note sent to Boyd yesterday - all read....
Dale,
The news released today was very positive, but I would like to know something. Success Oil is known as a turnkey drilling contractor. Do they have their own eqiupment (i.e. workover rig, drilling rig) in-house or are they still dependent on Schlumberger to lease this equipment when projects get started ? This is why I expect to see the East Texas LOI close by 8/31. As mentioned in the PR, the East Texas LOI company has 2 workover rigs and 1 drilling rig in-house thus eliminating the dependency on Schlemberger. From a cost basis this is great, but it's better news to know that Biogenerics will not have to wait on equipment anymore in the time when Oil Rig/Drilling equipment is in high demand due to the high price of Oil. This deal is key to Biogenerics fully exploiting all their assets in a very short time frame as opposed to what has been going on at Grimes with all the delays.
If Success has it's own rigs or better access to obtain this equipment, it should be noted in the PR. In either case, the properties at Crawer and Gray Gulch will be exploited first and with the East Texas LOI the properties resident within that asset will be exploited first. A workover rig can be permenently stationed at Grimes from the East Texas LOI company. In reality three major projects could be going on whereby 1 well could be completed at each site on a monthly basis. That's 3 wells per month. This will be huge for the company and I think it should be communicated to shareholders as such. The most recent PR's are confusing to say the least because investors are unclear what properties are being worked on by what LOI ? You understand ? There needs to be a table released showing operators, property, percentage ownership in revenues after ROI. This way investors understand the overlap and what JV partnerts are working on what with % ownership. Each project should be updated monthly regarding well status, current flow rates, anticipated future drilling at that site etc. Once it becomes old news and flow rates have been published or well is dry move it into the 10Q but continue with the monthly updates
September 2006 Project Update - Example ONLY
Operators: Success Oil 50% / WW Oil and Gas 25% / Biogenerics 25% Property: Crawer / Gray Gulch
Status: Crawer Well #1 Drilling depth 2800 ft. continuing to 7200 ft.
Gray Gulch Well #1 Lost circulation at 8400 ft. Well abandoned and plugged.
Operators: Tyche Energy - Hydrolsotter Inc 60% / Biogenerics 40% Property: Grimes
Status: Well #3 preliminary flow rates 1450mcfd recorded, Well #4 is currently having multiple formations slotted
Operators: Biogenerics 100% Property: LOI #1 East Texas Oil Company wells
Status: Well #1 Driiling depth 2800 ft. continuing to 14500 ft.
AI
