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Wednesday, 06/20/2018 10:44:18 AM

Wednesday, June 20, 2018 10:44:18 AM

Post# of 54209
A Theory In How to Interpret the June 19 PR

There were two points didn't make sense to me when reading the PR last night.

The first is that Dustin said it was a delay of a "few days", whereas as spike pointed out it seems like a delay of 16 days if they haven't started testing zone #2 yet.

The second is the subtitle of "testing expanded zone of interest". What does expanded mean? Zones 2 and 3 have been identified for a long time and the log would indicate exactly where each begins and ends.

A clue to reconciliation might the phrase "complete performing and stimulation". This clue could be interpreted to mean that zone 2 has already been perfed and stimulated, and now zone 3 needs to be perfed and stimulated, which will complete the perfing and stimulating.

The PR said that two issues caused the testing of #3 with #2:
1. Close proximity of the two zones to each other, and
2. Down hole condition considerations.

The first issue has been known for months, so the new news is the second condition. Something developed "down hole".

My first explanation posted last night was that they couldn't set a plug between the zones due to proximity and high pressure. But there would be no need to set a plug between zones 2 and 3 when testing only zone 2. The plug at that point would be between zones 1 and 2. Zone 3 would not be perforated yet to test just zone 2, so the casing would isolate it. So, that theory is no good unless zone 2 has already been perforated and now zone 3 needs to be perforated.

A second potential explanation is concern that zone 2 and zone 3 would communicate with each other through the rock (in contrast to an improper plug allowing communication inside the casing). I've seen two zones that are close together begin to communicate through the rock after perforation and stimulation. The perforation videos show the propelants going perfectly horizontal, but cracks in the rock running vertical can opened during perforation. Stimulation then follows, which opens the cracks further. The nightmare scenario is when a water zone is close to an oil zone. In the process of perfing and stimulating (we use HCL acid), a communication path is opened between the oil zone and the water zone. The result is that a well with previously little or no water now has excessive water. And there is nothing that can be done in the wellbore to solve the problem, so the well is lost. The nightmare case does not exist with MJ#1 because zone 2 and zone 3 are both producing zones. When two producing zones are in communication through the rock you simply test and produce them together. Which seems to be what ZN is doing.

So, my revised theory is:

A. Zone 2 was perfed, stimulated, and tested somewhat on schedule.

B. Something developed downhole that made ZN believe zone 3 could not be isolated from zone 2, either inside the casing (plug bypassed) or outside the casing (vertical cracks in the rock).

C. A few days were taken to change zone 3 test to be done without a plug between it and zone 2, so that they are in essence tested together.

Hence an "expanded" zone to test and a "few days" delay. If this is true, they already have reservoir and flow rate data for zone 2. When zone 3 is added to zone 2, then the incremental reserve and flow will be from zone 3. So, they will have data on what each zone can produce to guide future drilling. I imagine there was tense discussion with the service provider whether the test set up could handle the combined flow and both zone 2 and 3!
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