Here is the interpretation of the NR from a highly experienced oil exploration engineer (GreatSwami) from the VST board.
The news so far looks very encouraging (other than the unbelievably slow rate of progress).
But they have done what I suspected - drilled through all the academic stuff and cap rock zones and finally made it to the Cretaceous Shiranish (Phew!) What is very encouraging is they do not report having had any major gas kicks, potential blow outs or well controll issues. If they had reported some difficulties of that kind it would be a very sure indication of a tall thick gas or gas condensate column - the lack of any such problems meants that while they may have a small gas or gas condensate cap over the oil - they do not have a huge gas (or gas condensate) column they actually have an oil column right to the top (or very close to the top) of the Shiranish. This is hugely encouraging.
The reason that they will have ended drilling the 8 3/4" hole and run a 7" liner (A short Casing string only run from current TD at 3558m up to somewhere inside the 9 5/8" casing string they set earlier in the year) is because they have hit some hole troubles such as fractures or good permeability and could have had some serious mud losses to the formation. Note they would have used a heavy mud to drill into the Cretaceous because if they had found it gas charged with a thick gas column it would have been seriously overpressured and they would have been in serious trouble going mud-lite. The fact that they are running the liner suggests that there may be a thin gas cap or solution gas - but no real thick and overpressured gas column. They need this liner in place to stabilise the open hole sections below th 9 5/8" casing and to be able to safely use lighter mud to not incur any severe fluid losses to formation - while still being able to easily control any potential gas kicks from the top of the reservoir zones. They will of course have run wireline logs - as for any LWD (Logging While Drilling) I don't think so but who knows? As usual they will have been monitoring the mud gas - probably analysing it with a chromatograph to break it down into its constituent components. (Methane, Ethane, Propane, iso and normal butanes, pentanes etc etc). They will also have been looking very closely at detailed samples. Drilling as slowly as they seem to have been they will have been collecting at least 1m sample increments and that means lots of rock sample to visually examine at site as well as lots to send of to special labs for thin section work, electron microscopy, mass spectroscopy, and detailed material analyses of various other kinds. (Such as checking for residual hydrocarbon content and gravity as well as total organics).
There is no doubt in my mind that the presence of both elevated (and increasing) mud gas - from which they will have the chromatogram breakdown to show all the "heavies" - as well as the increasing fluorescence with depth is absolutely proof of having found both porosity as well as oil sitting within permeability. The exact colour of the fluorescence seen in the sample drill cuttings will tell the API range of any moveable oil phase present within the reservoir. A white to cream fluorescence is an indication of very light oil or condensate, cream to vanilla or custard yellow suggests light oil, yellow to gold to dark yellow a light to upper medium gravity, dark yellow through amber a medium gravity, dark amber to light brown we are dropping down into lower medium to upper heavy oils while medium to dark browns are simply heavy oil. The lack of any mention of blow outs - or severe well control issues pretty well rules out the condensate scenario. If we are seeing any mud gas at all considering the heavy mud they would have been drilling with that means the oil is likely at least a medium if not light gravity fluid phase. (You gotta have something volatile in the oil to allow any real gas to get into the returning drilling mud in the first place). Remember they do not expect huge matrix porosity but instead fracture permeability. Fracture permeability tends to present very little in the way of a surface area in contact to the oil for a bit to crush up - and so in samples you never see much in the way of great visible oil staining. First the heavy mud flushes the moveable oil deep into the fractures away from the well bore, then the bit arrives shredding the rock up into tiny chips which are circulated to surface. Only those chips that had an edge adjacent to the fracture surface will have a thin film of oil adhering to it - and those surfaces will always be an infinitesimal fraction of the fresh chip surfaces created by the drill bit - fresh surfaces that will not show a single trace of oil! (Unless of course there are zones with significant matrix porosity development?)
In these foothills structural reservoirs it is the presence of heavily fractured zones over great thicknesses and over a very large geographical area that provides the often huge oil volumes found in place - and due to the great volume to pore surface area ratio in fractured reservoirs - very high recoveries of the OOIP are possible with minimal numbers of exploitation wells.
It seems that the oil fluorescence and mud gas shows started in the overlying Tanjero and continued down into - and increased within - the Shiranish creating what they have told us is 143m of "Prospective Pay!"
Prospective Pay - is not Net Pay - but you do not call something "Pay" if it hasn't already shown the ability to have significant permeability. I suspect that they have encountered moderate to serious mud losses here while drilling into this section - that is how they know for sure they have permeability and very good permeability at that. They did not have any reported severe gas kicks - that is how they know for sure they are not dealing with a monster gas condensate column like the experience of WZR just to the south at Kurdamir. They have fluorescence in the samples and increasing amounts of it (that is very typical when drilling into a thick oil saturated zone) and so they knowthey have oil and from the colour of the fluorescence they will have a very good idea of the API of that moveable oil. (They will also have a very good idea from the Mud Gas chromatographic evaluation while drilling log).
Any wireline open hole logs they may have run will tell them much about what they have got - especially when calibrated to the revealed detailed mineralogy displayed in the drill cuttings samples. They may even have tried to take a few wireline sidewall cores and performed a RFT wireline log fluid and pressure sampling run - although it is devilishly difficult to get a seat and any reliable data in a fractured zone with little matrix porosity.
If I read the news release correctly - they have only just scratched the Top of the Shiranish and already have a minimum 143m of "Prospective Pay" within fracture plumbing with or without any significant matrix porosity and hence matrix storage volume. (They don't say so I am not going to pre-suppose anything here!) There is a significant column of the Shiranish to still drill below the 7" liner setting depth of 3558m. There are also the underlying Kometan and Qamchuqa reservoir zones yet to be seen. If the entire section proves oil bearing (there will not be any gas condensates underlying this upper oil zone - at least not in the Cretaceous - the deeper Jurassic and Triassic - well that's quite another story and one we will not get to test here) the potential reserves contained in a structure with several hundred metres of vertically fractured reservoir spread over 65+ sq kilometers of geographical extent is huge. Add in a likely high to very high potential recovery factor if the oil is light and the plumbing all fractures then this is an extremely encouraging news release that speaks much greater volumes in what it doesn't say directly...
I am now much happier to be "Patient!" The market may not know what to do with this yet as they will likely need to see a test to be comfortable. But I know these things - sometimes it is the details that whisper that in the end tell the best stories - the stuff that screams is irrelevant... Everyone hears the scream and all react at the same time!
Nice. Qara Dagh as a viable Cretaceous oil bearing reservoir has now been considerably de-risked. The only questions remaining are what oil gravity How thick a reservoir zone? How tall an oil column? These questions will be answered over the next 3-4 months as they drill to TD and then get into serious testing mode on what they find here and below - as well as what they have already news released (64m of oily Pay in the Aliiji) what seems almost another lifetime ago...
Cheers - and I'm glad I held. (Although I would have been more glad if I had sold at
.90 and bought twice as much back in the
.45 range LOL!).
Nothing is guaranteed yet - there are still risks. But to my mind the biggest have been removed. They have hit plumbing in a live hydrocarbon bearing zone (thats why they are setting the 7" casing). The hydrocarbons are oil and not gas (although as I said earlier there could well be a small gas cap or solution gas). They have at the very least proved a 143m oil column - with no sign of it ending anytime soon...
Make what you want of it - I don't care - this is what they have told you they have got. They just did it in far fewer words is all.
GS
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