Hemi Energy Group Inc. (fka HMGP)

[bdahl385]

This talk today about the NG pipeline being 1/2 mile away from Collins lease started me to thinking about the desirability of bringing both the oil and gas to market simultaneously. Here I am referring to the CBM gas and not the normal NG found in the Squirrel zone of the Collins well. I became confused when reading a couple of comments KAA made about this. From the email post from KA dated 9/7/2008 that Kels posted a couple days ago:

"Nothing has changed there and each drill proves up or expands our proved CBM reserves along with the oil reserves. Reserves are everything in this business, hence the term where petro dollars come from and that will be what is sold in any future buyout not production. All you have to do is read the news and SEC filings of acquisition disclosures that the large gas producers have made. I am going to stay on this subject for a minute, if we do build a pipeline and start to sell gas, this is a very desirable thing in the eyes of a potential purchasor[sic], because there are few in the area allowing gas to be transported to market.

In 2005 when we acquired some of these leases, we learned to stimulate the oil zones and prove up the CBM zones would be much to big of an undertaking. We are talking $100,000,000 or more to do both. To prove up the and stimulate the oil reserves and to also prove up and produce the CBM (they cannot be co-mingled each needs its on[sic] borehole and specialized equipment)".

Source: http://investorshub.advfn.com/boards/read_msg.aspx?message_id=32268007

Now read this statement again from KA in a PR dated 5/14/2008:

"Hemi President Keith A. Anderson issued this statement: "The high crude oil and gasoline prices has impacted each and every American, as the world seeks alternative sources of energy and CBM gas is a renewable energy resource. With that thought in mind, Hemi has been drilling and developing wells, we have been employing the highest levels of the industry standards for drilling and completion techniques which will allow these wells to continue producing decades into the future. Due to the current economic climate we have focused on crude oil production, near term. While choosing to leave the CBM gas behind pipe as proved undeveloped reserves for future use. Converting the current oil wells into CBM gas wells or comingled CBM gas/Crude oil production wells will be a relatively simple, straight forward, low cost conversion of these bore holes."

Source: http://www.hemienergy.com/05-14-08.html