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GAWAR
JDZ
Just a quick reminder of what we are waiting for. The top reservoir is the GAWAR, the largest reservoir ever found with close to 230 Billion recoverable barrels. The bottom is the JDZ reservoir (recoverable barrels currently unknown). From what I can gather the JDZ formation is approximately half the size of the Gawar.
At 15,000 Bpd it would take you over 180 years to deplete a Billion barrel reservoir. It would not make sense your equipment would deteriorate and it would have to be replaced before you could effectvely pay for it.
I look at a differnt map and I wouldsay that AKPO is only around 50 kilometers to the middle of Zone 4.
Unfortunately Petemantx,
I am not a geophysicist either. But I have been in energy for more than 30 years and am surrounded by many experts in my immediate family.
When making estimates geophysiscists will look at other producing formations in the same general era and that come from the same geologic time period. They also look for similar geologoic anomolies. One factor that really drives how much oil a geophysicist will forecast is the relativity in terms of distance another known zone is. In other words if a seismic anomaly is relativley close to known producing zone of the same geologic character then a geophysicist will be more apt to indicate a recoverable reserve figure in relation to size of thre known producing reserve. If the geologic anomaly is not close to a known producing reserve then the geophysicist will be more apt to discount the reserve volume.
In our case the closest know producing reserve is AKPO. The middle of Zone 4 is close to 150 kilometers from AKPO. So we may be seeing a very discouted forecast based on that distance.
But what do I know, I am not a geophysicist, just an old operator that has been in a lot of patches.
Seismics cannot predict oil at all. They simply show geologic abnormalities that can look like traps.
$16.66
It's not drilling, and only when we have rig news or innevitably drilling info on permeability, porosity, and flow rate will we see the real run.
Road show only at this juncture
http://findarticles.com/p/articles/mi_pwwi/is_200805/ai_n25415272
Has this article in Bnet been posted. It is more revealing than the Chronicle article.
Bayfisher
RK,
The only thing my cousin saw where the PDF we had posted showing the 4D time slice. It in no way represents the volumes of data a Geophysicist usually have when they are interpreting Seismic data.
What I took away from this his response is that he saw a lot of complex geophysical anomalies that could hold oil. He also said that in Nigeria they usually do. He alos indicated that the geophysical company that shot the data is very reputable.
My cousin is very laid back and very conservative. After his quick look and response I am even more confident about this investment!
Bayfisher.
I sent the PDF file to a family member who is a Geophysicist and here is his response.
I’ve been buried under a ton of work so I didn’t spend a lot of time reviewing the link ( it’s too bad you didn’t have the PowerPoint, those .pdf files are really slow!) but I can tell you that PGS is a good company, the acquisition parameters look sound (a high enough filter and long enough hydrophone cable, tight grouping, etc.) and the seismic profiles included showed some interesting and complex geology that has potential for structural trapping of hydrocarbons, plus we know Nigeria’s plumb full of oil. The inline and xline plots show vertical slices down into the earth and when you pack a bunch of them next to each other they form a “cube” of data which is made of seismic traces which are just strings of floating point numbers. So the first three dimensions are length and width of the survey as mapped on the earth’s surface with depth down into the earth as the third dimension. The 4th “D” in 4D refers to time. Here’s where it gets tricky: seismic traces take time to penetrate downward so the depth of a data cube is commonly referred to as time, as in the two way time for the source signal (an air gun in this case) to penetrate down an reflect back up to the streamer (hydrophone cable). When the data is depth converted then the third dimension can rightfully be called depth. The time referred to in 4D refers to re-shooting the survey and noting changes from the previous. I’m not a big believer in 4D as it’s really hard to get two shootings apple to apple. A better method is AVO analysis where you look at seismic traces in a zone of interest sorted by offset (distance between source and receiver) and note amplitude changes taking place going from near to far offset, these can be a pretty good indicator of fluid content as liquids screw with the signal strength in various ways – P-waves penetrate just fine but fluids absorb and dampen shear waves. In other words trying to see if there’s any hydrocarbon actually down there occupying that great structural trap? To do that you need pre-stack seismic data meaning the offsets at each trace location have not been summed together (they have in these pictures) and an AVO interpreter who knows what he’s doing.
Any thoughts?
Bayfisher
Red,
No one here knows exactly what is down there, as we have all said again and again, BUT we can also say that the formation, the geology and the seismics all indicate that we could have an oil trap very similar to what have been some of the true giant oil fields discovered.
That is why as I said it may be a stretch but it ceratinly is not unthinkable that zones 1 thru 4 could contain one of the true giant oil fields discovered. If they find a giant down there then who know where our share price will end up.
With all respect to Cayman, asking me what I thought the PE was made no sense at all. This company will not have flowing revenue for at least 4 to 5 years (at best). If any one of our partners discovers a significant find then our Share Price will be based solely on potential reserves and not cash flow.
Is there anyone on this board that has experience with Mega-Elephant fields?
I have been around two: Prudhoe Bay and the Tengiz, Kazakhstan field. Both are onshore systems.
I am wondering what corallations there are (if any) to an Offshore giant.
So Ruby, let's have a little Friday fun with the math.
What if the JDZ (alone) equals the highly touted discovery off of the East Coast of Brazil?
If so, then we would be looking at closer to 33 billion recoverable barrels.
Without knowing how much is in each of the zones 1 thru 4, I am going to assume an equal distribution. That would give ERHC a proven reserve portfolio of 4.5 billion barrels.
Additionally, I think that in today’s $100/Bbl plus market a proven reserve price of $10/Bbl is low. Back when oil was $30/Bbl (just a few years ago) proven reserves were priced at $5/Bbl proven. At a $115/Bbl a proven reserve price of $12/Bbl considering the location and the quality of this oil is IMO not a stretch.
So if we accept all of the assumptions above (bit of a stretch but after all it is Fun Friday), then once the 33 billion barrel recoverable reservoir is proven then the price per share of ERHC would be........drum roll please............. $71.31/share. And best of all we haven't even considered the EEZ in this silly analysis.
Now please understand what I wrote above is a BIG stretch, but what is so tantalizing about this stock and what keeps all of us coming back to this board, is, IT IS NOT TOTALLY OUT OF THE REALM OF POSSIBILITY. Granted it is a stretch and probably a huge stretch but it could happen.
I have been the energy industry all of my life. A good example is Prudhoe Bay. The Sadlerochit reservoir which is the primary reservoir for the North Slope has currently produced close to 12 Billion barrels of oil and estimates are that eventually it will yield close to 16 billion given today's technology. What is amazing is that we have only found half of the reservoir. The reservoir is (what is called) a sheered anticline and the other half has never been found. Now this could never be the case between the JDZ and East coast of Brazil as we have completely different geology. But my point is, there are still a lot of areas that have not been completely explored and of all of them the GOG tops the list as a highly probable catch basin for hydrocarbons. Point being the, JDZ could be an elephant or it could be a Mega Elephant. Hold on to your seats over the next 2 years cause the ride on ERHC is going to get bumpy and hopefully a lot of fun.
Flat or up a little today. The market has shown it does not want to go into the weekend (potential news) naked.
Opus,
Of course until we have an understanding of how much reserve potential in rocoverable reserves we have, and at this time no one really knows for sure.
BUT, if the JDZ alone (zones 2 thru 4) have at least 14 billion barrels of recoverable oil then the our share price based on 'PROVEN POTENTIAL RESERVES' tops $25/share immediately.
To think that SEO would go for anything else other than the most he can for his investment is silly.
I think TRYOTY (who I usually\ agree with) is being much too conservative here.
The fact that a huge discovery was made off the eastern coast of South America will only heighten interest in the JDZ and the EEZ. The structures, the depth and the geology are similar.
From Mappoint looks like you are about 245 miles from Houston.
You are leaving Dallas and going to Houston, the freeweay time is only about 3.5 hours but depending on when you leave and when you arrive it is hard to say how much time you will need. I would give it at least 5 to 5.5 hours to make sure traffic will not make you late.
Where ios Rawlett Texas?
That is OK as long as all shareholders have the same rights and are given the same treatment. (including SEO)
In respect to your last post, I as with many of us think that there is a chance that the company(ERHC) is going to try to remove public shareholders at a price they deem appropriate for us. Whether that is $3.50 per share or $6.00 per share.
Obviously this would fit into some larger plan whereby SEO and the buy-out entity would be able to cut some astronomical deal.
I must assume that they feel there is some number out there that if they buy us out at that price per share then public redress would be limited.
I for one would like to make my own decision on when to get out of this stock and not have it made for me.
I will not be able to attend the shareholders meeting but hope my fellow shareholders make it plain to management that if and when they try to take us out they will have a fight on their hands. This is still a public company and it is registered in the US and as such is under the US judicial system.
Hopefully we are all wrong about this possible contention but I do not see that it would hurt for the shareholders that are at the meeting to let them know we will fight a buy-out of public shares.
Zebra, I appreciate your analysis and agree with most of your math but for that value anaysis to work we would have to wait 5 to 6 years for these properties to become producing properties.
In looking and trying to predict what the stock price could jump to if significant reserves are discovered over the next 20 months, I would use an analysis that looks at proven reserves in regards to a price per barrel. I feel with the quality of the oil present in the GOG and the free carry afforded ERHC, that ERHC's proven reserves should be valued at $10 to $12 per barrel. Therefore, if as stated, proven reserves come in around 14 billion barrels and ERHC holds acumulative share of 15% then ERHC would be sitting on 2.1 billion barrels proven which would equate to a share price of around $35/Bbl in the near term. Another way to look at this analysis is that for every 5 billion barrels discoved in zones 2,3, & 4 ERHC's share price will rise about $12.50.
IMHO
Bayfisher II
We agree,
That is why I wanted to make my point to othert shareholders that $2 to $3 dollars per share is a price I would reject.
Bayfisher
Of course everyting we talk about is all speculation. But proven reserves in today's market are generally valued between $8 to $12 per barrel. Erhe's (future) proven reserves should be at the highest end of that value for two reasons:. 1st) the quality of the oil coming out of the GOG & 2nd) ERHE has a free carry.
If we put a conservative value $10/Bbl proven, then by late 2009 with the drilling programs that have occurred between 4th qtr 2008 through 4th qtr 2009 there is the potential for the JDZ to have proven upwards of 14 Billion Barrels in Zone 2 & Zone 4 alone. with an average of close to 20% royalties in those zones (this is still a bit up in the air as we do not know exactly what ERHC has in Sone 4) we could see as erhc's share a figure closer to 2.6 or 2.7 Billion bnarrels proven (from these tow blockas alone) if that is true a Sp of closer to $38 would be appropriate. Now all of this has some risk associated with it as we really do not know for certain what is down there. But with some of the info right or wrong coming out on meandering streams, oceans of oil, and company makers then even these numbers could be very conservative.
Thereffore I feel a fair price if someone or some entity wanted to buy us out and assume all risk, that number for me would have to be north of $10/share.
Anyones thoughts on this?
Bayfisher
Unfortunately I am not sure I agree. Balance may have the correct picture, but considering the potential of the JDZ and the EEZ, for us to get bought out now at 2.50 to 3.00 dollars per share, seems extremely low, even regarding the risk factor.
A figure closer to $10 or $12/share at this time, which would effective reduce al risk for the public shareholders is more in the range of what I would call a fair priceat this time.
Bayfisher
Opened up (half penney) on strong volume. It could be another good day, maybe mid to upper 40's by EOD.
BAYFISHER JMO
I agree with you Tryoty. If or when this run backs off a little we will have shareholders crying foul. The true run will have to come on tangible news. Either we have another company looking to buy or merge with ERHC or we have drilling info. And when I talk about drilling info I am referring to information regarding pay-zones, bottom hole pressures and flow rates, not just a rig moving into place and spudding in.
JMO
BayfisherII
For the past 30 years and counting, June has been the National Rose Month in the United States.
Just a guess but most oif the gasoline we now purchase is blended with (corn based) ethanol. And to my knowledge ethanol has a lower flash point than oil based gasoline.
The flash point temperature can be used as an indicator of the amount of power received when igniting or burning a hydrocarbon.
JMO
Bayfisher
On Saturday.
Does that mean that Chrome has been slowly buying off the open market and now Offor/Chrome own 87%.
If so, that explains a lot. And also indicated that the last 90 million shares are very valuable.
From overlaying maps it looks like it has been in the Southern region of the JDZ. But not specifically in Zones 1 thru 9. It could be a geologic ship doing additional mapping in the Southern undefined zones.
Tryoty,
Are you basing the $10/share on a $7/barrel for known reserves?
Is that accurate anymore? I dont know? How does the Energy industry value known reserves in today's market? When Oil was $35/Bbl they had a value of $5/Bbl for known reserves. But today and at a market price of north of $90/Bbl wouldn't a known reserve value be more in line of $12.85/Bbl? I don't know, but if there is a linear relationship between known reserve value and the market price per barrel this corallary would hold true.
If 12.85/Bbl was the correct known reserve value then our stock price would be more in line of near $17.50 per billion barrels of known "proven" reserves.
Can you blow holes in this analysis. It is all speculation on my part.
Bayfisher
I was a commoddity trader (nat Gas) in Houston for 9 years.
tOday at Nymex pricing 1tcf of gas is worth 8 Billion dollars
Unless you have either the LNG facillitis or a market for it Gas becomes an encumbrance.
Say I produce 100,000 barrels of oil from my platform and 500,000 MMBTu's of natural gas, what am I going to do with the gas. I can't flare it, can I sell it? Can I liquify it and ship it to Japan. Except for flaring the other two options require large capital oulays to set up the infrastructure.
200 tcf of gas equates to maybe 40 billion barrels of oil on a btu basis, but on a value basis 200 tcf of gas equates to maybe 10 billion barrels of oil.
For the most part gas is more of a nuisance in the GOG
Big Smile, very big smile. Thanks for making my day and shining a little perspective onto this (for the most part) frustrating investment!!
I still feel that unless Big Oil steals our rights, one day we will all be very happy with the time and money spent in this investment.
Bayfisher
Homeport ,
Do you have the breakdown on the figures you put together on how much of that was on-shore and how much was off-shore?
Not that it matters but my personal preference in this region is for offshore reserves. The reason is that even though it is much more expensive to produce off-shore (especially in very deep water) the threat of production interruption through civil unrest is lower.
Homeport,
I think it very well could be of that potential, but to my knowledge there are not known recoverable of between 60 and 70 billion barrels in the GOG.....yet.
Thanks Homeport,
I hope board memebers here realize that 18 prospects with an 8.36% chance of success are solid within the Oil Industry.
What all of us should be hoping for is that the GOG ends up being another GAWAR. I suspect that the US future energy strategy is looking in this direction.
Thanks Tapco,
I printed that out yesterday. That is one of the reasons I keep writing on this board that the STPEEZ may dwarf the JDZ in terms of economic return, specifically for ERHC.