Ann: Southern Cooper Basin Gas Project Operations Update, page-17

There is quite a bit of new info in there.

First there is confirmation that as I predicted, the non-frac wells wouldn't perform well enough to act as shield wells and will need to be fracced.

The comment about needing to get below 500 psi, together with the announcement of gas content (8-11m3/t, also as I have previously estimated) and previously reported saturation allows us to reconstruct the isotherms. Langmuir Pressure (PL) must be very low, around 1.5 MPa by my estimate. Langmuir Volume (VL) seems to be around 12m3/t which is what I predicted previously.

It basically indicates that the isotherm is very flat at high pressures, i.e. not very much gas is released even for quite large drops in pressure. This could explain why we haven't seen much gas flow yet (and let's not delude ourselves - flow rates are obviously very low at this point in time, even if management are not reporting exact numbers).

This is both a good news and bad news. Good news because it gives hope that when they do achieve that pressure reduction, they should see a massive increase in gas flows. But bad news, because depressurising that reservoir down to less than 500 psi is going to be a very big task and going to take a long time, particularly because once you start desorbing gas you find that the gas coming off the coals provides pressure support and slows down the pressure drop.

So those shield wells are going to become very important. When I have some time I will do some more work on my model as the pieces are starting to come together. There is still a big uncertainty over drainage area though, which is what is ultimately going to decide EUR per well. There are situations you could model where the well starts off like this and then gas flow goes through the roof (if there is a large drainage area and good connectivity) or there are situations where the well starts off like this and then dies in both water and gas flow (because there is only a small drainage area reduced to the frac area).

The language of the ann does sound optimistic though - I think STX are pretty confident.