But , at this conference , in particular , I mentioned that I also am attracted by things that use lots of numbers .
Boy does Oil & Gas Exploration Financing these days . First , there is the macro economic that Oil ( but not Gas ) prices are down to inflation adjusted price of around 4$ % Brl last seen in `72 . Lots of Oil plays have been mothballed because they require a price greater than 15$ % .
An offsetting consequence is that drilling and services are available at cut rates , eg , 40K$ % day for what used to be 125K$ .
The commodity nature of energy makes these projects eminently quant-modelable Finacial gambles .

A basic parameter in these gambles is the probability of a sucessfull hole . Technology , particularly 3D seismic analysis ( a major market for megaFLOPs ) continues to revolutionize the cost structure of the business . Jim Sigmon of The Exploration Co ( TXCO ) has accomplished the remarkable feat of hitting gas in 8 out of their last 8 drills in limestone reefs in limestone matrix . Amazing . I got the impression that for many types of drilling , a sucess rate of .3 was considered very good . The odds of 8 out of 8 , given odds of .3 or .5 , are | % .3 .5 * 8 |>| 15241.58 256 | to 1 .

 
  ============================: THU.JAN,990114 :============================
TheExploration Co ( TXCO ) | JimSigmon
|10:9|  Mavrick Ct TX Gas - Pearsall High Presure Gas  70k acres
 5500 ft | 3D seizmic on ho  seeing porosity  . limestone in limest reefs .
  some water . Have got  1. x 8 wells . $ flow alows 1 well % mo .
   Production  . gross produc   9M - 120M cubic ft % day .
 High deliverablity - followed . resevours subject to damage by too hi rate .
 400k$ , pay back in 4 mo .  2 pipelines available .
 170 B condensate on 1M cf % d well .
 3000 lb blowout protector .  horizontal drilling & fraging .
 Everything on books proved producing . Trillions of CF out of Gulf Jurassic
 basins . Looking to drill deep

  Price West Tx Oil eo96 26 , now 10  $%B .
  Price was 8 , now 1 . inverse from Rev .
 220 K $ . . Operational earnings reached last Q .
 incurred . oil cost . .9 .1 G O rev . lifting cost ( gas oil ; .05 .5 ) % 1$
  . Gas up 3x in yr .
 15$ oil would get them back to work on that .
 1 well drains reef .
ChuckStrain: x couldn`t do what doing now 6 yrs .
 2 Geologists w PC
|10:58| Harken Energy (AMEX:HEC)  Colombia & CostaRica .
 MarcLouis : Long term prospect for oil good because new find way below
  consumption ( thru `89 ) . looking for BillionBarrel fields .
  44.5 MMBOE proven 980930 .  Middle Maqgdalena valley Columbia .
  Doubled reserves thru Columbia finds since eo97 .
 Constructing pipelines .
 158E6$ working cap .  19 Engineers , 6 geologists  & 4 geophysists .
 Strain : strong buy . now down to 2$ .
 1.4M acres in Colombia .
SteveVoss : Colombia contract sanctity . Investment grade sovergn credit rate
 No nationalization or tax confiscaton of energy assets . Uninterupted govt
 since `32 .
 Oil .25 of total exports ( > coffee ) . In there w BP , Exxon , Texaco ,
 Arco . BP made Prudhoe Bay size find .
 Bolivar Association Contract : | 6 - 7 M$ wells , down 6Kft then horizontal
  . have 2 10kBOE%D wells .
 Cambulos Assoc Contract . Need more pipeline . 3 y out .
 Alcaravan/Miradores Assoc .

 Various difficult drilling conditions .  Largest net acrage in Colombia
Rick : CostaRica : Army abolished in `48 . size of West Virginia .
 Oil seeps near Atlantic coast . Approvals up to Environmental impact
 statement .
 Harken w b drilling 1st new wells in 20 yrs . government patterned after US
 AGR .05 . 3.5M pop . Tax .3 . Reasonable Standard of Living .
 Importing oil from Colombia . Ready mkt . Driling offshore 1st .
 Abt size of Chevron Caspian .  3B B . 20Tcf gas .
 > 100k acre gathering area . Probably reef . 7kFt . not expensive to
 develop . |11:40| ?s . Resevour homogeneity ? expect very hi delivery rate
 if correct that is cretatious reef .
 Expect to be @ 50BB proved reserves by eo98 . among top 30 Petrol Cos .
 NKJ . Rick has worked on Costarica situation 20 yrs . Harken owns .2 .
 350M gross Brls . on small acrage .
 Currently trucking 5K B%D . Pipeline midyear+ .
 Capital budget 90M$ last yr . Bulavar w b 1st cash flow .
  Gaffney Kline predictions .
|12:0| |12:59| JohnWestergaard : ChuckStrain  : Some real money to be made .
 CGX :
 S&J :
 Evergreen :
 Harken :
 SevenSeas :
Make us resevoir engineers : Fractured resevoirs ( Austin chalk - produce for
 3 days & stop )
 Some really big ones ecofisk in North Sea 5B Brls . Saudi
 Porosity : cube .476 , rombus .259 | w uniform spheres .
 Permiablity in Darcys . 1 cc % sec thru 1cc^2 under 1 atmosphere . visco 1cp
  common .1 miliDarcy | put mud to seal bore hole .
 have lots of rocks w hi porosity but << permiability because of distributed
 obstructions .
Book by Dr Agular .
 3 major booms in Austin Chalk .  Boom 2 - hydrolic fracture .
 3rd - horizontal . Fractures fairly scarce .
 Fracture systems drain well . 0.65 in 1st yr .
 LaPaz Mara Venesuala - late `40s . Dome fracture zone 1B B LakeMaracabo
  SevenSeas , Harken  permeablity fantastic .
MikeStrain : CO Mines , `85 . ran 3D seismic .
 |13:25| Prove contribute to SCI , not just sponge . Don`t own anything other
  than Petro stocks .  inflation adj Oil prices : back to price ~ `72 : 4$
  Gas ~ 2$ % mcf . no winter spike .
  last yr .116 warmer than usual .
  .028 demand growth % yr .
  The buy long hold long , look for growth  5 - 10x over 2 yr .
  sell ~ net asset value . risk adjusted break up value .
  median   8.5 x price .
 Own 5-10 of 38 Cos in universe . Until this yr .2+ roi for portfolio .
|13:34| JohnW : Y2K : since eo`95 . HowardRubin - nov `95 described Y2K to
 prez & Gore . Gore couldn`t get it . Keep getting feel good stories : SS ,
 etc .  Dept of Graves in good shape .
 Now getting 1E6 hits % wk .  e-mail anticdotes from WW .
 Military biggest problem . Tankers highly computerized . Expects Y2K
 slowdown in movement . Nuclear facilities in good shape .
 Because of uncertainties , could have much higher oil .
 Will be having conf next yr in Feb instead of Jan .
|13:47|
|14:11| TexOil explorations &
 FrankLodzinski : ' Forward looking stmnt ' disclamer .  CPA by bkgrnd .
  Acqd several prospects & properly . spend .35 acq , .35 exploitatoin .3
  exploration . Short term focus on gas .
  Engaged 1st Union ( already stakeholder ) in raising cash for acqs .
 9M float on 39M shares .
 `99 goals : convert $10M debt to equity . raise $15-30M additional Equity &
  quasi-equity .
 25M$ capex . ( 2%3 acqs )  | Restore net income - ( lost ~ .7M$ `98 )
  expect w Sonat properties acq Oct , > 1M$ earning `99 .
 Reverse Stock Split ( 5 -> 1 or more ) .
`98 did :  gas , oil reserves up  ( 1+ ) 1.56 1.13  | Revenue up .45
 Production up  ( `oil  `gas ; 1.12 1.24 )
 Bought 9 fields in TX & LA .
 TexOil was pure 3D expolration , Clifwood added Capital stability .
 Big Corp mergers w lead to shakeout - consolidation layoffs .
 In `86 lot of good deals came out of majors .
 M&A has to be almost immediately accretive .
 Frank only takes about | 4000 x 12 |>| 48000 | out of company .
 Frank & JerryCrews formed Cliftwood .
 Pull up SEC on Hampton Resources to see Frank`s past sucess
 4 3D seismic studies in process .
 Big fan of getting everything out there in wrting .
 Oil in Hayes Nebraska .
 Diverse of  low cost & risk acqs .
 Got to have staying power , science , statistics .
 Risk mngtd exploration .
 Vlasic & Frank are taking 2.5 of of 25M$ offering . |15:0|
 Texoil leaderless .
|15:20|  cgxenergy.com  Guyana , deal w
 government . Good fiscal regime . .08 AIDS , Good Beer .
 4.5M acres Off shore 240 ft . | budgeted 2.4 M for seizmic , now $800k
 thinking of raising 1 - 1.5 M $ . could increase prob from .3 to .5 or
 better . Have one prospect interested in maybe drilling by eo99 .
  Uins  Riskc | 2884 x .09 |>| 259.56
DenisClement Dir & Prez . KereySully Dir . well respected in oil patch in
 Calgary .
DanFerrall Invest relation s
 DavidBarris consultant
 2 giant targets in Guana  > 500M Brls .
 turbidite fans -  45K 60k acres . 850MB P=.5 Reserves
  Lateral Closure > 600 Ft .
 globally running .3 sucess rates .
 Guyana tax bite much less than eg Venezuala feel would be economic @ 10$ BTI
WarrenWorkman VP Exploration . Only grp w all data on Guyana
 obligations , want to get seizmic done this spring . don`t have to drill to
 yr 5 .
 Canje source kitchen  | will test there
  125 K$ % day now 40K % day
 alternative : Jul Aug Auction of seizmic in Calgary  .
   recovery factors .27 - .5 | wrote 1st model n `75 .   TX , Fin modeling
   2-4 darcies .  |
|16:4| |16:19|
|16:20| Solana Petroleum JimTaylor Chmn : Columbia - Llanos Basid
  substantial experience | Cdn2.7M on 15M shares IPO last yr .
 weather drying . doing road work . Identify comercial reserves this yr .
 @ .7$Cdn . range .36 - .75 |  no head office .
 legal rep in Colombia . sanctity of contract record perfect .
 pro-business govt elected . peace initiative w guerella grps around country.
 Net exporter since mid `80s . o&g investments 4x since 88 .
 63 cos chasing 100 prospects .
 Ecopetrol state oil Co . Association contracts since `70s . originally .5 .5
  split . R-factor scale above 60M bbls production up to .75 on 200M.
  .2 royalty + .35   Corp tax rate of total .
 Real Oily country .  Do allow you to make some money & take it home .
 Sucess rate .27-.36 .
Aud : in top 6 Corrupt Countrys ?  . not like Russia , West Africa .
 pipelines in area hav 70 - 100K bls % day capacity .
 Grp discovered operated Oxy,s Canyo Limon proj (1.2B bls recoverable )
 Same structure comeing S frm Trinidad - on to Peru .  .26 success rate 95-7
 good .3 porosity , 1 darcy permiablity ,
 source rock abundant .  10K ft depth - no problems .
 Tapir . bought .38125 for .425M$ . 233K acres .
 Canyo .5 of 126Kacres for 1.1M$ for seismic .
 Surounded by producing oil fields including Harken .
 Putting rig on Mateguafa#1 , 90 ft of shows .
 Avg well 1k brl % day .  | Partners w Mohave , SevenSeas .
 w/i 30 days of drilling Mateguafa#1 wb anouncing results
 lanyos Basin produces .6 of Columbia oil .
 complete 50km 2D seismic this mo .
 Shell bought .5 Oxy find for 1B$ .
 Makes low gas cut . makes lots of kerosene .
 Crude .  -2 vs West Tx . so could expect 11$%B now . cost  $5 .
 22M  6 wells  6000B%D . wells inexpensive .
 net to Solana  18M$ .
 200MB target - cost 30m$ .
 On stream yr after declare commerciality .
 Expect to establish nearterm production bael w sustaining cash flow .
  $cdn .66 x US $ | Private placement .
 Mohave contract :  can opt out on any particular action .
 Parties intrested on buying in .
|17:7| well cost 1.5 - 2M$ + 1M$ if sucessful .
 Maracaibo 50 gravity segregation by depth .
  |17:13|

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