More on Montello: The results from John Bowen #2 are due any day... !
Montello (TSXV: MEO) Progresses toward Depth at Massive Formation in Tennessee
By Doug Hadfield
Resourcex Investor
Sept. 18, 2007
As a director of Montello Resources (TSXV: MEO), a financial journalist and seasoned stock speculator, Marc Davis doesn’t get particularly caught up in the excitement of most oil & gas drill projects any more. But there are rare exceptions. And that’s why he agreed to become a director of the feisty oil & gas upstart, Montello Resources. He views it as a company that is drilling an oil and gas formation with the potential to blow Tennessee’s oil and gas industry wide open – literally. I spoke with Davis on the phone briefly and he explained a few of the salient details on the ground at Montello’s John Bowen #2 Test Well.
“We're drilling right now to find the hydrocarbon source of the most over-pressured oil county in all of Tennessee. In layman’s terms, there’s something big down there that was responsible for a gusher that spewed so much oil that the rig was apparently lifted right off the ground and the well had to be plugged for safety reasons,” Marc said, referring to the Howard-White #1 Well, which Pryor Oil drilled in 2002.
According to numerous 3rd party reports provided at www.montello.com, the Howard-White #1 could have been the largest well in recent Eastern US history – had it not blown out under its own unpredictably massive pressure and caught fire. The result was an ugly environmental accident that led the US Government and the Environmental Protection Agency (EPA) to halt the project indefinitely. That is, until Montello’s spud on August 15th, 2007. Pryor Oil essentially had the rights to Howard-White stripped from it; legal and cleanup fees sounded the company’s death knell. Read through www.pryoroil.com for the full picture.
Since then, little follow-up exploration has been reported in the area of the Howard-White #1. Records show that when Pryor’s drilling hit oil, the well began gushing light gravity crude oil at up to 750 barrels per hour, or 12,000 barrels of oil per day, which at today’s oil prices could generate close to $1 million in revenue per day. In spite of this, the oil and gas formation underlying the Howard-White #1 well remains untapped and tied up in a legal battle that has no end in sight.
According to Pryor Oil, the Howard-White #1 could have produced in excess of 5 million cubic feet of gas per day. (Both oil & gas co-exist in this part of Tennessee). Moreover, the same zone that caused the blow-out at the Howard-White #1 Well was encountered in the John Bowen # 1 Well – located 250 feet away from Montello's John Bowen # 2 Well.
According to a recent article posted by Davis on his electronic financial newsletter, www.smalllcapmedia.com, the John Bowen #1 remains significant to the overall picture in the area. It apparently flow tested at up to 800 barrels of oil per day prior to being cased and shut-in ahead of a production decision that never came, due to legal issues relating to the untimely death of the well's operator.”
Davis points out that Montello is not just after the rich shallow pocket of oil and gas that Pryor discovered, but also the source itself. That’s the big payoff. As such, Davis says, the company is not overly concerned that it has not yet hit the same shallow high pressure interval that Pryor hit back in 2002.
“I’m not in a position to say whether or not we’ve hit anything substantial yet, but we’re more than satisfied with our progress having drilled to a depth over 4000 feet to date”. He also told me: “We’re aware that there is concern that we’ve drilled past 2,400 feet and haven’t reported significant news yet but investors need to understand that the geology is very complex in this area and that what we are really after is the source of what caused the Howard-White #1 well to become over pressured at 2,400 feet.
To put the location of Montello’s John Bowen #2 Test Well into context, if you were to jump in your truck and drive from John Bowen #1 directly to Howard-White #1, you would be there in about a minute or two. It is so close geologically that the company, pundits, and many investors believe that Montello can hit the same pocket as Pryor Oil.
Montello and its 45% joint venture partners Austin Developments Corp. (TSXV: AUL) and Great Northern Oil Sands Inc. (OTC: GNNS:PK) have now progressed approximately 4,380 feet of the way down the planned maximum 9,000 foot well. The present well is the first of up to three or four that Montello the Operator, feels should be drilled to evaluate the potential in the area.
“We believe that one or more really big pay zones potentially exist at much deeper depths than we have penetrated so far,” Davis continued. “The fact that there was oil under such high pressure at 2,400 feet suggests that it migrated from a deeper formation, from the originating source if you will, and we're going after it.”
Davis anticipates another three weeks of drilling before Montello has a clear picture of the contents of John-Bowen #2. “Really the proof is in the pudding, which is illustrated by the mere existence of the blow out well, and also the John Bowen #1, which was never completed. There could be prolific oil and/or gas, but nobody has ever gone to basement. No company has gone to depth to probe where all the oil is emanating from. So we’re probing into uncharted geological territory.”
In response to concerns that company insiders have been clearing out their holdings or taking profit, Davis is dismissive. “Any selling that’s going on by company insiders is being used to prudently cash up Montello’s treasury. There’s not much of a spread on the exercise of these warrants or options. Certainly nobody’s selling them just to pocket small amounts of money. We’ve generated over $650,000 that way so far to help in the financing of acquiring further land leases, optioning of additional land, and to cover any unforeseen additional costs.”
Davis stated emphatically: “A company looks to make a discovery to benefit itself, its joint venture partners, and its shareholders not competitors waiting to pounce when it is opportunistic as land prices can be driven up to unreasonable levels. We need to try to ensure that a discovery benefits us – not the competition or unaffiliated 3rd parties.”
Montello Resources trades on the TSX Venture under the symbol MEO. The company has approximately 148,575,386 shares outstanding and a year high-low of $0.165 - $0.085. Find out more at www.montello.com
This article is intended for information purposes only, and is not a recommendation to buy or sell the equities of any company mentioned herein. It is based on sources believed to be reliable, but no warranty as to accuracy is expressed or implied. The opinions expressed in the article are those of the author except where statements are attributed to individuals other than the author, in which case the opinions are those of the individual to whom they are attributed.
