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JayHawk Energy is a larger operation. You cannot make a comparison with Hemi.
Huh, what kind of logic is that? We often see posts here by our Mod's talking about the majors (Chesapeake Energy,XTO, EOG, Devon, etc.) in the Barnett shale play and how it relates to the Hemi Leases in Tarrent county.
My point of the post was positive for Hemi (at least in my eyes). Here is a company developing the same exact coal seams as we have on our Woodson leases, Mulky, Weir, Riverton, Beviar to name a few. It's in the same geological trend, the Bourbon Arch, and is about 40 miles away. Not that far geologically since these coal seams are "blanket formations" in this area.
Its JayHawk Energy and they are in a major 100 well CBM project in two counties about 40 miles east of Woodson. The coal seams are the same ones mentioned in our Hemi leases. Their zones are somewhat shallower as the regional dip of the Bourbon arch extends from deeper to shallower as you move east.
It definitely was relevant to Hemi's operations and is in very close proximity to the Woodson county stuff and the CBM potential.
<BIGMUR>The Collins still has "tight hole" status...
Well then, someone better remind Keith. His PR listed the payzone being tested, the thickness, oil saturation value, inferred pressure, porosity and resistivity characteristics, a 2nd wireline confirmed payzone at ~600 feet with thickness and good oil saturation values... I would say the "tight hole" has sprung a leak (not literal folks, it's humor).
<BIGMUR>...the lower end of the well is still never discussed.I believe it is misleading to state that nothing was found.
My post said that "apparantly nothing was found that deep". Apparantly gives me some wiggle room. Since the PR said that the well is flowing from the Squirrel sand (~900'), it would be highly unusual to perforate a zone uphole with a deeper payzone left untested. You start at the bottom of the well and move uphole to test your zones, not the other way.
I just wish Kels or BigMur would have showed me this months ago. We all could have saved countless hours and many posts here on iHub arguing about things I took issue with... LOL
When I joined iHub in May, I went back in time and read about 4-5 months of the Post's to get caught up on the issues regarding this company. I just didn't get back in time far enough to see that...
Correct. the Collins drilled to test the Mississippi according to the NOI @ ~1350'. Apparently nothing oil zone wise was found that deep although they may have wanted to prove up the presence and thickness of the coal seams between the Squirrel @ ~900' and TD.
Keith's reference to "multiple pay zones" in the PR may be referring to the CBM potential as well as the two oil sands.
The 600' zone PR'd sounds interesting and would be a likely candidate for a closely spaced offset well. We shall see when any new NOI's are posted by Hemi for this lease whether they show TD below the Squirrel or not. No need to waste drilling dollars if there is nothing worthwhile to look at in those extra 400'. Hope to see an offset test that 600' zone in the upcoming months.
PE - up until today, I had never seen the famous KAA letter to Lowman from July 2007. Apparantly this is the defacto secret Mission Statement of Hemi that the faithful here have placed their confidence in....
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=20502495
I bought my first stock in HMGP in October 2007 on a whim after reading a PR on Rigzone.com I believe. They were HQ'd in Graham, TX at the time and that was not far from where I lived for 10 years. Thought it would be fun to follow their company's fortunes. Found about iHub in May and joined then. I slowly kept adding blocks of stock to average down as my first buy was in the mid 20's, then the teens, then the high single digits, then the low single digits...
I never understood how so many here could have such stalwart support of this stock based on what was being PR'd and such lack of transparency by HMGP. I now realize it's that letter from Keith. I read it today, re-read it several times and actually if you believe all that's posted there, I can see where this loyalty comes from. The letter actually explains some of the "stuff" that bugs the heck out of what you and I constantly complain about.
I don't know if I can place that much faith in someone I don't know - at least when it comes to investing my money. If Keith is actually still sticking to this game plan, the current low SP, new shares issued, secretive operations all make sense.
I guess time will tell whether Keith is a brilliant oil/business man or not and we all get that buyout in the end.
Thanks PF - I must have missed that excellent explanation...
Here is an excerpt from one of my earlier Posts about this KGS / tanking / storing / hedging topic:
"I find that statement odd that the KGS only reports on what they are told and that oil that is "sold"....
Production helps investors evaluate the lease much better than sales IMHO....
To me, production is defined by extracting the oil from the ground and placing it into a storage tank. Oil sales is defined by having a transport company pick up the load of oil out of your tank in exchange for payment at the going rate.
The KGS website I referenced says "Sample Monthly Oil Production, (bbls)". Maybe they need to change their wording to "Sample Monthly Oil Sales" since there is a distinct difference. "
Oh well, it's a government run site - what do you expect??? LOL
HB1 - be careful not to get these figures confused. See my post #38565 for further explanation. The KGS site shows "sold" production, a tanker truck actually comes to the lease to load up the oil and this is shown on the KGS site. Production is actually oil lifted from the reservoir and put into the storage tanks. The difference between the two would be the term "tanking oil" or as some call it "hedging".
Look back at the January PR from Hemi, they clearly explain what was produced and what was sold.
http://hemienergy.com/01-09-08.html
Now I just wish we could get similar PR for the months of March, April, May , June , July.....
Correct - the KGS #'s show "sold" oil as opposed to produced oil. Since Hemi has PR'd that they are tanking oil (some are calling it hedged although I think that's misleading) the KGS #'s would be lower than the actual production figures.
When I operated an oil lease in Texas in the 1980's, I had to file a Form PR each month that showed the oil amounts including beginning amount, produced amount, ending amount and dispositions (sales/theft/spills/etc). The form is still used and here is a link:
http://www.rrc.state.tx.us/divisions/og/form-library/FormPRf.pdf
I would think that KS has similar reg's, they would want to know more than just the sale of oil. The operator probably has to file such a form to show these amounts each month but it may not be available for public viewing. In TX, I believe you could view this info with a paid subscription. Would be nice to know if this info is available from the KGS. Their phone # is 785-864-3965, I don't get home from work in time to call them during business hours or I would. Hemi's operator # in KS is 33740 if someone wants to make the call and post what they find out.
Would sure answer a lot of investor hub member questions about the actual monthly production totals by Hemi in KS since we're not getting it from the company in a timely manner.
KGS April Production totals posted...
http://abyss.kgs.ku.edu/pls/abyss/oil.ogl5.OpLeases?f_id=1033972094
Just noticed the Hemi monthly lease totals are now showing on the KGS site. Hope this wasn't already posted, I just logged in and haven't yet gotten caught up on tonights posts.
Year * Month * Production * Wells *Lease
2008 *** 4 *** 72.46 *** 3 ***STURGEON
2008 *** 4 *** 104.94 *** 1 ***TEBBENS HEMI #2
2008 *** 4 *** 50.69 *** 9 ***ORTH-SILVEY
2008 *** 4 *** 44.81 *** 11 ***BENNETT-C
2008 *** 4 *** 50.19 *** 8 ***RENO
2008 *** 4 *** 55.4 *** 24 ***PURCELL
Total April production is ~ 377 bbl.
Okay - poor choice of words on my part. I stand corrected. Makes sense since it's a much shorter drive from Tulsa, OK for Craig to SEK than from Ft. Worth, TX to SEK for Keith or anyone else.
hillzman - Agreed, all the Hemi new well completions in SEK sound great on the initial PR. Some get a follow up PR with limited new info and some just quietly fade into oblivion.
I am cautiously optimistic on the new Collins well based on PR'd info up to this point. There is potential for this one well to surpass virtually their entire oil production the first month if the zone is as good as it sounds. I'm assuming monthly totals are now running around 600 bbls. but it's only a guess. Collins would need to avg. about 20 bbls. a day on a stabilized rate to pass all the others...
I believe its Craig's turn to be in KS this week so am sure he is hard at it trying to get the equipment in place to get the well completion finalized.
The SP has definitely firmed up so with any positive news in the next 7 days could start a nice little run.
Kels - please stick to the "non technical" side of the o/g business on your posts - you're embarrassing yourself. You do a great job of providing Hemi operational asset coverage to the board, especially to new investors looking at Hemi. Your coverage of the Hemi story and its potential is actually better than what can be found on their website in my opinion.
We're talking here about the difference between a flowing well and one that needs artificial lift (pump jack). You do not place a pump jack down stream from the well head on a flowing well - period / end of story....
Thanks BAU - it usually doesn't matter much to investors about the "nuts and bolts" of the companies operations, we're here to make money on our stock picks. Most wouldn't care if you used a pump jack or a flap jack to get oil out of the ground as long as it's profitable to the company and the SP goes up.
I just wanted to question BigMur's earlier post today where he was talking about the equipment issues of the Collins well. It didn't seem to jive with the recent PR so I spoke up. The potential significance of this well is much greater if indeed it's flowing under natural formation pressure. That would be a good thing!!!!
Keeping it "fair and balanced" and calling them as I see 'em.
Regards, bdahl385
Modern drilling techniques do so safely to eliminate this type of well 'blow out' as was common at the turn of the century with "cable tool" drilling. You should rent the classic movie "Boomtown" if you're interested in seeing early oil production in North Texas (Burkburnett area).
Trust me, oil wells can flow just from natural pressure, just not that usual in reservoirs that have had lots of prior production history (SEK for example). Have you ever seen a pump jack on an offshore oil platform??? I think not... Wells like those become non commercial once they stop flowing.
I am sure that the Collins well will go on a pump at some point but the PR says it's flowing. You just need a proper well head assy. (production tree) and put a properly sized choke (limits amount of fluid flow) in the well to allow proper flow for your separator equipment and KGS regs. I think this is the equipment needed for the Collins well and what we're waiting on. The gas and condensate complicates the production but this is a nice problem to have.
Please read the sections on Completion and Production from this article. Wiki is not always the best source of info but does a good job here dealing with the subject at hand:
http://en.wikipedia.org/wiki/Oil_well
Oilfield 101 is obviously needed again:
http://www.glossary.oilfield.slb.com/Display.cfm?Term=naturally%20flowing%20well
Did you never see photo's of Spindletop wells, oil shooting 100's of feet into the air above those wooden derricks. There were no pump jacks in those days, the reservoir pressure was sufficient to flow the oil to the surface (and then some!!)
http://www.vastenergy.com/site/web/company/images/spindletop.jpg
If Hemi is going to tout the virtues of these virgin leases with original "natural gas dissolved in water solution drive", then I am expecting these new wells to flow at least initially (a couple months, maybe more) before the need to be put on pump.
July 31 PR: The current well results indicate we have found one of the strongest areas in this developing trend. With the natural gas cap in place, excessively strong reservoir pressure and very good oil shows in the formation.
Pump jack? What pump jack??? Is this your guess as to the current operations going on with the Collins well BigMur?
The July 31 PR states the following:
The well is currently flowing natural gas, gas condensate and oil and is not being pumped yet. At one point we were venting significant volume of natural gas, potentially valued over $ 5,000 per day in management's opinion. In addition to the multiple payzones referred to in previous press releases, we also have discovered a yet-to-be-named 12-feet-thick payzone at approximately 600 feet deep in this well, which also contained exceptional saturations of oil. The oil well on the Collins lease has 4 to 5 times the pounds per square inch (PSI) of an average shallow oil well in southeast Kansas that generally has less than 500 PSI borehole pressure.
A flowing well with this kind of stated pressure should not need to be pumped at this point. ~2000# of pressure from a 900' zone should flow like a son of a gun. I was thinking the equipment delay was caused by the need to deal with the gas and condensate since this is not an issue on the other SEK mature wells.
Kels - good info to know about the continuing upward value of lease prices in an area of Hemi's holding.
Of course it would be nice to be able to value Hemi's asset by knowing the number of acres they have under lease. To my knowledge, Hemi has never PR's or even hinted at the total size of their Barnett holdings.
Maybe this is a reason that (quoting Hemi's own PR): "Hemi's very artificially low market cap is substantially below book value and even below tangible asset values based on conservative oil and gas industry standards, especially when ongoing due diligence on lease values in 2 states and also North Dakota's leases are factored in.
If you think about it logically, and not emotionally, isn't it hard for the street to properly value this stock when the actual assets are not even known???
EOR was one of the reasons I first invested with Hemi. It was prominently touted on their website (still is) while I was first doing my DD on the company. I felt that the type of leases they were obtaining had already been through primary and secondary production and would be well suited to this newer technology. In fact, the website sounds like they are already using the EOR.
From Hemi website under Plan of Operation tab:
Overall Strategy
We are a growing independent oil and natural gas company that intends to actively pursue enhanced oil recovery techniques (EOR) and developmental drilling to increase production and reserves at our existing and future properties. Our primary focus is crude oil and our target acquisitions are onshore U.S. properties. Our focus on domestic, mature oil fields eliminates exploration risks and the uncertainties of international sources. We use waterflooding and EOR technology, such as surfactant-polymer technology.
So far, the only strategic operational info we have regarding the SEK leases is "dewatering". This is simply the process of reinjecting the produced water in another zone than where it came from so as to increase the cut (ratio of produced oil to water). This also reduces the pressure of the producing zone and causes less fluid to enter the well bore. I believe this would be the first step to go to tertiary (EOR) recovery. My own personal experience as an oil operator only dealt with secondary recovery (waterflooding). I do know from researching the subject that the use of polymers and other fluid enhancing chemicals is very expensive.
From Wikipedia: http://en.wikipedia.org/wiki/Oil_exploration
Reserves and resources
Resources are hydrocarbons which may or may not be produced in the future. A resource number may be assigned to an undrilled prospect or an unappraised discovery. Appraisal by drilling additional delineation wells or acquiring extra seismic data will confirm the size of the field and lead to project sanction. At this point the relevant government body gives the oil company a production licence which enables the field to be developed. This is also the point at which oil reserves can be formally booked.
Definition of oil reserves
Oil reserves are primarily a measure of geological risk - of the probability of oil existing and being producible under current economic conditions using current technology. The three categories of reserves generally used are proven, probable, and possible reserves.
* Proven reserves - defined as oil and gas "Reasonably Certain" to be producible using current technology at current prices, with current commercial terms and government consent- also known in the industry as 1P. Some Industry specialists refer to this as P90 - i.e having a 90% certainty of being produced.
* Probable reserves - defined as oil and gas "Reasonably Probable" of being produced using current or likely technology at current prices, with current commercial terms and government consent - Some Industry specialists refer to this as P50 - i.e having a 50% certainty of being produced. - This is also known in the industry as 2P or Proven plus probable.
* Possible reserves - i.e "having a chance of being developed under favourable circumstances" - Some industry specialists refer to this as P10 - i.e having a 10% certainty of being produced. - This is also known in the industry as 3P or Proven plus probable plus possible.
Reserve booking
Oil and gas reserves are the main asset of an oil company - booking is the process by which they are added to the Balance sheet. This is done according to a set of rules developed by the Society of Petroleum Engineers (SPE). The Reserves of any company listed on the New York Stock Exchange have to be stated to the U.S. Securities and Exchange Commission. In many cases these reported reserves are audited by external geologists, although this is not a legal requirement. The U.S. Securities and Exchange Commission rejects the probability concept and prohibits companies from mentioning probable and possible reserves in their filings. Thus, official estimates of proven reserves will always be understated compared to what oil companies think actually exists. For practical purposes companies will use proven plus probable estimate (2P), and for long term planning they will be looking primarily at possible reserves.
I am selfish, I have money invested in HMGP.... I want the SP to get moving upward - I am deep in the red on this one.
Buying back the stock would help out the SP (HMGP). Drilling 20 wells would help Hemi and may or may not help HMGP (outcome of wells, new investors needed to move up SP, etc.)
Could you just imagine the amount of new investors and attitude change here by many a iHub member if an upcoming PR said something to that end???
Imagine this:
PR (HMGP) August 21, 2008 "The continued very undervalued market cap of our company and recent insurance settlement proceeds of $1M will be used to buy back stock in the open market over the next few months. The shares were issued last year selling at market prices to allow us to quickly repair the KS leases damaged from the flooding."
Would love to see those short's and manipulative MM's wet themselves after reading that!!! lol
I agree... there is indeed something not right about growing the O/S (dilution to us shareholders) at the same time Hemi PR's that they are tanking oil as there is no need to sell at this time. Oil was at $140+ a bbl. then and now $120...
I would like to know who the emails were from...
losing all our money on HMGP.
I hope you're being facetious, no one should ever - ever risk more than a couple percent of their net worth in the pinkie stocks... Read once where over 90 percent of pinks end up worthless, not my kind of odds to bet the farm on....
PE- Those are some good links there. I will have to study them further tonight when I have more time. One point though, even though the NOI showed a projected TD of 1350' in the Mississippi formation, I do not read from the PR that they had any pay zones below the Squirrel (~825' - 925' range in this area), FWIW.
From Hemi 7/31 PR:
"The open hole log suite confirmed a Squirrel payzone that we are producing is about 13 feet thick and with top 10 feet clean sands with excellent porosity and good resistivity showing through that interval with oil saturations of 55% or greater. >snip< In addition to the multiple payzones referred to in previous press releases, we also have discovered a yet-to-be-named 12-feet-thick payzone at approximately 600 feet deep in this well, which also contained exceptional saturations of oil."
Two explanations:
1) Those quoted production figures are only thru March, more oil has been produced and sold since then. How much is unknown.
2) Hemi PR on 7/22 states that 4M shares have been issued since April. 4M x 0.045 (rough guesstimate of PPS) = $180k.
Oilfield 101 educational training is now in session...
The term "flushed in" from the industry leader, Schlumberger's online reference glossary:
flush production
1. n. [Production Testing] ID: 11337
A high flow rate reached with a new well.
http://www.glossary.oilfield.slb.com/Display.cfm?Term=flush%20production
Another source, Dictionary of Petroleum Exploration, Drilling & Production By Norman J. Hyne
flush-production stage: the stage in the history of a field that occurs between the initial development period in which the wells are drilled and the settled production stage in which the oil is produced at a relatively level, but slightly declining rate. During the flush production stage, the oil is produced in relatively large, but rapidly declining amounts from the natural reservoir energy.
From the KGS (Kansas Geological Survey) website, here are links to the reported production from these two wells (actually the whole lease). Others here on iHub will tell you that these numbers from KGS are inaccurate and not complete but since Hemi hasn't released any audited financials for over a year, I have to base my investment money on something concrete. Might as well take a chance on the official government agency.
The Sturgeon-Hemi 1:
2007 139 bbls.
2008 nil (that's oil field lingo for nada)
http://abyss.kgs.ku.edu/pls/abyss/oil.ogl5.MainLease?f_lc=1001107114
the Reno-Hemi 2:
2007 349 bbls
2008 93 bbls
http://abyss.kgs.ku.edu/pls/abyss/oil.ogl5.MainLease?f_lc=1001106965
All Hemi Kansas leases:
2007 1,564 bbls
2008* 585 bbls *thru March
http://abyss.kgs.ku.edu/pls/abyss/oil.ogl5.OpLeases?f_id=1033972094
just filled my test order of 4900 @ 0.046.
this new zecco.com trading account I funded a month ago gives you 10 free trades a month and so these small test orders cost nothing. free beats $30 a trade in my book!
GLTY - have a great weekend. It's Long weekend in Canada - 3 day holiday. Me wishes I was a hoser today.
I like your analysis of the PR better than mine. I should have said it had Great "potential". There was encouraging news in it but still not enough "meat" to fully analyze the financial aspect of the new well.
I guess you are correct. I am not used to seeing this small of volume and the status quo on the bid/ask for this long.
It is indeed a good sign that no one's selling at this level, now we need some higher bids.
Guess there are just no buyers out there today. Great PR didn't translate into any new longs it appears, sigh....
... and no trades at all since 10:40 a.m. something looks fishy. Either the HMGP quotes are stuck in cyberland and can't find their way out or there's an unannounced trading halt (pure speculation).
I tested the bid with a 4900 share limit order 10 mins. ago and so far no trade.... hmmmm. what's up doc?
NOI on Collins listed TD at 1350' in the Mississippi Lime formation. The PR today shows current producing zone is the Squirrel Formation (normally 900-1000' level for this area). Untested zone in PR is uphole at 600'.
It's a good thing they were drilling with mud if the pressure is anything close to that in the PR. 2500psi from a 950' zone would be very, very uncommon.
The gas in the zone is kind of a mixed blessing. It is great for charging up the formation and allow the fluids to flow with great pressure. But without nearby infrastructure (read gas pipeline) it could actually hinder the wells oil production. The condensate can be stripped out and sold but the gas must be flared, vented or reinjected depending on the flow rate and Kansas environmental reg's.
Very promising zone though - congrats to the Hemi team.
Kel's / BigMur - do you remember if any gas pipelines were in close proximity to these leases on your site visits? I remember an early PR from Hemi stating that the nearest gas line was over 4 miles away and so chose to keep gas pay "behind pipe" on one of the older leases... Does that ring a bell?
Kels / BigMur - this could easily be put to rest if Hemi would state the use of the newly issued shares in their PR's. I for one don't care if they issue shares to pay for services if it makes financial sense to do so. As you've pointed out - dilution is not always bad if assets are acquired by the new placement. What I don't like is the fact that Hemi won't tell the shareholders what they are using the shares for.
They don't have to be specific and give away any confidential information either. A simple stated fact like " 1 Million shares was issued to buy xxx acres of leases in Tarrant county ". Now that would be transparency that would help me understand the "bang for the buck" ...
Sorry about the confusion PlastiPunk (and others) - my post was a "play on words" meant for Hillzman. We are involved on another board with a stock waiting for a major gas discovery to be announced from the current ongoing well flow test...
Hello Hillzman - I'm hoping for Victory here... The Bounty of these Kansas wells will flow all the way to Canada. It will be a Superior event in the end...
Take care and best wishes, tic-toc - tic-toc...
From PinkElephant post: In my mind the real question is not whether or not we are being manipulated, but whether or not HMGP can do anything about it. I don't think that is easily answered. Certainly up to this point we know what the answer is. There have been much bigger fish than Hemi taken down by these guys as well. Sadly, in the face of this, KAA has shown nothing but weakness back to those who manipulate his company. They lower the share price, he keeps issuing shares. He puts out PRs talking about 'BIG' things and they see no follow up, no interest from the market. This is a clear invitation to continue what they are doing.
If indeed outside nefarious forces by MM's and illegal NSS activities are being waged, then Hemi mgt. needs to take very aggressive actions to protect the capital structure of our company. There is no point to obtaining new leases, working deals and drilling new wells if these forces can wipe the company out financially. Can't the CEO and the TA report these illegal trade manipulations to the SEC and get some attention?