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If the typical schedule holds, tubing conveyed perforating guns will be fired Friday afternoon and the flaring will begin as the well cleans up. Saturday will have the well shut in for pressure build up test. Sunday will start the multi rate measured flow tests....
The company will have pretty good initial data at that point on Sunday, how long before a PR is anyone's guess in lieu of all the legal wrangling going on.
I still predict a good well for Endeavor but not as good as Bounty. I think the stock price will only react favorably if the well test blows away the Bounty well. I just don't see it happening but sure as heck hope I am wrong...
Sputnik - let me get this right... Are you alleging that KAA deliberately misled or tried to hide the actual WYO asset sale by the use of the word Immigrant Gap in the PR instead of the more likely Emigrant Gap???
http://wyomingenergynews.com/?p=616
Could simply be a spell checker gone bad somewhere along the line in the PR process. One thing for sure, KAA's infamous typo's in his PR's are all too common... sigh... I don't hold that against him though, he is 4th generation oil patch after all and spelling is not a necessity...
Kels - my post was not intended to debate the use of this cash from the asset sale. I only wanted to point out that a company that converts an asset to cash by liquidating it doesn't impact the balance sheet of the company if that said asset was carried on the books at FMV (fair market value) and was sold for roughly this amount.
Since there are no recent Hemi financials to look at, we can only speculate what value this asset was on their books at. It could have been sold at above, equal or below acquisition cost...
I remember seeing posts where some claimed that this $475K of cash would be equal to an extra 0.7 cents a share ($475K / 65M shares o/s) is value. I say it wouldn't since it only offset the asset that was sold.
Looking forward to positive results from this Silvey well, I believe it was a good decision to convert the WYO lease to cash to fund this well. Hope it produces a lot of oil and that we are kept informed this time of the drilling / production results.
"Hemi has raised millions over the years in stock sales and yet they sell assets to pay for projects. "
Very good point PP... I was amazed to read the posts here by the Hemi supporters when the Wyo. lease sale PR came through. Most were giddy saying how this $475K sale was like found money... They obviously don't understand a companies balance sheet. All Hemi did was move an asset off the books and replace it with cash. In theory, if the asset was carried at FMV - there was no net benefit to the company (and us - the shareholders).
An analogy for all to understand. In your own personal net worth, lets say you have a home free and clear and its worth $200K. This $200K value is included in your net worth along with investments, savings, CD's, etc. Now if you sell the home and put the $200K in the bank, did you get more net worth??? NO - you just changed the asset from a house to cash.
The cased vertical portion and the radius bend should take no more than 2 days including running the casing and cementing in place. The first rig is done at this point and moves on. Then 5 days to cure the cement would be reasonable.
The horizontal drill rig then moves in to drill the 2000' lateral. I doubt this would take more than 2-3 days. I am not clear if they then run a slotted liner or how they complete / case the lateral portion of the well and the timeframe for that.
Kels... Thank you for the PM reply...
Those KS oilpatch workers are real men, a little cold weather won't slow them down. In fact, many places like Canada and Alaska can only drill in the dead of winter when the ground is frozen hard as a rock. All that heavy equipment moving over thawed soil in the summer does a lot of environmental damage.
Welcome to the HMGP board, GLTY.
"Just the fact that if this SEK Horizontal drilling project produces equal to a normal vertical well (1-5 BBL/day) in this given area of SEK, then you do the math of a 2000 ft linear horizontal run thru the squirrel of the Silvey lease, an area surrounded by producing veritcal wells; based on how many vertical wells would be needed to equal this one 2000 ft horizontal well.
"
To me the most exciting thing about this well is the location where it is drilled. From my understanding of the location by analyzing the maps of the area, a large part of the horizontal section will pass under undrillable surface locations due to creek/lowland/flood prone ground (part of the "creekology" that is often mentioned). The Squirrel formation should have all it's original oil in place and produce very nicely upon completion.
You need to dig a little deeper before claiming something so profound. Only two wells were actually drilled in the H/C field, both in Allen County, not Woodson. The well info showed more of a deviated (slant) hole than a true horizontal, look at the gyro log and deviation printout from the KCC filings. The other well had no info on exactly what the bottom hole location was relative to the surface point. These wells could simply be deviated to put the bottom hole location under an undrillable location like a pond or creek.
Neither wells produced from the Squirrel formation either. Producing Formation: Bartlesville and Tucker
http://www.kgs.ku.edu/PRS/ACO/E/26S18/33139.pdf
http://www.kgs.ku.edu/PRS/Documents2/2006_09_01_KCC/9868_2.pdf
Badge - looking at your link and sorting by the field name, there are only 4 permits in the H/C field. Two of those 4 were permitted but never drilled. The other two are oil producers but not in the Squirrel Sandstone.
Pity the poor person(s) that bought 3 x 5K lots on the open at 0.01. Less than 3 hours later, they have a 50% paper loss on the basis of that posted 0.005 trade at 11:57 a.m.
That's painful even in pinky land no???
Man - I agree with that !! It's too bad that the stock / iHub board has turned into such a divided / argumentative situation. It seems to be an "us versus them" mentality when it comes to some of the investors and Hemi mgt. It needs to turn into a "we or team" so that it serves a common goal.
Mgt. needs to make good decisions and grow the assets / value of the company and shareholders need to be ultimately rewarded with SP gains. I think the SP gains are understandably difficult in this oil / ng price environment, we can deal with that as long as Hemi is performing equal or better than peer companies in their industry and information is forthcoming from mgt.
That's an interesting observation. I looked at the Hemi SP for the November-December 2006 timeframe to see what the seller's "basis" would have been in these restricted shares. Prices ranged from ~ 2 to 6 cents during that time:
http://ih.advfn.com/p.php?pid=historical&cb=1232644859&symbol=NO^HMGP
If they are indeed selling now at sub penny prices, they are taking a 60-87% loss on their original stake. I hope for them that the majority of the sales price was "cash" and not restricted stock.
Sputnik - I hope that your "definitive report" also clears up this discrepancy I discovered by the following post. Another case where the Hemi PR seems to be at odds with the KGS filed documents:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=34760774
Kels, my source for the 80% net lease is from Hemi's own PR's, where is your source of 81% net from?
Yes, they have 100% working interest in these wells which means they get 100% after the royalties are paid minus any customary taxes and fees of course.
http://www.reuters.com/article/pressRelease/idUS144825+22-Jul-2008+BW20080722
"We have 100% working interest and 80% net revenue interest in the Collins lease that is not mature and has had no oil production."
http://www.businesswire.com/portal/site/google/?ndmViewId=news_view&newsId=20061219005152&newsLang=en
"Hemi Energy Group, Inc. (Pink Sheets HMGP) purchased an investment group's interest in the lease, with 2 year restricted stock and cash, and now owns 100% working interest (net revenue interest of 80%) of this lease."
The 20% reduction in the crude price gross to net is because of the royalty payment to the mineral rights owner. Hemi has PR'd previously that the Woodson Co. leases are 80% net leases (80% for Hemi, 20% for the royalty).
The Coffeyville, KS crude prices has an entry for Eastern KS crude which derates it slightly compared to the other KS crude oil grades because of the relatively lower API of its oil.
http://www.coffeyvillecrude.com/CVRCrude/showPriceBulletins.do
REAZO - You're right, the odds of hitting something "man-made" is very minor. I was just wondering about this though since most horizontals are deeper "new" wells where there isn't the old drilling activity (old wells) around. If you look at the adjoining Bennett lease just to the East of Silvey, there must be hundreds of wells on it according to the KCC map. And that data only goes back to about 1970. My DD in this area shows production in Woodson Co. back to the 1920's or so.
In any case, I think the bit would just bounce off the old casing or cement and keep on trucking through the sand. It may cause a production problem though if there is a pressurized water zone that is not isolated by the casing / cement.
Just a curiosity to ponder...
I am hoping for a minimum of 50 bbls. oil per day (stabilized flow) on this Silvey lateral. I wonder what CT's pre-drill estimate is???
I'm hoping for another 200-300 feet of sand before hitting the bottom of the formation. I hope there is not a gas / water contact line encountered. The gross sand would therefore be greater than 500 feet thick and I would expect the net to gross ratio to be high - around 85-90%.
That should add a minimum of 2TCF for this well alone if the lateral extent is close to the CHQ latest presentation slide.
Don't anticipate much of a bump in the SP short term though - tough market conditions right now for NG.
GLTY - maybe we'll see a flow test PR on this well at the same time as HMGP spuds their horizontal !!!
just don't get too carried away with your $'s. As good as the block 5C reserves report might well be, we're here as investors to make money on the stock price. they could find 10 TCF and if the SP doesn't go up and my invested $'s don't go green, I am disappointed.
there are still many years of potential fallout from the deflation bubble affecting commodities and the world economies. I am just hoping for some SP stability going fwd into mid 2009 even with good Endeavour results. If NG prices don't steady or increase, I think this investment is at best flat near term.
Thank you - yes, I too can't wait until they post such records. It could eliminate about 50% of the speculative posts here about what some of these numbers are though...
When you're drilling in high pressure gas charged sands, I think they will drill as deep as needed until they 1) Find a gas water contact line that establishes the lower extent of the gas or 2) Find the bottom of the sand and thus the vertical extent of the pay zone in this well.
It is very positive to me that they are going deeper. Although costing more money and the risk, it shows that what they have is very good and they want to see the whole enchilada before running that final liner and starting the flow tests.
MM2B - just curious, as a professed long term holder of Hemi, would you like to see the same kind of financials for 2008 on Hemi? Would there be any downside to Hemi, as a public traded company, to post such information?
Hemi files state, local and federal taxes I am sure, there has to be a basic accounting of expenses and revenues that could populate this kind of report very easily.
I agree with your logic that the JH operation is similar (for CBM potential production anyway) and in close enough proximity to Hemi's leases that it is on-topic. That was my intent also last August...
I hope that Hemi's storage tanks aren't filling up too rapidly that they would have to sell some off to make room. Coffeyville buy prices for Eastern KS crude have fallen to the mid $20's from mid $30's last week:
http://www.coffeyvillecrude.com/CVRCrude/showPriceBulletins.do
After paying the royalty to the mineral rights holder of 20%, that's netting Hemi only $20 a barrel - ouch!
It's very interesting to me that you post these JayHawk links today... I posted the exact same info last August to tie in the CBM potential of JayHawk's acquisition 40 miles away from Woodson county's Hemi leases and the moderator deleted my post because it was "off-topic"... Two PM's then cited an expose article written by By Carol S. Remond, Dow Jones Newswires, about JayHawk.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=31528280
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=31528130
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=31528549
Kels - I'll converse with you about the upcoming horizontal, I think it's the most bold action ever taken by Hemi and any small o/g operator as far as that goes. I wonder if it was CT or KAA that first came up with this idea?
What I would like to know is whether they will run a slotted liner for that 2000 feet of lateral section and whether you need to use a downhole submersible pump to lift the fluid out. Where do you place the downhole pump if you use one, the far end, the middle or at the closest end to the vertical?
What happens if while drilling the lateral, you run into an old abandoned well and hit the casing with the bit? There are probably a lot of very old abandoned wells out there in SEK that no one ever knew existed.
Maybe Gold_Man is still reading the iHub board occasionally and will answer me via PM since he/she seems to have prior experience with horizontal drills / completions ....
Often times, that's to be expected in the oil patch. The best geologic data and initial results can end up being uneconomic and the well is P&A'd. I don't fault Hemi for drilling a well that turns out a dud, it happens and happens a lot to all o/g companies.
Now you can argue the fact that since they built up the lease potential so strongly in the PR, then why don't they follow up and say smething like "even though we had high hopes for this well / lease, it is uneconomic at this time due to low gas prices / faster than normal depletion / well bore failure / etc. so Weber has been P&A'd"...
I understand the risk of o/g exploration and investing, I just want news (both good and bad) to flow equally as needed.
This well has "tight hole" status and I believe HEMI can keep the info from going public at the KGS for 1 year. I ran across this stipulation a while back so not 100% sure on the 1 year length but fairly sure...
Sputnik - you're wasting your time researching data from the KGS site, you've already been told that their data is incomplete and inaccurate by other posters. The production figures at the KGS do not match the official Hemi PR's.
Another case in point, here is the official PR from Hemi released 11/12/2007 regarding the Tebbens-Hemi #2 well:
http://hemienergy.com/11-12-07.html
FORT WORTH, Texas--(BUSINESS WIRE)--Hemi Energy Group, Inc. (Pink Sheets:HMGP - News): The Tebbens-Hemi-2 oil well flushed in at 43 bbls per day after the fracing process was completed on our lease in Woodson County, KS.
Now here is the Well Completion document I found at the KGS for this same well:
http://www.kgs.ku.edu/PRS/Documents2/2008_10_01_KCC/A0012243.pdf
At the bottom of page two, dated 11/12/2007 shows the IP (Initial Production) of oil at 18 barrels and 30 barrels of water.
The PR number and the KGS document don't seem to match, now do they??? But wait a minute, if you read the Hemi PR again, carefully, the 43 bbls it refers to doesn't specifically mention that it is oil. If you add together the KGS filed report, you see that 18 + 30 is 48.... So the Hemi PR is close, it did "flush in" at 48 barrels but only 18 was actually oil.
It's because most of all the posters here don't know enough about the oil field to even think of that angle. These stripper wells are probably producing about 10% oil, 90% water - that would be typical. It is a constant changing oil / water mix especially if you have a water flood operation in effect in a nearby injection well.
It's all very simple and basic. Each operator must report monthly lease data. As a minimum (variations from state to state as put forward by USC Cowboy) is the beginning oil balance, monthly production, monthly disposition and ending oil balance.
It's just like a checking account. You start with some value at the beginning of each month, you make deposits and withdrawals and you end the month with an ending balance.
The real question here is what data is KGS showing on their site? From PP's answer in talking with the agency, is that it is the production from the ground into the tanks. If someone else gets a different reply from the KGS, please post that...
Excellent story - I had read similar accounts from other news stories, glad you got some payment out of them... Curious though - did you get a lump sum or will you get royalty payments? I'm not asking personal info like how much or anything, just which way you're getting paid. ( I am hoping you are getting both !!! )
Dang - I was afraid of that. That's why I never called the KGS to find out the source and accuracy of this public production data. More confusion, just what we need.
With almost two years of reported data, it does appear that the monthly production from Hemi to the governing agency is in the 125-150 bbl. range for 2007 (flooding caused lost production) and around 200 bbl. / month for 2008 based on reported numbers through ~ Sept.
This is so far off from the Hemi PR's of 2007 and early 2008, there must be an explanation. Why does the Hemi PR production #'s seem so high in relation to the KGS numbers???
Jan 9, 2008 12:38pm EST
FORT WORTH, Texas--(Business Wire)--Oil production resumed in mid-October and we have been phasing in
leases and wells over the past couple of months. In November, 436
barrels of oil were produced and 225 barrels of oil were sold. In
December, Hemi (Pink Sheets:HMGP) produced 461 barrels of oil and sold
393 barrels of oil. Not reflected in these numbers was the Bennett
lease, which was off line for additional service work. The Company
believes that our leases continue to respond positively to our
Enhanced Oil Recovery (EOR) programs and stimulation efforts and the
Company is on track to produce in excess of 600 Barrels of oil for
January.
Wed Feb 27, 2008 9:45am EST
FORT WORTH, Texas--(Business Wire)--
Hemi Energy Group, Inc. (Pink Sheets: HMGP) January oil production
ramped up to 669 bbls from the December production of 461 bbls. We
sold 395 bbls in January
Reazo - you really want to be the mineral rights owner, not the land owner. Often times these are two separate people. The land owner gets little or no money unless the production impacts their surface use (losing some land for farming for example because of the physical oil infrastructure). The mineral rights owner gets the royalties (often around 15-20%) of the "sold" oil production without having to pay for anything...
Sputnik - small production oil wells like these in SEK do not have flow meters mounted on the production lines by the pump jack. The most common way to read production is from gauging the tank. You literally drop a steel tape measure or wooden stick into the oil storage tank and record the number of inches from bottom of tank to the top of the oil. Each tank has a conversion rate to show # of inches equals how many barrels.
Sounds kind of crude (no pun intended) but that's the way I gauged my oil production in TX in 1988-90. From my memory, my oil storage tank conversion was 1.2 inches = 1 bbl of oil.
If you saw any kind of meter on the well head, it was probably a simple pressure gauge to monitor the gas build up since most oil wells also produce some gas also.
If you notice the source on the bottom of the page it states "Production data from Kansas Dept. of Revenue files monthly."
This leads credence to the fact that these production figures are based on sales since it comes from the revenue dept. They want to get their taxes after all.
I would really like to find a way to view the production totals w/o regard to sales, that is info I as an investor have been wanting to verify and monitor.
Sputnik - if you want independent verification of the HEMI production and number of wells, go to the Kansas O/G agency (KGS) for official government records on Hemi Energy Group.
http://abyss.kgs.ku.edu/pls/abyss/oil.ogop4.OpPage?f_id=1033972094
This is what you will find:
Year oil (bbls) Wells
2007 1,564 56
2008* 1,743 56
*2008 data incomplete at this time. Data from previous years may still change.
This data has been debated here on iHub many times about how accurate the numbers are. Some say these are sales figures and not actual production. Since HEMI is "tanking oil", the production numbers should be higher than the sales numbers. Eventually the tanks will all fill up and then you have to sell so I am not totally convinced.
I have been wanting to call the KGS myself and ask about these reported production numbers and find out from the governing source how accurate they are and what they represent. I have not done this for fear of what I would find. Since you are on a documented mission to fully investigate HEMI, this should be a good lead to pursue.
When I operated an oil lease in Texas from 1988-90, you had to file a monthly production statement with the RRC (RailRoad Commission) on Form PR each month:
http://www.rrc.state.tx.us/forms/forms/og/pdf/FormPRf.pdf
It clearly documents your lease totals by showing beginning oil balance, monthly production, monthly disposition and ending balance. This would then show if your are indeed "tanking oil" as you ending balance would keep rising by the amount of monthly production.
The Texas RRC now has an online search tool to look at production figures by operator or lease:
http://webapps.rrc.state.tx.us/PR/initializePublicQueriesMenuAction.do
It would be nice to see if the KGS site has a similar feature, I cannot find it other than the link shown above with HEMI's statement of production (or sales??)
GLTY
I would venture that these ID #'s are given out alphabetically by company name. Would make sense that these two similar Hemi companies would have nearly the same ID #.
I did find this nice short article on that website though that is pretty informative. When I first invested in HEMI, it was because of their mission goal to use EOR (enhanced oil recovery) to produce the so-called left behind oil from abandoned formations. I have yet to see any actual info from HEMI that they actually use this kind of technology on any of their SEK leases.
Link: http://moneyinoil.com/doe.html
Collins-Hemi 1 well info from KGS site. Found this link tonight while researching the upcoming horizontal drill on the Orth-Silvey lease area. I moved over to the Hemi-Collins lease to look at what info I could find on that well since we haven't heard anything about it from Hemi for many months now.
Here is the link:
http://abyss.kgs.ku.edu/pls/abyss/qualified.well_page.DisplayWell?f_kid=1037888913
Notice that the "cuttings data" are no longer confidential, they expired on Jan. 1 2009. I guess Hemi is slowly losing the Tight Hole status on this well. It does confirm that Hemi went deep, 1440 feet or so. Much deeper than the normal 800 or so feet for the typical Squirrel zone.
Now if you click the hyperlink that shows "View well on interactive map", you will zoom into the Section/Township/Range of the lease. You have to play around some to get the gist of this interactive map. Zoom into the area of the Collins-Hemi 1 well. Click on the individual offset wells (black circles) and you can read the data associated with these wells. Most were P&A or were permitted but never drilled back in the 1970's except for the Collins #6. It was an oil producer back in 1981 and plugged in 1992. I could not find any production records for OJC Oil Co.(the Collins 6 operator).
Here is a link to that well and if you click the Core Analysis PDF link, you will see a core lab report showing the oil zone geology data set.
http://abyss.kgs.ku.edu/pls/abyss/qualified.well_page.DisplayWell?f_kid=1033774408
Interesting stuff, the Collins lease is indeed underexplored / lightly produced. Not many producing wells around Collins compared to the mature leases of Bennett / Reno / Orth-Silvey / Tebbens etc. to the east a couple miles.
When HEMI sold shares to fix the flood damage in late spring / early summer 2007, the average share price was in the 20 to 25 cent range.
Now that HEMI is sub penny, they could use around 5 percent of the settlement (if and a big if, it ever materializes) to buy back all those issued shares. I can't think of a better use of that money as a way to show shareholders that mgt. thinks about the SP and is willing to try and support it.
Could also scare the bejesus out of any MM funny business if mgt. were to take this step and allude to further buys in the open market.
I emailed KAA 4 times suggesting that a portion of the flood insurance settlement money should be used to buy back HEMI stock and cause a short squeeze of this NSS (assuming it exists).
I failed to ever receive any answer, check my post history. I have documented this several times.
I believe Kels has stated that there is a NG pipeline in the vicinity, maybe a couple miles away, more or less.
There is still a lot of infrastructure that would have to be installed, pipelines, metering stations, compressors, etc. to sell the gas off of Hemi's leases and get it into the pipeline. All this cost would be borne by Hemi.
That would also be based on the pipeline owners need to take on additional supplies and what the "take" price would be for the sale.