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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: elmatador who wrote (154894)	8/5/2011 10:55:07 AM
From: architect*	4 Recommendations Respond to of 206110

HRT Participações em Petróleo S.A (HRT). - HRP.v now trades in Canada. I was interested in HRT at the IPO price, but HRT is up about 500% -600% since the IPO. HRT has a market cap of $8 billion, $USD, correct. So, about $8 billion of those Namibian resources are priced into HRT, as HRT market cap has risen from $1.6 billion to $8 billion. Namibia has always had big hydrocarbons structures, but to my knowledge, Namibia, in its history, has not produced any oil or gas. HRT needs to convert those contingent resources into proven reserves by discovering an oil or gas field. HRT has proven oil on-shore in Brazil's Solimoes basin. Do you know the amount of HRT's annual Solimoes basin oil production? Namibia Kudu gas field is one of the largest discovered and unexploited hydrocarbon fields in the world. Kudu is a huge hydrocarbon (gas) structure, but the gas doesn't come up the pipe in commercial quantities. I assume Kudu's reservoirs are tight, and Namibia has no market and no need for natural gas. South Africa the closest point of sale for gas. Until recently, Namibia had attracted companies similar to Hyperdynamics (HDY), using equity financing to play Las Vegas with the drill bit! Micro-cap stocks spending $80 MM in drilling costs on a wildcat well. HRT bought one of those micro-caps UNX Energy. Even if Tullow Oil made a giant multi-billion barrel Oil discovery in Namibia, Tullow Oil would have to joint venture with a large O&G to exploite a large ultra deep Oil field. As you know, my interest in HRT is their on-shore operations in the Solimoes basin of Brazil. In South America, Colombia and Argentina are becoming over explored, and Brazil still holds exploration opportunities in frontier virgin oil basins. Also, established basins like the Reconcavo basin hold low risk giant oil fields, if unconventional production methods, work. The Reconcavo basin has giant shale oil potential, similar to the Bakken basin. Another interest, in Brazil is on giant cold flow heavy oil fields similar to the Llanos basin's Rubiales / Piriri / Quifa heavy oil fields 5 billion OOIP. Again, IMO lower financial risk than deep water wildcatting. Brazil's ANP has been slow in approving Gran Tierra's exploration and production activity in the Reconcavo basin. Gran Tierra plans to implement conventional production and explore the shale oil using multi-stage fracture stimulation on horizontal wells. IMO, their is less financial risk on-shore in the Solimoes and Reconcavo for companies with market cap in the $2 - 7 billion range, than exploring for deep water wildcats in the unproven Namibian basin. Brazil's ANP has been very slow in implementing Brasil Ronde 11, Brazil's next oil and gas concession. ANP will auction plenty of blocks on-shore and shallow water off-shore. These second tier Brazilan blocks, IMO are better suited for wildcat exploration from companies in the $2 - $7 billion market cap. Kudo gas field has P10 resource estimates as high as 50 Trillion CF, (8 trillion boe) Kudu has about 3 Trillion CF of reserves. Even with 8 Trillion boe in resources the Kudu gas field has yet to become a commercial venture. Lots of natural gas - no cash flow. Clearly, their is high risk that another 810 mmboe GAS field would prove to be an uneconomic venture. A giant OIL discovery would be a different story, but still very high capital investment costs for exploiting an ultra-deep oil discovery, (reference CapEx costs in the Santos and Campos basin off-shore Brazil). Thanks elmatador, and keep me posted on Brazil's progress on Ronde 11 oil and gas concession. Cheers!