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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: jim_p who wrote (74951)	9/28/2000 4:51:42 PM
From: JungleInvestor	Read Replies (1) \| Respond to of 95453

jim_p, any news from SEV is welcome since their IR department has been extremely lacking in the past. Some background: SEV finally passed all of the huge obstacles that the Colombian government put in their path and is now achieving significant revenues by trucking over 5,000 bbl/day. (Note: the obstacles were overcome after Dr. James Schlesinger, past Secretary of Energy and Defense, joined SEV's BOD). SEV's stock price fell off a cliff when they had 5 consecutive botched vertical wells (thefirst 5 were successful). SEV determined, after the five failures, horizontal, not vertical, was the best way to drill this highly fractured basin. They successfully recompleted one of the unsuccessful wells by drilling horizontally and achieved 7,000 bbl/day. SEV recently hired as drilling manager a 22 year BP employee who was head of BP's Colombian operations. When the 6E was originally drilled, freshwater flowed from overlying formations into the Cimarrona reservoir. Current redrilling of the 6E, which will include about 1,000 feet of lateral drilling, is expected to overcome this problem. The most important point in today's press release for me is what was not said. SEV drilled 8,000 feet and cut the window to begin the horizontal drilling, and the press release did NOT mention any water problems. The successfully completed SEV wells had some amazing production rates. The biggest producer so far, the Tres Pasos 1E, had maximum actual production rates of 13,123 bbl/day and these rates were limited by the size of the downhole pump. The 6E has the potential to be an even bigger producer. With these production rates, SEV needs a pipeline to significantly increase production and they are in the process of negotiating a deal to fund and construct it. Texaco, Sipetrol and CanOxy are drilling nearby to SEV's site and are therefore possible partners to cofund the 25 mile pipeline. There are certainly major risks in Colombia that need to be considered in any investment decision. Additionally, SEV's management's performance would have to be classified as mediocre at best. These risks have really burned me over the last several years and I still need 2 more points just to break even. That said, however, all companies with assets in Colombia cannot be painted with the same brush. The majors are going there in larger numbers, the political situation has improved, and IMO SEV is down to the short strokes insofar as delineating the field and greatly increasing production/revenues/reserves.