Nice post Optionsman -- got a few of those riding on Oilex.
1. With all evidence to date one would have to say it is a gas well producing condensate. As you say,
condensate wells GOR is usually between 900-3500scfg/1boo. Crude wells GOR about 200-900
scfg/1boo. Condensates usually have an API of 45 and higher. 77H API average 48.3, high of 50.1
and low of 43.6. On evidence one would lean strongly in favour of condensate v pure light crude.
Regardless, I still view it as a "wet" well. 120boo/1mmscfgd as reported is 60/40 wet v dry.
I would still be having a small punt {at long odds admittedly} on the possibility it could still be pure
light crude. Well 19z was 46.3 API and classed as an OIL well, that's just 2 below 77H's average and
and 1.3 above the 45 degrees that constitutes condensate. Also, I feel they shouldn't have
marked the sample bottle for 77H as OIL, prior to no announced results from testing. Also, the interesting
{almost caveat} in their statement ;
"The light crude oil is consistently measured in the range of API 45 – 50 degrees and therefore may be considered a condensate. However as seen in the accompanying photograph, Cambay-77H liquid hydrocarbon has the appearance of other Cambay crudes".
Another thing that doesn't quite gel is the previous Presentations given by Oilex state they anticipate
50% liquids & 50% gas from the Cambay acreage. Well at 120boo/1mmscfg that's 60/40, so they are
pretty accurate there. So, why after flowing back 77H were they exclaiming it was 300% more liquids
than they anticipated? They were expecting 30boo/1mmscfg or a ratio of 75% gas/ 25% oil then??
Anyway, the good news regardless is that 77H is a wet well that produces gas.
2. Pure light crude, even at an API of 39 {WTI} commands a premium price v condensate. I
think from memory that condensates at one stage were getting about $10 bbl less than
pure light crude. Not a big deal then. Also, although condensate reservoirs contain less oil per unit volume, they typically yield slightly higher oil recoveries than black-oil reservoirs because of their higher dissolved-gas content and lower oil viscosity. Ultimately, condensate reservoirs may yield greater oil reserves than black-oil reservoirs.
So increased chance of better pressure/flows and higher ultimate recovery of the oil/gas in place.
3. Don't quite remember calling for "bigger tubing". Just made the observation {as Joatman has also}
that "bigger" casings in the well-bore for FUTURE wells would improve flow. We would need bigger
casing if we get the chance to drill 1000m laterals v current 350m and 20 fracture stages v 8.
4. We can still make an assessment {in my view} as to what it takes to make 77H a commercial
well v a sub-marginal "concept" well. Just something for me to analyse when the eventual production
test flows DO come out and base my trading decision around that QUICKLY.
The general consensus from analysts and I think Oilex also is that for 77H to be commercial it
has to flow about 3.5-4mmscfgd. Targeting about 3bcfg per reservoir. Is this accurate?
Let's ASSUME then that 77H does in fact flow 4mmscfd. I will also assume that there are no declines
in flow over the 2 years it will take to extract 3bcfg. 4mmscfgd = $32K revenue per day {allow 330 days
production, 35 shut down for maintenance etc} Annual Gross Revenue = $10.5 million p/a. 2 years
gross revenue = $21 million. Oilex share 45% = 9.5 million over 2 years. 9.5 million minus 5.4 million {Oilex's
share of well} minus say $2.1 million admin, salaries etc leaves 2 million net revenue over 2 years LESS
40% corporate tax leaves 1.2 million NET profit over 2 years on an $8 million investment. ROI = 15%.
Commercial at this rate JUST.
That's probably why I think that 4mmscfgd is the MINIMUM for it to be commercial. If you allowed for
typical decline rates of 40% over the 1st year then upwards of 6mmscfd would be needed as an
initial 24 flow rate imo. Once again, 77H is only a concept well, at 350m lateral and 8 fractures. IF
77H could even flow at 2.5mmscfd on average I am sure we could easily double that with up to 3 x lateral
and frac stages on future wells. So, for me, even at 2.5mmscfgd 77H as a CONCEPT well would have
proven herself but not commercially. Enough to keep you in the game until bigger and smarter wells
can be drilled.
5. Silly to extrapolate I know, but gives us something to mull over. We may be doing a bit of that as it
will probably be a month before we can get to a post clean up production test. The SP will likely
drift. Ive enough confidence at this stage to buy more. I just threw in the "doubling" of the first 7 days
flow rate {60% frac fluids still remaining} as a reasonable guesstimate post clean up flow rate. Even it
improved 25% on the 1st 7 days it would put us around 2.5mmscfgd-- not commercial but CONCEPT
imo proven. This all assumes of course that the reservoir for 77H contains at least about 3bcfg or more
that can be extracted.
GLTAH
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