A blowout is high pressure gas or oil that is greater than the mud weight can hold. It doesn't necessarily mean big reserves. Look this 70% means actucally 35%. What will happen IF AND WHEN the lease is declared commerical, the government will become a 50% partner (most deals are like this). So if they sell part of their % it will go down further. Tengiz is producing for now only 200,000 bbl/day. THe sweeter the crude the higher the price, but then we don't know what they have, now do we.
I just called investor relations. Pretty hectic there right now. First off they said that the government has approved the transfer and Dow Jones News as reported it. In pressing for specific, I'm still not sure if this is a land job or on the Caspian Sea. That would be significant in terms of cost to drill a well. They still are in an evaluation stage on one prospect that is the largest of all identified. No potentialestimates as of yet. They are also talking to Household named drilling partners. I wonder what kind of deal that could be......
Let's go to some assumptions and a reality check. I'll base this assumption on another hotbed area back in '91, Yemen. We will further assume it is a land job. As this could end up a partnership of a differing % than it is today, say AIPN has 35% and a new partners have 35%, or whatever suits your fantasy du jour. The cost associated with drilling and exploration will be split by that %; ex: @$1 million that would be $350,000 cost @ a 35% stake. The cost to drill a well is based on rig availability. If no rig is available, then it would need to be shipped in. There is the first obstacle. This is a land ;ock area that has war faction that isn't known to you or I. Nonetheless, Chevron and CXY are there and drilling so it is possible. Naturally a drilling company will factor in the cost for the dayrate. That could be whatever. Offshore Gulf of MExico they are gong for $40,000/day!! Land jobs are somewhat cheaper. But then you are talking transporting this rig which can be 100's of truckloads. Then there is the tubular cost; casing. This depends on depth of the well to be drilled. That could be 2000' to 15,000'. Yes that means , 'The deeper the more expensive' Then there is loggin units, mud logging units, drilling fluid cost, cement units, communications, so forth and so forth. It is all part of the process.
I think that a 8000' well could cost $20 million to drill in this region (guess on my part). On a five well program, that would be $100 million. @ a 35% stake that cost is $35 million that AIPN would have to bring to the table JUST TO FIND OUT WHAT IS REALLY IN THE GROUND!! Where are they going to get that kind of backing for a speculation? Folks this is a high risk stock, in a known energy region. I hate to burst some bubbles, but betting the ranch on it could hurt you in the end. Bre-X just happen and this could be another Bre-X. THEY SIMPLY HAVE NOT DRILL A WELL@35% stake will, someone pay AIPN $35 million on speculation? Well stranger things happen in the patch, but hey just like that Texas oilman once said "I've been a millionaire a couple of different times, I promise to keep some the next time" IT's a BIG GAMBLE!!
Good luck to all. |
