Todays PR provides a batch of important information and follow up that was indicated from the 11/01/07 and for me validates that HMGP is on a proper business course and KAA is taking the issue at hand including good follow-up of prior going forward statements now that the operation is recovering from the floods and the time needed to get the corrective actions completed.
This is my take on today's PR.
1. "The Tebbens-Hemi-2 oil well flushed in at 43 bbls per day after the fracing process was completed on our lease in Woodson County, KS. We are baselining this new oil well to maximize efficient production."
Isn't this what many wanted an updated operational PR that includes an actual production number? And this is only the Tebbens-Hemi-2 well!!! IMO this is real and will lead in assisting the anticpated results that HMGP and the geological reports have been alluding too.
2. "The water injection well is allowing us to not only dispose of the water from new wells but also to continue to efficiently de-water the leases with mature re-worked wells in Woodson County, KS."
Read deeper into this and it appears that HMGP is utlizing the water injection process as a double benefit which again will pay better dividends down the road. When a water injection process is utilized the strategy of placement becomes huge if the injection process can be placed in an area that works "downstream". Yes it may have taken a longer time to get the permit in place but if this "placement" of the permit now influences the de-water of multiple wells "downstream" then the extra time will be well worth it as production continues to kick in.
3. "Geological information obtained from cutting samples and open hole logging of this new well and the water injection well will be used in proving up additional BOE reserves. These wells allowed us to discover several coal methane beds (CBM) that are "behind pipe" and other deeper oil pay zones, which are generally blanket geological formations in this area of Kansas. These additional oil and gas reserves will be added to the independent reserve report values as they are drilled and proved up."
Simply put: Added intelligence = added value the report reserves
4. "Hemi is acquiring additional leases in three states that are either adjoining or in close proximity to leases which have mature or producing oil wells. Hemi is evaluating the best use of its resources in order to determine in which state they will drill the next new oil well this winter. Management believes new wells to be drilled on these new leases will yield bbls per day significantly higher than our last new well in Kansas."
Growth and expansion continues to be a focus of HMGP but a focus that has a new benchmark equal to or greater than the potential of it's current productive leases. Think about this potential and what this could mean going forward.
5. We continue to implement our business plan and are allocating resources to begin expanding drilling to other states in addition to Kansas. Management knows that the total value of the oil and gas reserves on our leases in Kansas, BOE values on leases in four other states, an extensive library of geological information and management experience confirms that the undervalued stock market price is irrational considering the values and fundamentals of all its assets. Management and groups assisting Hemi are still addressing issues involving the artificially low market cap.
Pure confidence stated by management both current and going forward.
This is why I have stayed the course with HMGP. The fundamentals speak for themselves and in due time the results will now start to catch up and validate these fundamentals with results that will bring HMGP to a proper valuation of its assets and the ultimate production results of it's proven reserves.
Kels
AI
