antsquires, here is a similar post I threw together about some of Hemi's oil. Again, this was done a while ago so some of the prices mentioned for the oil are a bit low and even more land has been acquired than what is mentioned below so the figures I use are LOW. But, again, it'll give you an idea and a starting place in your homework :)
Hemi's proven reserves of OIL $100+ mil
I've talked about this a little before but a reminder never hurts!
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"Read between the lines" of what Hemi has in store...
Some new investors and even long timers may not have yet connected the dots
for what Hemi is doing in Woodson County Kansas (which is just one of many
areas where Hemi has acquired land).
There are some important things to realize when connecting the dots...
First, the oil under the 5 leases in Woodson County for which we have a
reserves report has blanket formations. Blanket formations extend laterally
over large areas. Meaning, what is under the ground right here is likely the
same way over there. Second, many of the leases Hemi has been acquiring in
Kansas are contiguous to the 5 leases mentioned above (meaning they are
touching or next to them).
Knowing the above, we can "look ahead" so to speak.
The 5 leases above make up ~2000 acres or a little less. This is 3.125 sq
miles. Hemi now controls 11 sq miles in this blanket formation and
should have finalized the paperwork for 17 square miles by the end of June
(see PR). Keith has mentioned wanting to go for 40 square miles but
let's just stick with the 17 square miles for now. 17 square miles is 5.44
times more than the land we have the reserves report for. It has already
been stated in press releases that Hemi believes, based on numerous records,
cores, past history, etc. that the land around the 3.125 sq miles the 5
leases make up will have similar reserves. Also to note... the reserves
report does not even contain all existing pay zones (even more potential
reserves... see below).
So, lets do a little math. The current INDEPENDENT reserves report
has proven reserves of 2.15 million BOE and probable of 3.1 million BOE
for a total of potentially 5.25 million BOE.
If you talk only about the proven reserves and take 2.15 million BOE
and multiply it by 5.44 (remember, blanket formations and contiguous
leases... Keith acquiring contiguous leases is no accident) it
is my opinion we will likely see at least 11.7 million BOE proven in the not
too distant future. Oil is going for around $62 barrel in Kansas so at that
price, it is not unlikely that we could have more than $725,000,000 in
proven reserves once we start drilling these other leases and get enough
wells on them to perform and updated report. Now, throw in the probable and
you are looking at the potential that would approach TWO BILLION
DOLLARS worth of oil and just in Woodson County! This doesn't include
Montgomery or even all the other states... and you wonder why so many people
think this is undervalued? The above also doesn't include the block of
leases Hemi just acquired with all the gas (above is just oil!).
Now, just let me hit you over the head with a 2x4... the reserves report
doesn't contain the deeper zone, the Mississippian. It contains the other 4
shallower pay zones but not this deeper zone. Hemi has not yet drilled to
that zone. BUT, production of oil and gas does exist from the
Mississippian within a few miles all around and in all 4 directions
of our contiguous Woodson County leases. What's it mean when others all
around you are producing gas and oil from this zone on all your sides? Means
you don't need to think too hard about good production coming from the
Mississippian on Hemi's contiguous leases as well. AND, once this happens,
it will be added to the reserves report making it that much more impressive.
Bottom line, Hemi is sitting on a ton of gas and oil with a ludicrously low
market cap. Congrats to those who have done their DD and can extrapolate the
above as well. Granted, the above is extrapolation... but not unreasonable
extrapolation. For those who want to wait until Hemi actually proves up this
land, don't expect to pay anywhere near these prices once this happens. Read
the press releases closely, do your DD, and you can see that Keith and crew
are building something that is going to be very big and I, for one, am very
excited to be a part of it.
AI
