Doug, SEV is a very intriguing company. Although SEV has huge reserves in Colombia, they drilled five straight losers and as a result their stock dropped precipitously from 9 in January to less than 4 (its 52 week high is 26 5/8). SEV recently fired all their Colombian managers and consultants and hired a team from ARCO. The previous management drilled vertical wells and the ARCO team is drilling horizontal wells.
Following are excerpts from one poster (Oilperson) on the Yahoo SEV thread:
1) there is an estimated 5 billion bbls. of oil in the field ("official" proven reserves are estimated and booked at 38 million bbl of oil).
2) The Columbian fields are fractured carbonate reservoirs which should be developed using horizontal drilling.
3) With minimal expense, SEV can now re-enter the five questionable wells and drill a lateral, making a total of eleven (11) wells, easily capable of 50,000 BOPD+ sustained production. Once this is done, the reservoir guys give SEV all their "P's" back.
4) Here in Texas, one could mill a 60' section inside of casing, set a kickoff plug, and then drill a 1,000' lateral in zone for probably $300K, and take 9 days from start to finish. Problem is we ain't in Texas. Oilperson's guess for a job such as this in Colombia would take 12-14 days and cost somewhere in the $500K ($750K tops) depending on problems encountered. Like Oilperson has previously said, it would take a nominal amount, considering the amount already invested, to convert the five questionable wells to world class producers. 50,000 BOPD would then be a "piece of cake".
5) Regarding Oilperson's comment that oil is worth $4 - $5 in the ground, this range is what properties historically transact for on the open market. No reason to expect anything different here. BTW, this value range assumes that the property is actually producing. This value range will yield somewhere in the 15% ROI area should you care to view it from a financial perspective, which is, of course, how you should be viewing it.
The ARCO team is acidizing one well that was reworked using horizontal drilling. Flow testing will begin after the acidization (which will be done carefully to avoid damage to the infrastructure). Another poster said to expect to see about 1500 bopd trucked off, which means high flows for short periods of time.
Doug, my question to you and others with technical expertise is how do these statements jive with your experience? For example, is horizontal drilling best for fractured carbonate reservoirs? Will it only cost about $500k to $750 k per well to utilize horizontal drilling in existing wells? Is oil in the ground worth $4 - $5? |
