GulfSlope Energy Inc (GSPE)

[MktMvn]

Great questions - you’ve obviously been around the GOM some. Question on migration timing is complicated, but in general the oil is cooked and moving out of the source rock by early Miocene time. It has to move up through a lot of rock to get to the Tau reservoirs and that can take millions of years. I would say there was oil available at the time the Tau reservoirs were being deposited, but without seismic data I have no idea when the trap formed against the salt. I have only heard of a few good traps, with reservoirs, that have been drilled in the GOM, that were completely dry. Considering that Tau was apparently drilled in a closure, and good sandstones were encountered, it is a bit worrisome. There were no indications of oil in the Tau wellbore, or GulfSlope would have been advertising it when they announced the well results.
There could be a number of reasons for this. I had the opportunity to talk to a geologist who has worked Mahogany in the past. He told me that there was a sealing rock layer over the top of Mahogany, which showed up as a sharp downward break in the formation pressure when they drilled through it. It bit them a few times before they recognized the problem and adjusted the casing to let them get safely through it. We know from GulfSlope that they couldn’t get mud circulation at the very end of the Tau well, which says to me that they hit low pressure, and had too heavy a drilling mud . The hole would have emptied out and from that point they would be screwed. So I suspect that they had just gone through that pressure seal that is present at Mahogany. I have no well information to back that up, so it is pure speculation. But it is at least possible. If that’s what happened, then they were just about to drill into the section that produces at Mahogany. It’s heartbreaking if true, because it was so close. But without drilling another well no-one will ever know. Continued below.