Last time I talked to Charles Bitters, I asked him what formation was producing the huge amount of gas coming out of the Palo Pinto well in the national news that caught on fire, and is still burning out of control. He said it was the Conglomerate formation.
AMEP has a very significant amount of Bend Conglomerate coverage under their leases, but not a 100 percent blanket coverage like it does have on the Barnett Shale, and pretty much the Marble Falls. That said, the Bend Conglomerate is an important pay zone on much of AMEP's leases, and already has some older wells on the leases that were producing NG out of the Bend Conglomerate before the leases were obtained by AMEP. The various Conglomerate gas formations are below the shallower Strawn Sands, but above the Marble Falls limestone formation that caps the Barnett Shale formation. These Conglomerate wells, along with the Strawn Sands formation wells, are the shallower wells producing in the upper pay zones, and holding the leases without having to renew.
Other conglomerate wells in the Palo Pinto area have had initial production rates of over 1,000,000 MCF per day, making this another important pay zone on AMEP's leases that will be developed without the expense of going deep.
Although the prolific and headline grabbing Barnett Shale formation is the reason why so many have invested in AMEP, including myself, do not overlook the other proven producing shallower formations like the Strawn Sands with multiple payzone depths, the various Conglomerates including the Bend Conglomerate. Then there is also the deeper Marble Falls, another proven prolific producer on AMEP's leases that has the potential to rival some Barnett wells.
It was this information that I gathered while in Mineral Wells Texas, along with seeing the condition of the newly acquired drilling rig that moved me to increase my AMEP position substantially after returning home.
2006 will be a milestone year for AMEP, as it starts its drilling program in early January. I am expecting the SP to well exceed the 308 percent growth it had in 2005 with just the acquisition of the rig.
Good luck and good DD all longs.
… %^ greeneyedhawk
AI
