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Dan has assembled an outstanding group of people around him. Just having SE to talk to is like having Joe Montana as your quarterback! He is a winner!
I was told by a very reliable source that Superior has over 1,000 stockholders.
Thanks for you cooperation! LOL! I wondered who would be the first to express displeasure with the company building a database. Congrats! You win the prize!
This is going to happen! This could be the turnaround story of the year!
Just follow the instructions on the card and all will be good!
I hope JRT can get all of those stamps licked so the investor postcards can go out soon!
Among the significant tight oil plays in the U.S., one of the Mississippian Lime’s distinguishing traits is its lower-cost, shallower nature. Production per well in this play, which straddles the Oklahoma and Kansas border, may sometimes average less than other plays, but countering these lower production numbers are the advantages of lower well costs and increased access to infrastructure. The Mississippian Lime remains one of the nation’s more active plays after North Dakota’s Bakken, Texas’ Eagle Ford, and the Permian. It’s one of several plays that have helped turn around crude oil production in the region. Combined Oklahoma and Kansas crude oil production in 2012 surpassed that of 2005 by 37 percent, or 100,000 barrels per day, with the largest part of the increase in Oklahoma. About 22 percent of Oklahoma’s crude production was in Mississippian Lime counties in 2012, according to the Oklahoma Corporation Commission’s Oil and Gas Division.
It’s not that oil and natural gas activity in this “patch” is anything new – conventional exploration and development goes back here more than 50 years, and exploration and production in these states goes back to the 19th century. But with advances in horizontal drilling and hydraulic fracturing, it’s another case of an “old” play that’s become new again.
What is the Mississippian Lime?
Taking the name apart, the “Mississippian” refers to a geologic period roughly 320 to 360 million years ago. “Lime” refers to marine limestones laid down during the Mississippian when an inland sea covered parts of the North American continent. This thick limestone section does diverge slightly from other plays that have a bigger shale component as part of their interbedded zones. The oil and natural gas play of that name focuses on a specific part of this area centered along the Kansas/Oklahoma border, with some experts estimating it to extend as far as southern Nebraska. While the largest share of activity has been in northern Oklahoma, areas now considered as part of the play stretch farther north and west within Kansas. Earlier descriptions put the area of interest at around seven million acres, but with extensions to the north and west, estimates now range to 17 million acres. The play’s surface area is similar to that of West Virginia or South Carolina.
One of the play’s attractions is its shallower nature. The Mississippian Lime section, typically 300 to 500 feet thick, is found at depths of 3,000 to 6,000 feet, contrasting with 9,000 to 10,000 feet to the top of the Bakken in North Dakota and depths of 4,000 to 15,000 feet for both the Eagle Ford in Texas and the Permian/Delaware Basin (Texas and New Mexico). This translates into faster drilling times, lower requirements for rig horsepower and fracturing pressure, along with other cost savings per well. Typical well costs of around $3-3.5 million are publicly cited, which is half or even a third of the cost in more complex shales like the Bakken.
The source rock for the Mississippian Lime is traced to the Woodford Shale below it, which has also driven many of the more traditional plays in the region. While tending to be more “oily” to the east and “gassy” to the west, a roughly 50/50 split between oil and natural gas would be typical in the Mississippian Lime. However, the recent economics have been driven mostly on the recovery of crude oil and natural gas liquids (NGLs).
The Mississippian Lime itself has a complex and varied geology. It is interbedded, with areas of high porosity alternating with tight limestones. It is topped by the Mississippi “Chat” – a varied combination of chert, limestone, and dolomite. The “Chat” is the legacy from when the top of the Mississippian was transformed through uplifting, erosion, and exposure to weathering and other geologic processes, all before being buried again in subsequent periods. Due to its more brittle nature, the “Chat” has served as a reservoir rock, a target in the past for thousands of more traditional vertical wells, as well as for more recent activity. As a low permeability, high porosity formation, it may hold oil, natural gas, and/or water in its abundant pores, but these may not flow easily because the pores are not connected.
Crudes from the Mississippian Lime are in the light sweet category. IHS in its “Potential for Tight Oil in North America” multi-client study released late last fall, projected total oil and condensate recoverable resources from the Mississippian Lime play at 1.3 billion barrels through 2035.
History
Looking more broadly at the states, Oklahoma’s first commercially producing well, the Nellie Johnstone No. 1, was drilled by the Cudahy Oil Company under contract to George Keeler and William Johnstone. It came on stream in 1897 in Washington County, just east of the current area of interest and producing from 1,320 feet. Beginning in 1905, the discovery of the Glenn Pool Field in Creek County set off a major trend of oil activity in the state. The early 20th century was a period of discoveries and production growth for Oklahoma, with crude oil output reaching 760,000 barrels per day in 1927. A subsequent decline was reversed in the 1950s and production climbed above 600,000 barrels per day by the late 1960s.
Meanwhile, commercial production in Kansas actually began earlier with the Norman No. 1 well in 1892, drilled by William Mills under contract to a group of local businessmen. By the 1950s, Kansas was producing at its peak of about 340,000 barrels per day. More recently, Oklahoma output has risen from a 2005 low of 172,000 barrels per day to 244,000 barrels per day in 2012, and nearly 280,000 barrels per day in this year’s first quarter. Kansas has recovered from under 100,000 barrels per day as recently as 2006 to 120,000 barrels per day for 2012 and early 2013.
Recent Developments
The Mississippian Lime has been producing for more than 50 years from mostly traditional, vertical wells. According to the Kansas Independent Oil and Gas Association, more than 4,000 vertical wells have been drilled in the Mississippian Lime. The first wells that demonstrated the value of this approach were drilled in 2009, and horizontal activity picked up quickly. The fact that the formation is relatively shallow, can be drilled horizontally, and can benefit from hydraulic fracturing has given this play new potential. As recently as early 2011, the horizontal rig count in the area was just in the 20s, according to Baker Hughes. More recently, it has shot up to the 70s and 80s.
The shallower Mississippian Lime, in comparison with other major plays across the country, typically means lower per well cost. That being said, the complex geology, mix of porosities, and place-to-place variations in rock types and other characteristics mean that accurate downhole measurements, practical reservoir modeling, and attention to the specifics of each location can help optimize stimulation plans. Water content, often a factor in producing oil and natural gas, is often particularly high in the Mississippian Lime and especially in the “Chat.” Precise targeting to increase hydrocarbons and reduce by-product water production is a major consideration in project design. Proper handling typically involves drilling disposal wells routing the excess water into deeper formations below the Mississippian Lime from which it originated.
To put the scale of activity in the Mississippian Lime in perspective, consider that in recent months, the Mississippian Lime has seen 70-80 active rigs, according to Baker-Hughes. While less than the 180-190 for North Dakota’s Bakken, or 220-230 for Texas’ Eagle Ford, it still is one of the most active tight oil plays after these, and at a similar rig activity level as the Marcellus tight gas shale play in the Eastern U.S. Of course, none of these plays come close to the nearly 500 active rigs for the Permian, though in the Permian, horizontal drilling and tight oil activity account for only about a third of overall activity.
As for the so-called Mississippian Lime extension farther north in Kansas, activity seems to have slowed. The rig count for Kansas counties farther north of the Kansas/Oklahoma border had seen an increase in 2012, but has since subsided in 2013, because, apparently, some areas with a good history for conventional production in those regions have not panned out for horizontal wells and hydraulic fracturing, at least at this stage.
According to the Kansas Independent Oil and Gas Association, traditional, vertical wells in the Mississippian Lime have recovered an average of 86,000 barrels of oil equivalent (boe) per well. The association estimates horizontal wells may recover from 250,000 to 450,000 boe per well, just one measure of the dramatic changes brought about by horizontal drilling techniques. The IHS tight oil study estimated the typical Mississippian Lime well would produce 219,800 boe, a mix of crude, NGLs and dry gas.
The Mississippian Lime has drawn considerable interest from international joint venture partners, which has provided additional capital to finance activity in the play. Some of the partners include Sinopec (with Chesapeake, Devon), the South Korean firm Atinum (with SandRidge Energy) and Spanish Repsol (with SandRidge Energy).
Economic Impact
As activity has grown in the Mississippian Lime, so have the jobs directly related to drilling, completing, and servicing the wells. The resulting growth in production has also increased the need for additional pipeline capacity, natural gas processing facilities, and other infrastructure, as well as for all the goods and services used as inputs by these varied activities. In 2012, according to IHS, unconventional oil and gas activity, including the Mississippian Lime in both states and the Granite Wash in Oklahoma, led to economic activity which directly and indirectly supported more than 65,000 jobs in Oklahoma and 11,000 jobs in Kansas. Oil and gas accounted for 38 percent of the net jobs added for these two states between 2005 and 2012, which is to say 34,000 out of about 88,000. IHS projects these figures to rise to 150,000 for Oklahoma and 25,000 for Kansas by 2020 and to rise further in the following years.
The Mississippian Lime is another case that demonstrates how the technological innovation of independent producers is reviving a historical play, bringing jobs and economic growth to the region.
This is a very well thought out business plan. If you can't get excited about this, you either don't understand it or you're not very smart. LOL!! Somebody was using their noodle when they came up with this!
I heard that you drank all the Prickly Pear wine?? Word on the street was that you had to have a friend from Texas drive you home! LOL!
That is a pretty good reason! How are you coming with the stamp licking for the postcards? LOL!!
Thanks SE, you are one of the many reasons why I have so much faith in something great happening here!
Yes, you are correct. I believe that when a company is destroyed to the point that this one was, everyone associated in that companies destruction should step down or be replaced. There is no doubt that the former management team did not have a freaking clue about how to do develop a successful company. The company history is just completely littered with poor judgement and incompetence. I believe that Mr. Kenan was part of the old team that blew this up. If he was, he needs to go as well. He is too old to perform at the level he needs to anyway. I got old and I knew when to quit. It happens to us all.
I have been critical of Dan in the past. He seemed to me at times to be like a ship without a rudder and very unfocused. I even questioned if he had the guts to stand up to the board, make his own decisions and speak for himself, like a CEO should. Maybe it was because he was being pulled in all directions at once. I will say this. Dan seems to have settled in to his position. He seems to be making good decisions and there has been very good progress on many different fronts. He does have very good people around him and I think he is smart enough to know that and extract their knowledge and take advantage of everyone's individual talents.
I am extremely excited about Superior and what could be built here. Keep pushing ahead Dan!
Something exciting must be a foot!
I thought he was going to save us all...
Really??!! WOW!! I'm glad JRT is back on the team and helping to make this happen! Thank you JRT! I would help out if I could.
I wonder when the company postcards will arrive?
This company has had a bad past. I really believe that with the new management team they have turned the corner. We need to look towards the future. There has been major progress over the past year.
I know that I'm excited! Been a long wild emotional ride! Make it happen Dan!
You said a mouthful there!
Now you behave JRT! LOL!! Dan is doing a magnificent job at this time!
Dan is surrounded with a group of very talented oil people.
Dan is proving to me, to be the leader I didn't think he was.
I'm pretty sure that everyone will get a communication from the company.
SE is the man! I was speaking with other Gushers Club members yesterday and most are really excited about the company and the investments in the wells. There are several guys in Gushers who do not own any stock and are chomping at the bit to buy shares when it re-lists.
Everyone is excited about SE and Dan working together! I for one look for a lot of positive things to start to take shape over the next few months. I hear that Superior is putting together a large multi well offering.
I have to disagree 100%!! That statement could not be further from the truth!
Here is the difference between Superior and most other energy companies. Superior was a very cash strapped enterprise, one tick away from bankruptcy. Leasing costs BIG money. The business plan put fourth was to look for the best operators, getting the best results, in the best local area, at the most reasonable dollar cost. Then gauge investor interest in sections being spaced. Then send in a landman to acquire the acreage that you have investment capital for, sell it at a profit to investors, fund the drilling of the oil well with investor money and get a free carry of 33% on the 25% sold.
By doing this the company has the following benefits:
1) Superior does not tie up funds in land, seismic, geophysical studies, legal / land issues. These all cost energy companies enormous amounts of money. But not Superior.
2) Superior then flips the leases to investors for a quick profit. By flipping the lease to an investor Superior provides itself with operating capital and it also adds to the capital used to acquire additional leases for investment.
3) Superior then funds their proportionate share of the drilling costs with investor money. Superior sells 25% of the total project to investors , while getting carried for 33% of the quarter.
4) Superior in effect becomes a cash harvesting investment fund of a company.
I know that Superior has several thousand acres under lease and several thousand more under option. Where Superior shines is it's ability to farm in with other operators like Devon, Newfield, Continental,Sandridge, Sundance, Red Fork and Chesapeake. Superior can farm in on hundreds of thousands of acres. Dan Lloyd has done a marvelous job at establishing relationships and being welcomed with open arms by them to be able to participate.
I hope I explained this clearly enough.
I do not think this will have much effect on the investment made by the more affluent. Here is why.
1) Oil prices can be volatile. Long term affluent investors know this.
2) The tax benefits that an oil well provide are second to none.
3) These wells will produce for over 10 years.
4) Under the program by participating in one well in a section, you then have the ability to participate in the next subsequent well or wells. Depending on the operator, the drilling could go on for several years.
5) Most "in the know" oil people had been forecasting this drop and a average price next year of 75.00 per barrel.
Basically, we have returned to the oil business that I grew up in. Companies will now have to allocate capital to their best projects, manage their capital wisely and improve efficiency in the field. I take more of a long term view than most.
I did speak to a gusher member who spoke to SE and he said that SE wasn't too concerned yet and he thought that prices would shake out and stabilize by the second quarter of 2015. The key is to be drilling the "sweet spots,"
Yes, you should receive revenue from all months if you paid Devon monthly for overruns or operating costs. I just have them net them off of my account.
I have been told that Devon is currently working on the accounting for that well. When Devon get's it resolved then Devon will send the DO out. The stipulation order issues have been resolved to Devon's satisfaction.
Yup! Thats a small sampling of the business plan.
Yes, there is a timeline.
You're both right. SIOR didn't have to file financials if the shareholder count stayed less than 250. But it surged way past that and then WAMMO! The stock was delisted. This to shall be corrected in the very near future!
You most definitely want to keep your eye on this one. This has long term buy and hold written all over it!
I don't think the price of oil will delay this at all.
Happy Thanksgiving to you as well! I have a feeling that big things are in store for us in the near future!
If they can execute their farm in agreements with the big boys, Superior could have access to hundreds of wells to be drilled.
The best part of it is Superior gets a free carry on all those wells. Superior has very low lease acquisition costs, all geological and infrastructure expenses are burdened by others. Through forced pooling Superior just pays for it's share of the well or sells it to accredited investors and gets a free carry. It is a genius business plan!
Yes. That is correct!
Hold through the end of 2016? I don't agree with that. Why would one only hold to the end of 2016? I was told that Superior is to offer 8 new sections for investment this month. This would equate to adding the ability to participate in 96 new horizontal wells. These 96 will be on top of the existing inventory. Every section that Superior participates in will add at least 12 new wells. Dan is constantly adding acreage and farm in opportunities.
I understand many of you do not know how this company is being developed. It is being developed the same way that Chesapeake Energy was developed. Through forced pooling and accredited investors. When I tell you that the sky is the limit. Believe it. This has a chance to be huge. Please consider taking a long term view of this.