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Strategies & Market Trends : Bosco & Crossy's stock picks,talk area

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To: LoneClone who wrote (37061)

3/14/2012 1:19:53 PM

From: LoneClone

of 37387

Also from IH

Msg 14005 of 14072 at 3/13/2012 9:48:00 PM by

belt

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some initial thoughts...

Much has already been covered but I'll fill in a few blanks and share my initial thoughts. From speaking with management, others and more DD my sentiments generally go along with Inoseit's. According to management, this oligocene well will be a good producer without any fracture stimulation and has been cased for production. They also discovered oil in the eocene (to which they drilled total depth). Part of my suggestion in my post from last week was to treat this four well commitment as a testing ground for Bua Ban South and not to get too caught up on a well to well basis to determine the entire field. These are all separate fault blocks - and anything can happen...they will learn the geology and oil migration on a well to well basis. The first two wells are both down dip (G01 and G02) so we may see a similar result from the second well on the other side of the fault. From this initial well - the hopes now for miocene migration by management lie more with the two 'upthrown' blocks that Bartley is referring to in his comments (G03 and G04).Why they chose to drill the wells in this order is a head scratcher in hindsight as it should have been more clear from the outset that the reverse order may fit the miocene hype better.

Anyhow - every field they have encountered offers new obstacles and new opportunities. When they began drilling Bua Ban North it was a few wells in before management and later the market began to understand what might be at stake (the second well at BBN was actually a duster and had folks thinking it was going to be a bust of a field but helped with overall understanding). This lower oligocene could be much bigger at BBS than originally anticipated - we saw siginificant upgrades to the miocene at BBN after initial discoveries (which continue to grow to this day). Macquarie is saying 5-10MB recoverable from oligocene here - that could grow yet. The miocene is also far from dead here - the downdip thus far has not proven successful but the oil has migrated somewhere. Management is now speculating it may have accumulated to the two upthrown blocks (G03 & G04). My suspicion is we will be surprised again - possibly on each well going forward - this basin has a habit of doing that. If management is right and this well can produce at 1000bopd - it will pay out its costs in about a month. Most companies would yearn for that kind of disappointment. One down and at least three to go at BBS - then back up to continue hammering away at further miocene reserves and production at BBN.

Not going to predict share price action on this as we saw what seemed to be a lot of manipulation last week down to $18 and then back again. The G02 has spudded. We should have results in about a week's time....

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