Replies to post #3041 on Petro Rio S.A. ADR fka HRPTY

[Northsun0]

Question regarding HRT's ownership of their drilling rig:

BTG Pactual CTVM SA Thank you very much and Milton just a follow-up question please. You have an integrated drilling platform, could you give us an idea of the costs involved in the wells we drilled, I mentioned it will be lower in the regular costs.

Milton Romeu Franke:
Definitely it’s good of you to bring up this point. We believe that this platform – the sixth platform that we haven’t been accessed for that field, it is quite helpful, because the completion of the wells are dry completion – dry completion in general make operations easier with reentries in these wells. We are currently performing an intervention to restore the production of one given well, and I believe that our performance is being quite exceptional in terms of time and number of days necessary for this kind of operation to be conducted.

The platform obviously has a top drive rig, and this is a rig that drills the wells, all of the wells in the field. And we have an [indiscernible] of our cost involved. We have to update and review and service all of the rig equipment and so that we won’t to need to having stoppage during the drilling process.

The wells that we intent to drill can be drilled with this rig. Our initial estimate is that each well will cost around R$35 million, total cost of 100% to be divided by the joint venture partners. Our cost to be shared by the joint venture partners and we think that with the studies that we are conducting and we have reprocess, so all of the seismic data for the fields, and our intention is to review the prospect and perhaps drill additional wells, but we haven’t made the decision yet.

So given the fact that we have the rig that has been amortized and included in the cost of the field. Obviously, we have wells that can be drilled at a lower cost than if we needed another platform, another rig to drill. And so this is the kind of information we can disclose for now.

[DrillaHill]

BVE, great post!!

Just want to say there are still
some valuable non-core assets for sale:

Helicopters & Airplanes could add ~US$20MM (~R$45MM)
IPEX (object of reevaluation)

and of course there is potentially
huge cash upside from farmouts expected to happen in 2014
from Polvo, Namibia & Solimoes.

I did like the comments on Namibia,
I think next farmout will be most likely in
Walvis Basin/ PEL 23 (two Blocks),
where HRT identified new propects, following the Wingat Light Oil discovery
and/or Orange Basin/PEL 22 (three Blocks)
where we have the Multi Billion Dollar prospect Meerkat:



this group of ten amplitude anomalies represents a package of total thickness of 600 meters, 1/3 of which, that is, around 200 meters, we believe has presence of reservoirs able to produce hydrocarbons. The prospective reservoirs, the prospective resources of Meerkat, only ten of these amplitude anomalies correspond to around 2.7 billion barrels; again, P10 reservoir with no risk applied.
It’s important to note that the Meerkat project is in water depths of 160 meters, so these are relatively shallow waters. Most importantly, it can be tested through a well just 2,800 meters deep. That’s a shallow well, a well that can be quickly drilled, a well of reasonable cost to test such large volume of oil.
In addition, for us to drill until Meerkat, the main targets of Meerkat, while we are drilling it, we will also test another prospect, which we call Sitatunga, and this prospect is also quite large. It doesn’t have ten stacked amplitude anomalies, but it has four, and these amplitude anomalies are as consistent as those of Meerkat. And Sitatunga, by itself, has a prospective resource of nearly 2.3 billion barrels. So, it will be a single well to test Sitatunga and Meerkat. We are going to drill up to 2,800 meters of depth only, in water depths of 160 meters, and we are going to test a total of 5 billion barrels of P10 prospective resource, with no risk applied.
This combines Sitatunga and Meerkat – 2.3 for Sitatunga and 2.7 for Meerkat. Prospects like these are hard to find. I have 34 years of experience, acting especially in South Atlantic, and I worked with a prospect of Meerkat’s quality only a few times. We are confident that Meerkat will bring us very positive and encouraging results.
...


Maybe Galp is interested to increase their stake
and drill new propects identified within the Shallower Petroleum System, where light oil had been recovered:

Wingat-1 well drilling confirmed the existence of an active petroleum system with the recovery of light oil sample with 42° API and it penetrated two thick intervals with source rocks, both in the oil window
New prospects have already been identified in the 3D seismic on PEL 23, after the drilling results of the light oil sub-commercial well in the Wingat prospect
Continuing with the laboratory tests of oil, gas, cuttings and sidewall samples to study the source rocks and reservoir, sampled in the three drilled wells
Review, reprocessing and analysis of approximately 9.1 thousand km2 of 3D seismic surveys on the four PELs, plus 2D seismic data from previous surveys, with the integration and calibration with borehole data, geophysical well log and fluid and rock analysis in order to define the potential of each block and the selection of new prospects to be drilled in a future drilling campaign
Continuing with the farm-down process

GLA

[powerwalker]

BVE, thank you for your thoughts. One correction per the transcript on Seeking Alpha is that the Polvo drilling costs will be R$35 million per well, nor US$.

I think you are too hopeful that the 1Q CC will be any more revealing from these guys. I thought they were good at not answering the questions with any new information or insight.

They did not address the status of selling 30% to BWO, which raises the question as to whether it will happen or not. Is the daily decline in production from last year a deal breaker?

But you are right that, especially if you have been here for a while, it is not practical and too pre-mature to sell now.