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AMEP total Market Cap only $8,143,467 & Revenues ramping up sharply.
Per 10Q, for quarter ending June 30, 2004
Source pinksheets(d0t)com:
"The number of shares outstanding of the Company's common stock outstanding on August 13, 2004: 198,621,144 "
Todays closing price for AMEP was .041
That gives;
(198,621,144) X ($.041) = $ 8,143,467 AMEP Market Cap.
Todays press release in part:(followed by calculations)
"American Energy Production Inc. subsidiary, Production Resources Inc., sold 1501 barrels of oil in July and August for total net oil revenue of $46,397.
Bend Arch Petroleum Inc. in July and August sold 4598 barrels of oil and 12,598 MCF of natural gas for approximate total gross revenue of $268,000. Total approximate gross revenues in these two months for Bend Arch Petroleum Inc. and Production Resources Inc. totaled $314,000.
Charles Bitters, President of American Energy Production Inc. stated, "Oil and gas revenues so far in the 3rd quarter increased by approximately 229% over revenues from the entire 2nd quarter with September production still to be added. We are very pleased with the production revenue showing significant incremental increased since the quarter ending December of 2003, when the Company had total production revenues of $6600; followed by approximately $60,000 in the 1st quarter of 2004, $143,000 in the 2nd quarter and now $314,000 for the first two months of the 3rd quarter this year."
At the rate of $314,000 per two months, gives $1,884,000 when pro rated for 12 months. However there is a significant lag between real time production in the field, and what revenue tickets are received from the O&G buyers, and later reported in the 10Qs (see DrillBit's post on that subject on this iHub thread). More importantly, there is a strong ramp up in revenues that can now be charted, that projects a significant increase in future revenues yet reported,... as the curve is extremely steep. That revenue curve will continue to rise significantly, unless CB starts drilling dry holes, and that is not happening, just the opposite is occurring in fact. I don't expect CB will be hitting dry holes over the several blanket pay zone formations, most notably the Barnett Shale, that he is developing for production under the AMEP leases.
Keep in mind that AMEP is not sharing working interest with another energy company, that is an extremely important advantage.
Based on what is known, and what is being indicated by the revenue graph, the $ 8,143,467 current Market Cap is extremely low on the SP component,... IMHO.
Forward Guidance given by the CEO in the 4 Aug press release:
"Charles Bitters, President of American Energy Production Inc. stated, "Our subsidiaries are performing beyond expectations. We are very pleased that the new oil and gas wells, and the improving treatment/recovery process with AMEP HOA-800 has increased production and revenues in the second quarter by approximately 240% over revenues from the first quarter. Similar increases are anticipated in the following quarters."
Looking forward to future press releases, and AMEP becoming cash flow positive in the near future from "similar increases" in revenues. SP will follow.
FYI... %^ greeneyedhawk
DrillBit, thanks for the heads upon Habanero Resources.
I only posted that company press release because of their Palo Pinto well data, along with comments on the Barnett shale and Marble Falls formations; and that AMEP has interest in the same subject areas.
Concerning a red flag on Habanero, what do you make of the following statement concerning "1% working interest":
"Texas is one of the most prolific oil and gas producing regions in the world. According to the Texas Railroad Commission Texas oil production for 2002 was 365,900,123 (BBL) and natural gas production for 2002 was 5,715,496,310 (MCF). 2001 annual gas well gas production rates for Jack County was 12,918,995 (MCF) and for Palo Pinto County was 12,733,215 (MCF). The Crude Oil production was 795,108 (BBL) for Jack County and 408,852 (BBL) for Palo Pinto County. The company currently has a 1 percent working interest in this prospect.
The Martex Prospect is located in a multi-play area with production being obtained from multiple zones. These zones are the shallow strawn sands from 1,800 feet, to the Big Saline Conglomerates at approximately 4,000 feet, and the Missippian Chappel Reefs at 4,500 feet in depth. Tight gas shales and lime stones are located below this depth, which are classified as continuous type natural gas plays (accumulations that are pervasive throughout large geographic areas and offer long-lived reservoirs with attractive finding costs). Increased drilling in the Barnett Shale and Marble Falls Lime has been spurred by a reduction in completion costs as a result of using light sand water fracs, higher gas prices, and refracing of productive zones. The objective for this project is to test the previously overlooked zones of interest in these wells.
Currently two of the seven wells to be tested on this prospect have been completed. Both of these wells, the Ima #2 and Henderson #3 both were successfully completed and both are flowing oil and/or gas. The remaining five wells to be tested are expected to be completed within the second quarter 2004.
Recently the Ima #2 Well in Palo Pinto County was successfully completed. This well is successfully producing both oil and gas. The well flowed as high as 701 mcf of gas per day and 252 barrels of oil per day. HAO is also pleased to announce that it has been informed by the operator that the Henderson #3 Well has encountered gas within the target pay zone. The well was put on line at a flow rate of 300 mcf per day. The operator was expecting to have to frac this well, as it was not expected to flow at this level without being fraced."
DrillBit, what's with the 1%. The way it is worded, may leave you thinking that they are talking about the total play of those counties; or is it the Martex Prospect?
One percent of the Martex Prospect is not much, if that is what they are saying....?
One of the most important fact about AMEP, is it's total working interest in most cases; and the 50% working interest on the adjoining lease just announced, that also has plenty of sales pipeline, was a great deal IMO.
The AMEP "working interest" fact cannot be overstated IMO, and is going to be one of the biggest drivers of the SP, once production ramps up and O&NG sales are in the revenues released, and AMEP starts getting serious attention.
Like you have warned, there is a delay between what is going on in the plays, and when revenues are released, reflecting a lag in the real-time picture for a start-up O&NG company.
(BTW, DrillBit you have mail re CMKX.)
GL DrillBit, and all AMEP longs. looking forward to future news releases.
... %^ greeneyedhawk
IDNX starting to make a break. Bullish chart, and SunTrust analyst upgrade to "BUY". Biometrics starting to show revenues with US DHS/DoD and foreign governments(Great Britain, Saudi Arabia) requiring biometrics on visas, passports, drivers IDs, and airport/border control. Three +10 million contacts expected per the DD, and yesterdays SunTrust analyst report.
Common shares and MAR 05s call options attractive IMO.
... %^ greeneyedhawk
Habanero Resources in "Palo Pinto" ...
(undated company news):
http://www.habaneroresources.com/jack_and_palo_pinto_texas.htm
Jack and Palo Pinto Projects- Texas
This multi-well project in Palo Pinto and Jack Counties is primarily a gas project. According to the operator this project was initiated by Mitchell Energy Corporation (subsequently bought out by Devon Energy) before the company focused its efforts in the Barnett Shale. Mitchell Energy had established commercial production in the Marble Falls formation. The goal of this project is fully exploit the potential commercial production from this formation through a multi-well program of up to seven wells.
Texas is one of the most prolific oil and gas producing regions in the world. According to the Texas Railroad Commission Texas oil production for 2002 was 365,900,123 (BBL) and natural gas production for 2002 was 5,715,496,310 (MCF). 2001 annual gas well gas production rates for Jack County was 12,918,995 (MCF) and for Palo Pinto County was 12,733,215 (MCF). The Crude Oil production was 795,108 (BBL) for Jack County and 408,852 (BBL) for Palo Pinto County. The company currently has a 1 percent working interest in this prospect.
The Martex Prospect is located in a multi-play area with production being obtained from multiple zones. These zones are the shallow strawn sands from 1,800 feet, to the Big Saline Conglomerates at approximately 4,000 feet, and the Missippian Chappel Reefs at 4,500 feet in depth. Tight gas shales and lime stones are located below this depth, which are classified as continuous type natural gas plays (accumulations that are pervasive throughout large geographic areas and offer long-lived reservoirs with attractive finding costs). Increased drilling in the Barnett Shale and Marble Falls Lime has been spurred by a reduction in completion costs as a result of using light sand water fracs, higher gas prices, and refracing of productive zones. The objective for this project is to test the previously overlooked zones of interest in these wells.
Currently two of the seven wells to be tested on this prospect have been completed. Both of these wells, the Ima #2 and Henderson #3 both were successfully completed and both are flowing oil and/or gas. The remaining five wells to be tested are expected to be completed within the second quarter 2004.
Recently the Ima #2 Well in Palo Pinto County was successfully completed. This well is successfully producing both oil and gas. The well flowed as high as 701 mcf of gas per day and 252 barrels of oil per day. HAO is also pleased to announce that it has been informed by the operator that the Henderson #3 Well has encountered gas within the target pay zone. The well was put on line at a flow rate of 300 mcf per day. The operator was expecting to have to frac this well, as it was not expected to flow at this level without being fraced.
FYI... %^ greeneyedhawk
8-23-04 Article on activity in the Barnett Shale Formation...
http://phillips66.yellowbrix.com/pages/phillips66/Story.nsp?story_id=55941317&ID=phillips66&....
Gas-Drilling Exploration Firms Home in on Johnson County, Texas
Source: Fort Worth Star-Telegram (Fort Worth, Texas)
Publication date: 2004-08-23
Article in part:
"Gremman is a true legend of the Texas oil patch, having drilled since 1945 and worked through the great Snyder Field boom of the 1950s and '60s. He moved from his longtime home of San Angelo to Granbury last year to get in on the Barnett Shale action.
"I worked all the great booms since World War II," Gremman said. "I thought I'd never see another one. I'm just grateful that I've lived long enough to see the Barnett Shale take off. This one will make the others look tiny."
Benny Cude said his family-run Cude Oilfield Contractors put 25 people in a new field office in Cleburne at the beginning of this year.
"We think the Barnett Shale is not an in-and-out kind of deal, but will be long-term, good for years," said Cude, whose Houston-based company has prepared and built drilling sites all over Texas for 52 years.
The Barnett Shale has become Texas' largest natural gas field since it was opened in 1999 by Mitchell Energy, now a part of Devon Energy. Until this year, the play, now 2,400 wells strong, was confined to Wise, Denton and northern Tarrant Counties.
This year, the action has moved around Fort Worth to Johnson County.
Landmen are also working for Barnett leases in Hill, Erath, Parker and Jack counties.
The exploration company that has done as much as anybody to set off the Johnson County boom is EOG Resources of Houston. Three years ago, it quietly began laying the groundwork for what is so far a 26-well program that the company expects to grow to as many as 700 wells in the next decade.
When the publicly traded EOG revealed in its first-quarter report that it was making natural gas near Godley in Johnson County, the company aroused a financial land rush south of Fort Worth where Tarrant, Parker, Hood and Johnson Counties intersect.
Thomas said that EOG has worked cooperatively with Hallwood Energy, a privately held partnership based in Cleburne that has been working in Johnson County since 2002 and now has 45 producing wells around Cleburne.
Hallwood Energy caused a sensation this summer when it confirmed a Johnson County well that produced up to 5 million cubic feet of gas per day, at least double the usual initial production of the average Barnett Shale well. Hallwood plans at least 150 more wells in the next few years."
FYI... %^ greeneyedhawk
DrillBit ...CMKX and AMEP
After reading patreko's CMKX post this weekend on the RB "Sterlings Classroom" I got interested, I saw where you posted on that subject too.
Tried to buy an initial position in CMKX this morning in my Scottrade account, but Scottrade will not take buys on CMKX, only sells.Story sounds interesting though.
So instead of buying CMKX, I added to my AMEP account, in anticipation of good news from Youngblood #1.
BTW DrillBit, you have e-mail.
... %^ greeneyedhawk
DrillBit, you have Yahoo mail.
... %^ greeneyedhawk
DrillBit thanks re NG info, I thought so, but did not know for sure. I think it would be "highly profitable" if only 20% of the crude oil is recovered from the PRI lease, that is a pretty big reserve(and that is an understatement).
GL Drillbit and all AMEP longs.
... %^ greeneyedhawk
DrillBit, appreciate your observations and thoughts, as I have a significant stake here, and want to learn all I can about the O&G biz, and AMEP. I did not think about the additional advantages to the pipeline deal. Points 1 and 2 are good to know, thanks for passing on. Todays news was bullish, I think the significance of todays news is not appreciated by the investment community ..... yet. They will wait for revenues, and pay the higher SP.
As far as the 193 PRI wells, .... I have a question regarding the gas reserves estimates on that 11 page PDF, dated 3-04, by Rhea Interest Inc, linked at the AMEP web site. Seems the oil reserves are just huge, but the gas estimate is not so impressive. Is the Barnett Shale significant, or present in this lease?
Report says;
"231 MMCF"of gas reserves. and:
"NG reserves account for 1% of the total gross revenues and crude oilreserves account for 99% of the total gross revenues"
DrillBit, can you shed any light on this? TIA.
BTW, the oil reserves under those 192 (I have also seen 193)wells IS impressive, worth much more than the market cap alone, IMO. Longs will learn to appreciate those new downhole pumps as soon as CB releases the results, IMHO.
GL DrillBit and all AMEP longs.
... %^ greeneyedhawk
DD Article on the Barnett Shale Formation (Pay Zone!!)
Pump it Up
BOB FRANCIS
Barnett proves it is no Shale game
"It's hot as a pistol right now and I'm not hyping you. I don't have to, believe me," said J. Robert Ransone, vice president at Five States Energy in Dallas. Ransone is talking about the Barnett Shale, one of the largest -- certainly the hottest -- natural gas production areas in the U.S.
That gas production happens to be in our backyard. The Barnett Shale is centered in Tarrant County with extensions into Wise, Denton, Johnson and Parker Counties and is producing approximately 935 million cubic feet (MMcf) of natural gas per day.
In total, the Barnett Shale covers 500,000 acres of land and eight counties. An assessment of the potential gas reserves of the area last year estimated that up to 26 trillion cubic feet of potential reserves are in the area. That is a major increase over the seven trillion cubic feet estimated in the late 1990s.
It also verifies the crystal ball prognostications of legendary Texas oilman George Mitchell, of Mitchell Energy Corp., who began buying acreage in the area in the 1950s. Devon Energy Corp., of Oklahoma City, purchased Mitchell in 2001 for $3.5 billion, primarily for Mitchell's Barnett Shale assets. Devon is the big dog in the Barnett Shale with 120,000 acres, the majority in the core area of the Barnett Shale. Last year, Devon drilled 325 vertical wells and 54 horizontal wells in the core area of the Barnett Shale. This year it plans to drill 113 vertical wells and 114 horizontal wells, spending about $300 million in the process. Devon is also moving outside the core area to develop wells in Johnson and Parker Counties. It employs around 800 contractors for its work in the area.
The major geographic elements in the Barnett Shale are the Ouchita Mountains to the east, the Munster Arch to the northeast and the Bend Arch that defines the western margin of what is called the Fort Worth Basin. The oil is encased in a layer of tight black shale that ranges in thickness from 50 feet near the Bend Arch to nearly 1,000 feet near the Munster Arch.
To get the gas out, the well must be "fraced," which generally means applying extreme water and sand pressure to the shale, which yields the gas. Over 1,200 successful wells have been drilled in the area and at least 400 wells are being drilled or completed.
The growth in the area's drilling has been huge by any measure. In January 2000, there were 566 wells completed in the area; since then, at least 750 have been added. "It's grown faster than anyone thought even a year ago," said Terry McCarter, executive vice president for energy at Texas Capital Bank.
Most of the drilling has occurred in far north Tarrant County and southeast Wise County; the first wells were drilled in the city of Fort Worth earlier this year after the city approved guidelines for drilling last year. There are 326 wells worth $301.9 million pumping gas in Tarrant County this year, compared with just 10 wells four years ago, according to the Tarrant Appraisal District. And more are coming.
City officials are considering whether to allow companies to drill on city-owned property at several local airports, parks and at the Fort Worth Nature Center. The potential revenue to the city is enormous -- as much as $2.25 million over the 10-year life of a well, according to city officials. Other cities are adopting similar ordinances, said Chester Nolan, city manager for Cleburne. "We realize we're going to need some rules as companies begin drilling here," he said.
The increased market and price for natural gas stems from several policies implemented by the federal government several years ago, said Charles Matthews, Texas Railroad Commissioner. "During the Clinton administration, policies were put into place to favor building gas fueled power plants. At the same time, Canadian suppliers began cutting back on their exports. That has fueled a lot of the increase in gas prices, which has translated into drilling in the area," he said.
As the Barnett Shale's importance has grown, so has interest from local companies. XTO Energy Inc. purchased producing properties in the Barnett Shale in April and has 40,000 acres in the area. "We would like to have about 100,000 acres," said Gary Simpson, XTO's vice president of investor relations. XTO typically does a lot research before the purchase of reserves and Simpson said this was the case in its Barnett Shale purchase. "We believe these assets will continue to prove their value. This area will produce for a long time," he said.
Also joining the Barnett Shale group is Encore Acquisition Co., which purchased Cortez Oil & Gas for $123 million in April. Cortez has several acres in the Barnett Shale.
Ness Energy International Inc., of Willow Park, has been busy acquiring acreage in the area, including approximately 3,500 acres in June to add to the 10,000 acres it already had in the area.
Quicksilver Resources has 120,000 acres in the area. Quicksilver raised eyebrows last year when it hired Mark Whitley as vice president of operations. Whitley had been instrumental in developing the Barnett Shale, first for Mitchell Energy, then for Devon.
Not every Fort Worth oil and gas company is interested in the Barnett Shale.
Cano Petroleum Inc. is taking a contrarian's view. "We believe the world's need for oil is continuing and will continue for some time," said Jeff Johnson, chairman and CEO of the company. Johnson's company is focusing on developing secondary and tertiary oil fields. "Natural gas is in vogue and that's understandable because demand is high, but we believe there will be a role for oil as well."
While everyone has acknowledged the importance of the core area of the Barnett Shale, the story this year has been the growth in non-core areas in Parker County, Johnson County and the western area of Wise County "Eighteen months ago, people thought the play would be in the core of the Barnett Shale, in Tarrant County, Wise County and maybe a little of Denton County," said XTO's Simpson. "That's not the case any longer."
The reason the core area was thought to be most likely to produce the most profitable wells was that the gas was less expensive to obtain. In the core area, there is a natural frac barrier formed by the Viola limestone on the bottom and the Marble Falls limestone frac barrier on top that helps force the gas up the well. Outside of this area, the bottom layer of the shale is the much softer Ellenburger dolomite. "A lot of people thought that would make it tough and more expensive to get the gas out," Ransone said. "But we've gotten around that."
Last year, Devon began drilling some test wells in the area and, while the company won't specifically discuss the results, it has started acquiring more land in the non-core area. According to EOG Resources, which also has acreage in Johnson County, drilling in the non-core area is not as fruitful as in the core area, but is profitable. The company said horizontal wells in the core area produce between two and six Bcf (billion cubic feet) per well, while in the non-core area the amount is somewhere between 1.5 and four Bcf. "It's a little more expensive, but it's not bad," Ransone said.
It was not just Devon that proved gas could be brought into the area. A small oil and gas exploration company called Hallwood Energy Corp. does not talk about how it does it, but it averages production of more than 20 million cubic feet of gas per day, all in Johnson County.
"Our biggest problem has been the lack of capacity to handle the gas we have produced," said William Marble, vice president of Hallwood. The company has 47 producing wells in Johnson County. "We have to be careful not to outrun our capacity in our drilling program."
Natural gas pipeline companies are interested in the area. Energy Transfer Partners is hoping to build a 52-mile, 24-inch pipeline from Cleburne to TXU's processing plant in Springtown, and other companies are interested. "We really need some more capacity here," Marble said.
Even without a pipeline to carry much of the gas, Cleburne has reaped benefits. According to Nolan, the city has received more than $250,000 in royalties from the drilling on city property. "We think we'll get about $100,000 annually for the foreseeable future. It's not a large amount, but it will sure help," Nolan said.
The lack of a pipeline has not hindered companies from coming into the area. Beside Devon, Hallwood and EOG, XTO, Chief, Quicksilver, Tom Brown and Burlington Resources have acreage in the area. "That area is going to be more of a technology play than the rest of the Barnett," Ransone said. "You have to do your homework to get the gas out and to get the most gas out, whereas with the core area of Barnett it is almost a no-brainer."
Technology plays are where service companies and companies such as Flotek Industries of Houston are making sales to the companies drilling in the Barnett Shale. Flotek recently opened a sales office in Fort Worth to sell its Petrovalve vales for bottom hole gas pumps.
Parker County is probably where Johnson County was 18 months ago, said Tony Carvalho, manager of geology for Chief Oil in Dallas. "We probably have about eight 3D seismic surveys going in Parker County," he said. Carvalho said Parker County is similar to Johnson County and southern Tarrant County in that there is no limestone frac barrier. "The gas there is not as 'wet' either, which means you may not be able to get as much out of it in terms of liquid natural gas. So it is a little different, but we're all still learning a bit about it," he said.
For long-time oil industry observers, the Barnett Shale almost seems like a dream come true, as rigs begin to show up right in Fort Worth's backyard. "The beauty of the Barnett Shale is that there is a long curve to this field, said Texas Capital's McCarter. "It's going to be here awhile and it has a lot of economic benefits, for people in the industry, for people that own the mineral rights and for those that collect the taxes. Most of the great fields aren't so attractively located. This one is."
BTW, thanks to cartaflash on RB for the link.
... FYI %^ greeneyedhawk
Good News ...
Press Release Source: American Energy Production Inc.
American Energy Production Inc. Announces Purchase of Natural Gas Pipeline and Properties by Wholly Owned Subsidiary Bend Arch Petroleum
Wednesday August 25, 9:00 am ET
MINERAL WELLS, Texas--(BUSINESS WIRE)--Aug. 25, 2004--American Energy Production Inc. (OTCBB:AMEP - News) announced today Bend Arch Petroleum Inc., it's wholly owned subsidiary has purchased a 50% interest in 400 acres in Parker County, Texas. This property is contiguous to the Company's existing Youngblood lease. The 400 acres has five producing natural gas wells and the potential for several Barnett Shale gas wells. Also, included in the purchase package is a three mile 4" natural gas pipeline that will allow the natural gas from the Youngblood #1 and other wells on the property to be transported and sold. The Youngblood #1 gas well will be connected to this natural gas transportation line in the next few days.
This purchase of natural gas properties in the Barnett Shale by Bend Arch Petroleum Inc. is in keeping with the business plan of acquiring, drilling and developing as many select natural gas wells in the Barnett Shale formation as possible over the next five years. Charles Bitters, President of American Energy Production Inc. stated, "We are allowing Bend Arch Petroleum Inc. to be very aggressive in the Barnett Shale formation, because we believe this natural gas formation will only expand rapidly as new stimulation and fracturing technologies are utilized."
ABOUT AMERICAN ENERGY PRODUCTION, INC.:
AMEP was founded in 2000 and in 2003 upon the acquisition of certain oil and gas assets, the company entered a new development stage becoming a Business Development Company in January 2004. Activities during this stage include acquisition of subsidiaries' additional assets, developing and implementing a plan to extract oil and gas, acquiring certain rights to and utilizing an oil recovery additive, completing initial sales of oil and gas, and raising capital. The company has determined that its operating model best approximates that of an investment company and intends to make investments into developing businesses in oil and gas related industries.
FYI ... %^ greeneyedhawk
DrillBit, you are right. According to several articles, that is the beauty of the Barnett Shale wells. Some reports say that the volume and pressure nearly returns to the initial numbers after the refract. Barnett Shale wells are expected to produce 15 to 30 years before production starts to drop off.
If CB continues to be successful, the thousands of AMEP acres over the Barnett Formation will provide plenty of opportunity for success, as new and re-worked wells add constant and increasing revenue each year, for a long, long time.(Apparently a lot of the old wells that AMEP acquired, and is re-working, has plenty of Barnett behind the pipe - originally drilled before the slick water fracs made the Barnett such a great producer. It's almost like drilling a new well over a known producing formation - at much less cost.)
The advantage of Oil and Natural Gas over many other investments, is that the product always has a buyer. AMEP will go from a start-up, to a reliable investment that you can hold for a significant long term gain, as additional production comes on line, and revenues increase year over year, IMO.
GL DrillBit.
... %^ greeneyedhawk
DrillBit, because you are an oil man, and have been to the well sites, appreciate your comments on any part of this RB post, hopefully on the RB Board, but if not, appreciate your input here for the ihub AMEP longs. TIA.
"cyberbub0 ... re 193 PRI oil wells.
Bub, in response to your referenced post.
Bub, appreciate your interest in AMEP, even though you are not a share holder; that usually raises a red flag unless the poster is objective with BOTH longs and shorts. Question: Why do you keep warning about well plugging cost on the PRI lease, which has 62,000,000 barrels of reserves? At $40 a barrel, thats $2,480,000,000 (as in billions), and yes I know you don't get it all, but that is a lot of Oil to pull on. I will be pushing up daisies when these wells are plugged.
"MINERAL WELLS, Texas, Jan. 21, 2004 (PRIMEZONE) -- American Energy Production Inc. (OTC BB:AMEP.OB - News) received the lab results comparing AMEP HOA-800 treatment oil to the base Olmas oil produced on the Company's recent acquisition Production Resources Inc. leases.
The base oil was tested to determine three factors: 1) gravity, 2) sulfur content, and 3) viscosity. The base line on the Olmas oil showed a gravity of 20.9, a sulfur content of 2.0276 and a viscosity of 72.93. When compared with the AMEP HOA-800 test mixture recovered from the ``Wilson B' oil tank the numbers showed a significant difference especially in the viscosity. The gravity rose to 21.7, the sulfur content dipped to 1.624 and the viscosity dropped to 61.08. While the gravity and sulfur content numbers did not show a dramatic change the viscosity number is very significant because the 12-point drop demonstrates that AMEP HOA-800 is thinning the oil allowing it to flow through the sand formation easier and faster increasing the production from the oil wells. More reports will be released as information is compiled. American Energy Production Inc. began treating and testing oil on these leases in the fall of 2003 with the new heavy oil additive AMEP HOA-800. Results of initial well treatments showed increased oil production of more than 1000%. With the current information available, the positive results of the tests completed so far, and the price of oil today, the Company will begin the second phase of treatment with AMEP HOA-800, treating as many oil wells as possible over the next several months.
American Energy Production Inc. acquired Production Resources Inc. on January 1, 2004 as a wholly owned subsidiary. The oil properties owned by the Company in Medina County, Texas are west of San Antonio The PRI oil leases cover more than 1,500 acres and have a long history of oil production through three producing horizons and have an estimated 62,000,000 barrels of proven recoverable oil reserves. The price of oil today is approximately $29 per barrel. Presently, Production Resources Inc. has 193 fully equipped oil wells capable of producing several thousand dollars per month of oil with the new technology discussed above and stimulation procedures that will be incorporated into oil operations. The PRI oil field will be able to produce to its maximum potential using the company's newly acquired technology.
...
At 5 barrels a day per 193 wells, is 965 barrels a day. At $40 a barrel(a big discount on todays price per barrel) that is $38,600 per day, or 14 million a year. I think 5 barrels average may be conservative with HOA-800 used with the new down hole pumps being installed.
Since this release, AMEP is adding down hole pumps to push up the oil, which are working "very well" according to a recent news release, and according to my phone conversation a couple of weeks ago with the CEO.
OF NOTE: IMHO the PRI lease will be very profitable and worth more than the current SP alone,.... but will not be the most profitable AMEP play:
"Bend Arch Petroleum Inc. completed a well located on its 12 well Palo Pinto Project in the Barnett Shale Foundation. Total cumulative gross production to date is over 1400 barrels of oil and over 2,000,000 cubic feet of natural gas for the Company.Charles Bitters, President of AMEP stated, "It is very unusual for a Barnett Shale well to produce this volume of oil. Normally these wells produce mostly dry natural gas. With the price of oil and natural gas at today's market prices this well has the potential gross sales of over $5,000.00 per day."
...OR ...
Bend Arch Petroleum Inc. also completed a Barnett Shale well in Parker County, Texas, and the Company believes this well, the Youngblood #1, will produce oil and natural gas in sizable commercial quantities. The well has 1200-lbs/sq. inch shut in pressure and only needs a pipeline connection to begin production. More details will be announced in the next few weeks as to the status of the Youngblood #1 well when production begins.
...
Bub, appreciate an objective take. TIA.
BTW, we both will have a big win with BIPH... IMHO(one of my largest holdings along with AMEP).
Long AMEP, BIPH
... %^ greeneyedhawk
DrillBit, TIA for your experienced O&G in-put and comments.
DrillBitt... CB indicated in a phone conversation that horizontal was in our future. I asked how tough a job that would be in that hard shale, to my surprise(been away from Oil as an investor too long) he said the technique was down, and it should not be a problem. AMEP looks to have a profitable future.
... %^ greeneyedhawk
DrillBit, thanks, I understand. I have called CB several times, and got a feel that all is going very well(pardon the pun). Being a good man, he did not give me anything material. Personally I think the last several news announcements have a wealth of good news information not reflected in the SP.
BTW, regarding that article I just posted on the Barnett, what do you think of this statement: "Further, this explains why in some areas a high oil content is found where higher gas content is expected."
Since the oil content was very high for a Barnett Shale play, you could assume the gas is also a big find, and should push "long and strong" volume. Is that how you read this play? TIA. +20-30 year well?
... %^ greeneyedhawk
Barnett Shale Article, re "high grade" oil in formation.
AAPG Abstract (in part), source: Google, PDF format
Barnett Shale Oil and Gas as a Analog for Other Black Shales
Daniel M. Jarvie and Brenda L. Claxton
Humble Geochemical Services
Division of Humble Instruments & Services, Inc.
Source-reservoir systems such as black shales have shown excellent commercial results
over the years including oil in Monterey and Antelope shales in California and Bakken
wells in the Williston Basin, whereas Barnett Shale gas production in the Newark East
Field in the Ft. Worth Basin is currently the largest gas field in Texas. These systems are
more difficult to log, although logging techniques have improved significantly over the
past few years. Using techniques of organic geochemistry prospect generation by
mapping of oil versus gas prone areas, and evaluation of oil and gas yields at various
maturity levels aid high-grading of perspective drill sites. The success of these
techniques in the Barnett Shale is applicable to exploration for oil and gas in other black
shale petroleum systems.
Immature Mississippian-age Barnett Shale is readily identified as a Type II oil prone,
marine shale based on its high petroleum potential (ca. 350-1400 BO/AF at low
maturity). Barnett Shale-derived oil is found in the western portion of the Ft. Worth
Basin and is high quality (35-45 o API), low sulfur oil. Higher maturity oils and
condensates are associated with gas found in Wise County, but are generally of similar
quality (40-50 o API)
These black shales are similar to pressure cookers in that as significant burial occurs oil
and gas is generated and is episodically expelled
The retention of hydrocarbons in the Barnett is due to its high carbon content and
lithofacies. Until it reaches fracture thresholds, oil is retained and portions of the oil can
be cracked to lighter hydrocarbons. This is in part why such high quality oils are
associated with Barnett and Bakken source rocks. Further, this explains why in some
areas a high oil content is found where higher gas content is expected.
.................
FYI... %^ greeneyedhawk
DrillBit, the AMEP web site shows a site picture on the Palo Pinto 12 Well Project. The well is identified as "Well #2". Question, is this the announced well completed in the Barnett Shale Formation with $5,000 per day gross potential, with 128 barrels per day of high grade oil, and 200,000 c.f. NG per day? Or was that well #1?
Thought I would ask you since you have been on the sites, thanks for helping sort out the details.
Disclosure long AMEP(long as in holding for at least one year)
... %^ greeneyedhawk
Drillbitt, this was tucked away in the last announcement, nobody on RB commented on it much:
"On the PRI subsidiary oil properties in South Texas, the Company is evaluating a new down hole pump that will increase oil production after treatments with AMEP HOA-800. At this time the new pumps are performing well."
I talked to CB after this announcement by phone, he seemed pretty pleased with the new down hole pumps performance, and said they will increase the production, just like the announcement says, but did not get specific per rules.
Question Drill bitt (or anyone else with knowledge): Considering the HOA-800 treatment together with the new down hole pumps, what would be a range of barrels per day, per average of the 193 PRI wells, that we could expect to see out of the PRI play based on your background and AMEP DD? I realize that the best you can do is a range, but that will help get a handle. ....TIA.
... %^ greeneyedhawk
I'm in,.... read all 119 post. I am a little smarter about O&NG operations, and AMEP, after taking in all the information shared here, thanks. Looking forward to exchanging info and thoughts with the knowledgeable posters here.
... %^ greeneyedhawk