IOC on BETM radar. ivolatility.com
8bits gets credit for finding the event. Message 22875183 which is...
equityresearch.li
Major discovery indicated at Elk wildcat in Papau New Guinea. (Updated September 26th, 2006)
Six weeks ago Interoil's Elk Wildcat well in Papau New Guinea cut 6 meters of pay which open flow tested 150 Mmcf gas per day. Up until a few days ago work focused on stabilizing the well so that it could drill deeper into a seismicly defined structure which extends from 1694 meters to 3000 meters. The clastics sealed strucutre is characherized by huge porosity and permiability. Roughly 40 barrels of condensate is produced for every 1 Mmcf ofgas production. The condensate is expected to sell at a premium to the WTI price while the natural gas would go to a planned gas liquification plant. Seismic shows th structure to extend as much as 100 square Km and the next well is planned approximately 8 miles away. Oil reservoirs in Papau New Guinea typically have a large high pressure gas cap and the compnay hopes this will be the case as it drills deeper into the formation. Industry observers expect net pay will be from 200 to 300 meters. InterOil looks to have, at the very least, made a major gas discovery just as we are near a cyclic bottom for oil prices. We rate its shares are strong buy.
InterOil Corporation is a vertically Integrated Oil and Gas Company in Papua New Guinea and comprise oil refinery, upstream petroleum exploration licenses, and retail and commercial distribution assets. It has Papua New Guinea's only commercial refinery, a network of retail and wholesale petroleum distribution outlets and 8.8 million acres of highly prospective exploration leases. The upstream 8 million acres include a new oil system discovered with two distinctive sandstone reservoirs (Pale and Subu sandstones) in one of five "high impact" wildcat wells it was drilling. Most recently IOC announced that a drill stem test at its Elk exploration discovery on the acreage a sweet API 43.5 degree oil in addition to high pressure gas flows at the time of the DST. We are encouraged as the existence of gas liquids at the top 200 feet of the limestone formation increases the probability that an oil reservoir will exist in the underlying 650 meters of limestone structure. It remains however, early days and additional testing will be required to establish if at minimum a commercial gas discovery has been made and if so its ultimate reservoir size. Because of the high pressures the company is adding equipment to accommodate the wells high pressures before drilling deeper. IOC's midstream assets are principally a 32,500 bpd commercial oil refinery. First sale of refined product commenced in early August, 2004. In 2005 teething problems combined with Hurricane Katrina-related product price volatility led to a $39.3 million dollar loss at the refinery. The money losing operation is expected to become profitable this this year as it increases the amount of high value production. Most of the refinery's products are secured by off-take contracts with Shell and InterOil's wholly-owned subsidiary, InterOil Products Limited. British Petroleum(Singapore) is InterOil's agent for crude oil supplied to the refinery. Interoil is also acquiring Royal Dutch Shell's retail distribution network. IOC's midstream assets include a 32,500 bpd commercial oil refinery. It's existing infrastructure is amendable to the onshore processing of natural gas. Last May 5, 2006 Interoil announced it had raised US$140 million to construct further facilities for the processing of natural gas liquids . Downstream assets include the operated InterOil Products Ltd. and Shell Retail and Commercial Distribution Assets Acquisition. Risk rating: Speculative, Action: strong buy .
marketwire.com
InterOil Corporation: Elk -1 ST -1 well Drilling Report No. 10
TORONTO, ONTARIO -- (MARKET WIRE) -- September 15, 2006 -- InterOil Corporation (TSX: IOL) (AMEX: IOC):
Elk Prospect
Type:
Oil / Gas exploration well
Location:
PPL 238, Eastern Papua Basin
145 degrees 08' 27.6" E; 007 degrees 06' 0.5" S
Current Status:
Drilled the target formation to 5,564 feet (1,696 meters). Successfully drilled out through all the temporary safety plugs (this includes the drilling out of the float shoe, cement plug, cast iron bridge plug and the gunk plug) that were required to hold back the high pressure gas and secure the well. Gas was present while drilling through the bottom of the gunk plug.
Currently preparing to run Gyro surveys to determine 3-D location of well bore which was not possible prior to arrival of new high pressure equipment.
Forward plan:
- Continue drilling through the target zone using conventional and 'Managed Pressure Drilling' (MPD) techniques.
- Log and evaluate the target reservoir.
Activities since last report:
The well was pressure controlled; See detailed Elk presentation at www.interoil.com. Activities consisted of:
- Ran and cemented 7" casing with the Weatherford's Downhole Deployment Valve (DDV) to the top of the 7" liner at 3,258 feet (993 meters);
- Rigged-up the new equipment for high gas pressure drilling, including raising the rig and all equipment 2 feet higher to allow for the installation of new high pressure equipment.
Past Data:
The following information is the result of DST #1 as reported earlier:
Wellhead gas pressure of 3,150 psi, Calculated kh (permeability feet) of 3,000 md-ft., Estimated Absolute Open Flow (AOF) was calculated at 150MMCFPD.(1)
Set 20" conductor at 15 feet (5 meters). Drilled 17 1/2" hole to 1,007 feet (307 meters) and ran 13 3/8" surface casing. Set 9 5/8" casing at 3,478 feet (1,060 meters). Ran 7" liner (casing) to 5,393 feet (1,640 meters) and cemented. Drilled a 6 1/4 inch hole into the transitional Marl/Puri Limestone formations to 5,558 feet (1,694 meters). While circulating out the gas kick, the well flowed gas to surface at 2,000 psi at an estimated of 30 - 50MMCFPD.
(1) Note: These results are based on surface pressures and gas flow rates only. The well flowed for approximately 25 hours and the well test calculations were based on the measured data obtained over the final 3 hours of flow.
Planned Total Depth:
Approximately 9,843 feet (3,000 meters).
Operator:
InterOil and affiliates - 68.25% working interest, drilling partners interest at 31.75%, subject to PNG government participation.
Prospect Description:
This well is targeting the Puri/Mendi fractured limestone.
Cautionary Statements
This press release contains forward-looking statements as defined in U.S. federal and Canadian securities laws. All statements, other than statements of historical facts, included in this release are forward-looking statements. Forward-looking statements include, without limitation, statements regarding our drilling plans, plans for expanding our business segments, business strategy, plans and objectives for future operations, future capital and other expenditures, and those statements preceded by, followed by or that otherwise include the words "may," "plans'" "believe," "expects," "anticipates," "intends," "estimates" or similar expressions or variations on such expressions. Each forward-looking statement reflects our current view of future events and is subject to risks, uncertainties and other factors that could cause our actual results to differ materially from any results expressed or implied by our forward-looking statements. These risks and uncertainties include, but are not limited to, the ability of our refinery to operate at full capacity and to operate profitability; uncertainty involving the geology of oil and gas deposits and reserve estimates; delays and changes in plans with respect to exploration or development projects or capital expenditures; political, legal and economic risks related to Papua New Guinea; the impact of competition; the volatility of prices for crude oil and the volatility of the difference between our purchase price of crude oil feedstocks and the sales price of our refined products; the uncertainty of our ability to attract capital; and the risks described under the heading "Risk Factors" in our 2005 Annual Information Form dated March 31, 2006.
Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of the assumptions could be inaccurate, and, therefore, we cannot assure you that the forward-looking statements included in this MD&A will prove to be accurate. In light of the significant uncertainties inherent in our forward-looking statements, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. Except as may be required by applicable law, we undertake no obligation to publicly update or advise of any change in any forward-looking statement, whether as a result of new information, future events or otherwise. Our forward-looking statements are expressly qualified in their entirety by this cautionary statement.
We currently have no reserves as defined in Canadian National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities. All information contained herein regarding resources are references to undiscovered resources under Canadian National Instrument 51-101, whether stated or not.
This is the first time an O&G company has made it on to BETM!! I hope this is not the last time either. |
