted to share what I found and further show everyone just how undervalued Hemi actually is.
All I'm trying to say in my ever-wordy way, is the biggest $$ potential isn't in extracting all the oil. It's accumulating and proving the assets.
This is all an attempt at expressing my viewpoint on this and what I believe is more important. Take it with a grain of salt. But I do believe that as long as folks still keep thinking short term, and strictly production, they're missing MOST of what Hemi has going on.
I posted a bit about Hemi's gas in this post...
http://investorshub.advfn.com/boards/read_msg.asp?message_id=21544879
and their oil in this post...
http://investorshub.advfn.com/boards/read_msg.asp?message_id=21554936
and neither of them include any oil shale figures.
Just trying to back up and further hammer home the point you are trying to get across Big Mur (not that you need help... just providing additional wording in my own wordy way. LOL!).
For those who don't want to click anything I'll copy and paste the above links below
++++++++++++++++++++++++++
Look at Hemi's proven reserves of OIL $100mil+
I'll also talk about probable but the proven is what many like to look at.
I posted the below a while back so some of it is outdated (example, I mention oil being $55 a barrel but I believe it is now over $62) but I thought after today, this would be a nice reminder :)
-------------------------
"Read between the lines" of what Hemi has in store...
Some new investors and even long timers may not have yet connected the dots for what Hemi is doing in Woodson County Kansas (which is just one of many areas where Hemi has acquired land).
There are some important things to realize when connecting the dots... First, the oil under the 5 leases in Woodson County for which we have a reserves report has blanket formations. Blanket formations extend laterally over large areas. Meaning, what is under the ground right here is likely the same way over there. Second, many of the leases Hemi has been acquiring in Kansas are contiguous to the 5 leases mentioned above (meaning they are touching or next to them).
Knowing the above, we can "look ahead" so to speak.
The 5 leases above make up ~2000 acres. This is 3.125 sq miles. Hemi now controls 11 sq miles in this blanket formation and should have finalized the paperwork for 17 square miles by the end of June (see PR). Keith has mentioned wanting to go for 40 square miles but let's just stick with the 17 square miles for now. 17 square miles is 5.44 times more than the land we have the reserves report for. It has already been stated in press releases that Hemi believes, based on numerous records, cores, past history, etc. that the land around the 3.125 sq miles the 5 leases make up will have similar reserves. Also to note... the reserves report does not even contain all existing pay zones (even more potential reserves... see below).
So, lets do a little math. The current INDEPENDENT reserves report has proven reserves of 2.15 million BOE and probable of 5.1 million BOE for a total of potentially 7.25 million BOE.
If you talk only about the proven reserves and take 2.15 million BOE and multiply it by 5.44 (remember, blanket formations and contiguous leases... Keith acquiring contiguous leases is no accident) it is my opinion we will likely see at least 11.7 million BOE proven in the not too distant future. Oil is going for around $55 barrel in Kansas so at that price, it is not unlikely that we could have more than $643,500,000 in proven reserves once we start drilling these other leases. Now, throw in the probable and you are looking at the potential for over TWO BILLION DOLLARS worth of oil and just in Woodson County! This doesn't include Montgomery or even all the other states... and you wonder why so many people think this is undervalued? The above also doesn't include the block of leases Hemi just acquired with all the gas (above is just oil!).
Now, just let me hit you over the head with a 2x4... the reserves report doesn't contain the deeper zone, the Mississippian. It contains the other 4 shallower pay zones but not this deeper zone. Hemi has not yet drilled to that zone. BUT, production of oil and gas does exist from the Mississippian within a few miles all around and in all 4 directions of our contiguous Woodson County leases. What's it mean when others all around you are producing gas and oil from this zone on all your sides? Means you don't need to think too hard about good production coming from the Mississippian on Hemi's contiguous leases as well. AND, once this happens, it will be added to the reserves report making it that much more impressive.
Bottom line, Hemi is sitting on a ton of gas and oil with a ludicrously low market cap. Congrats to those who have done their DD and can extrapolate the above as well. Granted, the above is extrapolation... but not unreasonable extrapolation. For those who want to wait until Hemi actually proves up this land, don't expect to pay anywhere near these prices once this happens. Read the press releases closely, do your DD, and you can see that Keith and crew are building something that is going to be very big and I, for one, am very excited to be a part of it.
+++++++++++++++++++++++
Hemi's proven oil reserves and tobe proven GAS reserves...
We all know Hemi has oil and a ton of it but very few actually ever understand or talk about the huge tobe proven gas reserves on Hemi's leases. xtrapink talks about it a bit and even mentioned the below in the post I linked to this one...
My opinion is that oil production is the "low hanging fruit" right now, even though the natural gas (NG) and coal based methane (CBM) gas may hold the keys to a dramatic increase in the estimated worth of Hemi's Kansas reserves. Think in terms of BIG numbers when you imagine the potential impact of proving up NG reserves in Woodson County.
I thought I'd go through some of Hemi's older PRs and interviews and see what I could come up with. When piecing it all together and adding it all up, it is incredible the amount of gas Hemi has yet it gets so little attention.
Here is what I have been able to piece together just from what Hemi has put in print. Keith has been known to hold back a bit on things he thinks are very big and if what I've come up with below is holding back we are going to be in for some very exciting times.
------------
Hemi has talked about some promising gas in Sabine County, TX as well as two oil and gas leases totaling 640 acres in North Dakota. Hemi has also talked about existing gas wells on their leases in Montgomery and Woodson Counties in KS
In Sabine County, TX, Hemi has 360 acres with 3 adjacent oil and gas leases. Wells in Shelby County that are about 4 miles to the north average over 2,000 mcf/day. The average well is producing over $400,000 per month when using $7/mcf. These gas wells and gas fields have a slow rate of decline and have an economical life of over ten years.
In North Dakota, there are three other leases adjoining Hemi's lease on three sides and have five producing gas wells, owned by other companies, which are within one mile and less of the Hemi lease. Each one of these five wells have an approximate revenue of $4,000,000 or more over an economically viable life of ten to fifteen years.
Now, in Kansas, Hemi has told us quite a bit about the gas under the leases but is also holding back quite a bit as well. That's the impression I get when reading the press releases, emails, and listening to the interviews. Many view Hemi as an oil company because, for right now, all they are selling is oil. But, if you look at just what we know about their gas it is pretty incredible. Hemi's gas could end up being very very big.
In Montgomery County, Hemi has a shut-in gas well at a depth of 1250 feet that is commercially producible. This lease also has two gas zones. The well and the gas zones make developing the gas formations "financially obvious". After mention of this well was made, Hemi talked of new research locating natural gas wells that were drilled from 1950 to 1980 on the Montgomery County leases. They were originally drilled as oil wells but instead of finding oil, the developer found natural gas. These wells open flow tested at 300 to 400 mcf/day. These wells are in the Mississippian formation. Hemi has talked of at least 3 of these uncompleted gas wells existing. Hemi then went on to tell us they have acquired additional leases that will be their most valuable leases with reserves of all their Kansas lease holdings. This is referring to gas value. Since the reserve report for the 5 contiguous leases has independently proven reserves in excess of $100,000,000 then this new gas find would be valued in excess of $100,000,000. Now, after listening to the 6/12/07 Wallst.net interview, one can learn a little more about just how valuable this find actually is. This gas find is not contiguous to their oil leases to the south. Existing wells on the lease were drilled from 1916 to 1930 with 5 pay zones 800' to 1200' deep. Newer wells were also drilled around 2002. Research data has shown the wells drilled in 2002 flowed similarly to the wells drilled from 1916 to 1930. Now get this… the pay zones in one well could flow at 7,000 mcf/day to 15,000 mcf/day! However, it wouldn't be possible to produce all pay zones at one time so one wouldn't expect to get that high of flow out of each well but these would still be very prolific gas wells. The field where all these wells are located has never been declared and Hemi intends to name it the "Hemi Field". So, similar to the Humboldt-Chanute oil field, Hemi could be in the history books with their "Hemi Field". Keith believes this oil find will "totally validate Hemi's existence" and is what they've been working for for years.
So, for Kansas, there are several wells in Montgomery which open flow tested at 300 to 400 mcf/day so if you say there are only 3 of these wells you could say 1000 mcf/day for these wells (be sure to check out xtrapink's further number crunching in post 10090!). Then, who knows how many wells there are on the new leases that have been defined as having prolific gas? The plural "wells" is talked about as being drilled from 1916 to 1930 and again wells is plural for the ones drilled around 2002 so one can assume at least four of these wells exist. Since just one zone flows at 3,000 mcf/day, if you just use the 3,000 mcf/day number for just 4 wells that would be 12,000 mcf/day (likely very conservative). Tack on the 1,000 mcf/day from Montgomery County and you've got a conservative number of 13,000 mcf/day for wells that already exist. Gas is going for around $7/mcf. Do the math. Even using conservative numbers, this is $2,730,000 worth of gas per MONTH. That's nearly $33,000,000 per year worth of gas coming from a debt free pink sheet company! If Wilshire comes into the picture and provides funding as talked about previously, all this would be done and the company would still be debt free. The current market cap of the company is under $15mil. Sound crazy and pie in the sky? Keith said in the interview that if all goes well, the infrastructure to get this built could happen in 6 to 12 months. With the amount of natural gas under Hemi's leases and the price of natural gas, it isn't a stretch to think the bigger money would go after this.
Keep in mind, all that is talked about above is what has been put in print or talked about in interviews. Keith has stated a number of times he is not going to show his entire hand until he is ready. If the above is what he is willing to talk about, one has to wonder what it is he is not yet willing to talk about :)
Even if Hemi has no intentions of immediately going after this gas it will add tremendously to Hemi's reserves and independent proven reserves are what primarily makes up the value of these type companies. Keith has been spending extra money when drilling and getting core samples and having these sent off and analyzed. Why? He has already drilled the hole but is trying to learn how better to drill the next well plus, IMO, using this information to prove up additional reserves. Don't forget too that our current independent reserves report doesn't include all the pay zones.
Anyway, I know we all talk about Hemi's oil but often, it seems, overlook this very valuable gas. I connected some of the dots from all these press releases and interviews and just wanted to share what I found and further show everyone just how undervalued Hemi actually is.
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