AI
Wednesday, August 27, 2008 12:43:11 PM
Commentary on the latest PR, Part3:
Please see the "disclaimer" at the top of part one.
The underlined portions represent the part of the PR I am focusing on, and the bold italics are my added commentary.
Please keep any resulting discussions, if any, civil and on-topic.
================================================
(cont'd from part 2)
President Keith A. Anderson issued this statement: "The Collins Hemi 1 well is exhibiting all the characteristic's of being a discovery well located on the southern flanks of the Cherry Creek trend, which appears to extend 4 to 10 miles north by northwest of this well. While the Collins Hemi 1 well has been said to sit right next to the Owl Creek, and is on that Owl Creek trend, it appears the more significant trend being mentioned here is the Cherry Creek Trend. The Weseloh and Driskell sites are on the Cherry Creek trend also, even though they are several miles away from the Collins. From the driving tour that I got during my last visit to Woodson county, many of the properties (most?) between the Collins and the Weseloh/Driskell sites are leased by Hemi. Taking into account what is said here about how far this trend extends, would indicate that Hemi has an awful lot of room to work with to take complete advantage of what has been discovered beginning on the Collins Hemi 1. Additionally it appears this well and our surrounding lease acreage maybe positioned on an anticlinal fault trapping mechanism. Already pretty much covered what this is, plus Mike_t posted a nice picture representation on the board the other day for this. We have discovered significant amounts of natural gas present in this field and are currently negotiating a market for this gas. Once we have established a market for this gas, shareholders should expect to see a dramatic increase in the oil and gas production over the choked back production numbers we currently are producing. It is my belief that with this large amount of gas, Hemi is in a strong negotiating position, to either explore options beyond the "pirates" that won't pay a fair value for the gas, or to perhaps persuade those that previously would not pay an equitable amount to now reconsider doing so, if they want this gas supply. This is the type of situation where Keith's and Craig's experience can really pay off, either with very creative alternatives, or excellent persuasion during negotiations, making sure it's a win-win situation for all involved. But the main point of this portion is that once they have somewhere to send all the gas, they will be able to go full-steam ahead without worrying about what to do with subsequent gas supplies that will no doubt come from successive wells along this trend. Production levels should easily increase significantly. Upon establishing a market for this natural gas we will aggressively continue drilling and development of Collins and other undeveloped lease acreage we have located along this trend, in a Southeast to a Northwestern pattern. Along with the increased production will come the increased ability to expand the drilling program along these trends. I'm assuming that their existing drilling contract will be used in this endeavor, but for each new well that comes on line, comes an expanded ability to drill even more. I would like to acknowledge we have taken more time than usual to complete this well, we have experienced weather delays and with the discovery of additional Coal Bed methane and conventional oil and gas pay-horizons present in this well. We chose the side of caution and await lab and engineering analysis/results before completing this well and putting it into production." If they had attempted to rush this well, and then found themselves in a position where they couldn't get through the mud and the muck to the well, they may have ended up with a very large environmental disaster on their hands. Unfortunately this well sits on an active flood plane close to a creek and there wasn't much they could do with it but be patient and then careful. In this case, at least it's turning out to have been worth it. Once the well is set up for full production, it will be on a raised platform so normal water issues will not be a problem. I'm sure the testing results they were/are waiting for will be useful in future wells, and probably has a role in establishing the market for the natural gas, as they will then have proof as to the quality of the gas product.
Hemi's very artificially low market cap is substantially below book value and below tangible asset values based on conservative oil and gas industry standards, especially when ongoing increasing undeveloped lease acreage valuations in 3 states and North Dakota's leases are factored in. All ongoing due diligence on leases' values in several states are continuing to move forward. Hemi has been cash flow positive and continues to be cash flow positive and is meeting all normal operating expenses from oil production.
DON'T BLINK!!!!
Please see the "disclaimer" at the top of part one.
The underlined portions represent the part of the PR I am focusing on, and the bold italics are my added commentary.
Please keep any resulting discussions, if any, civil and on-topic.
================================================
(cont'd from part 2)
President Keith A. Anderson issued this statement: "The Collins Hemi 1 well is exhibiting all the characteristic's of being a discovery well located on the southern flanks of the Cherry Creek trend, which appears to extend 4 to 10 miles north by northwest of this well. While the Collins Hemi 1 well has been said to sit right next to the Owl Creek, and is on that Owl Creek trend, it appears the more significant trend being mentioned here is the Cherry Creek Trend. The Weseloh and Driskell sites are on the Cherry Creek trend also, even though they are several miles away from the Collins. From the driving tour that I got during my last visit to Woodson county, many of the properties (most?) between the Collins and the Weseloh/Driskell sites are leased by Hemi. Taking into account what is said here about how far this trend extends, would indicate that Hemi has an awful lot of room to work with to take complete advantage of what has been discovered beginning on the Collins Hemi 1. Additionally it appears this well and our surrounding lease acreage maybe positioned on an anticlinal fault trapping mechanism. Already pretty much covered what this is, plus Mike_t posted a nice picture representation on the board the other day for this. We have discovered significant amounts of natural gas present in this field and are currently negotiating a market for this gas. Once we have established a market for this gas, shareholders should expect to see a dramatic increase in the oil and gas production over the choked back production numbers we currently are producing. It is my belief that with this large amount of gas, Hemi is in a strong negotiating position, to either explore options beyond the "pirates" that won't pay a fair value for the gas, or to perhaps persuade those that previously would not pay an equitable amount to now reconsider doing so, if they want this gas supply. This is the type of situation where Keith's and Craig's experience can really pay off, either with very creative alternatives, or excellent persuasion during negotiations, making sure it's a win-win situation for all involved. But the main point of this portion is that once they have somewhere to send all the gas, they will be able to go full-steam ahead without worrying about what to do with subsequent gas supplies that will no doubt come from successive wells along this trend. Production levels should easily increase significantly. Upon establishing a market for this natural gas we will aggressively continue drilling and development of Collins and other undeveloped lease acreage we have located along this trend, in a Southeast to a Northwestern pattern. Along with the increased production will come the increased ability to expand the drilling program along these trends. I'm assuming that their existing drilling contract will be used in this endeavor, but for each new well that comes on line, comes an expanded ability to drill even more. I would like to acknowledge we have taken more time than usual to complete this well, we have experienced weather delays and with the discovery of additional Coal Bed methane and conventional oil and gas pay-horizons present in this well. We chose the side of caution and await lab and engineering analysis/results before completing this well and putting it into production." If they had attempted to rush this well, and then found themselves in a position where they couldn't get through the mud and the muck to the well, they may have ended up with a very large environmental disaster on their hands. Unfortunately this well sits on an active flood plane close to a creek and there wasn't much they could do with it but be patient and then careful. In this case, at least it's turning out to have been worth it. Once the well is set up for full production, it will be on a raised platform so normal water issues will not be a problem. I'm sure the testing results they were/are waiting for will be useful in future wells, and probably has a role in establishing the market for the natural gas, as they will then have proof as to the quality of the gas product.
Hemi's very artificially low market cap is substantially below book value and below tangible asset values based on conservative oil and gas industry standards, especially when ongoing increasing undeveloped lease acreage valuations in 3 states and North Dakota's leases are factored in. All ongoing due diligence on leases' values in several states are continuing to move forward. Hemi has been cash flow positive and continues to be cash flow positive and is meeting all normal operating expenses from oil production.
DON'T BLINK!!!!
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