Bob and ALL - Here are my questions and notes I took at the AGM and Presentation
1.. How does SOP prove production without drilling (what seismic does SOP have)
SOP must drill 400 feet into the Temblor to have "Earned Interest". SOP has the same seismic that Berkley made their decisions on
2.. What is CA law re drilling adjacent to existing production
California law is still old west where "right of Capture" is still the method used today
3.. Royalties, if CC produces do they have to pay SOP
Only if agreed between SOP and CC
4.. Royalties, if SOP "ditto" pay CC
As #2
5.. Royalties, if SOP & CC produce do they both pay royalties to the original lease holder(s) (grannies on their porch's with the shotguns) Supplementary question, what is the total land area of the CC how many mineral rights holders are there?
Granny sitting on her porch both barrels are loaded, waiting for SOP to come by with a check (just one royalty payment) the royalty payment is 1/6, approx. 16%
6.. Does SOP have to drill within a given time, Supplementary question, if SOP doesn't drill within a specified time line (X months/days) , how long is will SOP retain rights for future exploration
Within 10 days after the release of the Berkley rig SOP must elect to drill, and 20 days after notification of "election to drill" SOP will/must advance AFE monies
7.. What is the total look see going to cost if CC does not produce (dry hole). Supplementary question, What will the cost be to drill, test and complete a well on the 40 acres approx.
SOP will pay $100,000.00 dollars for the looks see, if CC is a dud, it is pretty cheap looking IMHO. The cost to drill a well is 7 million plus contingency
8.. Surface access, does SOP have access?, if not how will you produce? Supplementary question, estimated cost for pipelines
SOP has full road and pipeline access, ABA (the operator) is currently talking with CA Gas for pipeline access.
"6000 feet to pipeline access" my estimate for pipeline costs are $150.00 per foot installed. Plus costs for any surface equipment, i.e. dehydrators, refrigeration, pig traps, headers, knockout tanks, flares etc. If the gas is clean and dry costs would be minimal. If SOP elected to strip the "K" values off the gas for sale to others you would need a gas plant capable of a through put of 50 mmcfd
9.. Where are existing facilities (distance, capacity etc, etc. Supplementary question, if CC produces and ships gas to existing facility (close proximity and at capacity) what is the distance to next process facility for SOP products can existing pipelines handle SOP production. 2nd Supplementary question, potential for immediate sales?
YES, Chevron built a complete gas plant for the Stevens zone, which lies directly above the Temblor 2000 feet shallower, (This was probably the gas that Red Rocket of KOB thread, talked about 2 or 3 weeks back) SOP has the mineral rights to the Stevens where Berkley does not. (Stevens produces retrograde condensate) CA gas would buy all products see #8
10. Give the total land size of the CC .. 2 wells CC/SOP 50/50 if CC drills additional wells on their land will SOP benefit from those wells or vice versa 2 wells each, each well in theory produces 25% of the reserve etc. Supplementary question how many wells does SOP expect to
drill on the 40 acres?
SOP will only be drilling one well on the 40 acres
11. Where does the SOP lease lay relative to the CC's location. Is it "updip", "downdip" or "along the strike". Supplementary question, how do you know?
SOP land is NNE of the Berkley well on a down dip. SOP has the same seismic that Berkley had to evaluate their well. Based on the survey I saw the down dip is approx. 3 to 500 feet deeper than CC, Seismic data same as Berkley
12. Who owns the balance of the section that SOP has 40 acres of?
Berkley owns all land surrounding the SOP 40 acres
13. Forced Pooling and voluntary, will SOP try to establish "voluntary pooling?)
There is no "Forced Pooling in California, SOP does not plan to discuss "Voluntary Pooling" at this time
14. If SOP is willing to do a "voluntary pooling" with CC (or whomever holds the balance of the section). That would save SOP a lot of time pulling together your own partners and would leave SOP with 1/16th total interest in the CC and funding of the current and new wells.
See question #1 they must drill (at this time) I guess like everything else if the $$$$$$ are right.
i.e., SOP could be able to produce up to 50% of the Temblor, if Berkley agrees to a 50/50 split for the life of the CC, I could see SOP agreeing to something like that...
15.. What percent of ownership will SOP retain from a JV
SOP will retain a minimum of 25% of the well and monies generated, I have yet to determine if SOP will take a reduced fee until after pay out. Estimated less than one year for pay out.
16. How will SOP fund their portion of the JV, or will the other participants pay a premium to SOP there by paying for SOP's portion?
The JV partners will pay a premium to cover any and all costs applicable to SOP
17. What is the size of the standard "drilling spacing unit" for deep Temblor gas on this prospect. Is it 640 acres, 1/2 section, other ??
640 acres is the number that was mentioned
18. The target zone is it "Apex"? or a percent of the whole? or ??
First guy in with the straw gets most, as forced pooling is not required by CA law total recovery of whatever flows in or is there at present "total capture" is the correct term I believe
19. CC is predicted to have a reserve of 3 Trillion "TCF" of gas, what estimate does SOP have for their well,? Supplementary question, would the value be considered part of the CC reserve estimate.
SOP, says 1 Trillion, but who really knows
20. What value does SOP put on proved, probable and estimated reserves
(gas _.50__, oil _5.00__)
Additional Answers
The rig that will drill the SOP is the rig currently drilling the CC, SOP will as a result of obtaining the Nabor's rig this brings the expertise of what it took to drill the CC, another freebee for SOP? ABA also carries 40million in insurance against blowout.
Rig bids are out on the Metagufa #2 well, and should be in shortly, also bids for cost analysis for pipeline to produce the Met #1 & #2
The way it sounds NOW is the Cano Caranal area will be drilled this 4th quarter too, land has been offered, and SOP will farm out the area, if ole Arman Hammer was around we would probably be drilling now.
I had a friend with me at the presentation, he is a production engineer with a major O&G co in Calgary, and was very impressed with SOP presentation and personnel.
Never in all the time I was there did I hear one word of hype.
The feeling I got from talking to SOP representatives was the JV for the CC is fully taken, and more... Lets hope for some well known names (EXXON, GULF, OXY, CDN HUNTER, SHELL,)xyz????
There are additional California prospects that SOP is looking at
Regards
Taff |
