|Modified | DDT |>| SAT.JAN,990116,12:52-4 |||CoSy/Home ; CoSy/Current||© Coherent Systems Inc .|
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|