Received in an Email from Lajuanda Holder, CWEI Investor Relations; the following contains a lot of very good information:
Hi!
Ok! Finally an update! Also I failed to answer 1 of your questions. I'm not aware of any of the analysts changing their recommendations.
Some of this is in the 10Q. The North Giddings Block is now approx. 122,000 net acres (rounded). The farmins are approx. 44,000 net acres. The production was up above what analysts had estimated due to some wells (7) drilled in the northern part of the Giddings block and 2 wells drilled in the farmin acreage that came online at higher than expected rates of production. These wells are still under evaluation to see if the engineers believe these wells will continue to produce at higher levels than expected or if the decline of the production will be sharper than expected (I hope this makes sense). It's my understanding that this is not to be viewed as a negative or a positive statement because they just don't know what to expect. Production was up 10% for the six months and 12% for the quarter.
Production is not expected to jump as much from 2nd to 3rd qtr. as it did from 1st to 2nd qtr. The current success rate in the Cotton Valley Trend is estimated to be approx. 40%. There are 20 successful reef wells to date and 20 rigs currently operating in the play. The seismic shoot is about 85-90% complete and the quality of the data is exceptional. Management still expects to be able to release (conservatively) new on the results of the shoot in early November. I can't remember if I told you earlier -- CWEI still plans to drill the 1st CV well in 4th qtr. depending upon rig availability. You
can't reserve a rig until you have permitted a location which you can't do until you evaluate the 3-D seismic survey and choose a location.
CWEI traded shallow chalk acreage for 14% interest in 18,000 acres of deep rights (Cotton Valley) in an area adjacent to our acreage that Management and the Geologists believe is prime for Cotton Valley. I believe the details of this will be in the 3rd quarter 10Q. This acreage is in the current 3-D shoot. CWEI also traded 50% interest in the southwestern "Broughton Block" (close to one of the farmins) for 2,000 acres of deep rights and 6,200 acres of shallow rights (refer to your "Cotton Valley Reef Play map" that was in the Hanifen presentation in February). I don't have much detail on this right now.
The other projects:
Mississippi Salt Dome Program - 25 to 100% interest in 8 domes and CWEI is conducting the industry's first dome 3-D seismic shoot (this is a very small shoot). Mr. Williams has had some experience in this area many years ago and technological advances have cause the salt domes to be more profitable. Plan to participate in 3 wells in 1997 with interests ranging from 25 to 75%.
South Texas Program will be targeting the Wilcox formation which CWW has had a prior track record of success. CWEI has 75% interest in 2
prospects. May drill the first well in 4th quarter.
Louisiana Program will target the Sparta, Wilcox and Miocene formation. Mr. Williams also has a track record of success here in years prior to going public. Developing 9 prospects and expect to drill the 1st well in September. The prospect is ready to drill. We've been waiting on a rig for several weeks and don't expect to have one until later this month or Sept.
All three of these projects have significant potential.
Also if you saw the news release and/or the 10Q, you know that CWEI dropped a rig in the southern portion of the Gidding block. This portion of acreage is still under evaluation. The Austin Chalk in this area is marginally commercial at current oil prices, however, CWEI plans to test other formations (Georgetown and Buda). Because rigs are in short supply, CWEI basically "loaned" the rig to another company for a few months. Unfortunately, the rig couldn't be moved as far away as Louisiana where it's needed. It's also not the right kind of rig for the Louisiana drilling.
As I gain information that I can talk about, I'll update you. Thanks for your patience!
Sincerely,
Lajuanda |
