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Gold/Mining/Energy : Tusk Energy (TKE) -- Ignore unavailable to you. Want to Upgrade?

To: Werlick who wrote (751)	7/25/1998 2:04:00 AM
From: grayhairs	Read Replies (1) \| Respond to of 1207

Hi Werlick, Whoops!! I had already finished the "19th hole" by the time I saw your post!!! <gggg> #1 --I'm very sorry. I should take more time to explain MY OPINIONS. I do not KNOW that the reserves are huge. I do CALCULATE very large volumetric reserves for the well. My calculations are neither PRECISE NOR CORRECT. They are simply MY BEST ESTIMATE of reserves for the well--> about 60 BCF per section (deep horizon only; shallow reserves are an incremental 15 BCF per section). It is my opinion that the well will today have 1 section of proven reserves (75 BCF) and 3 sections of probable reserves (225 BCF). I personally consider these reserves (300 BCF) as huge. Others may not. Now, my foggy grayhaired memory recollects that---> Until roughly 10% of the ultimate reserve of a well has been produced, there is not a single soul on earth that can tell you, with a high degree (95%???) of certainty, what the ultimate reserve of that well is. Unfortunate, but a fact of the business. Now there may be some younger engineers out there that have a "fresher recall" and they may want to fine tune my 95% in the foregoing statement, but they can not challenge the "essence" of the statement. Now what that means is, if the deep reserves of the 3-22 well in fact are 60 BCF, then no one will be able to tell you that with a 95% confidence level until the well has produced about 6 BCF. So if the well comes on stream at 20 MMCF/D and produces continuously without interruption of any kind, it will take 10 months to attain that degree of confidence!! If it comes on at 10 MMCF/d, it'll take almost 20 months!! If the well is the sole producer in a 10 section pool (i.e. a 600 BCF Pool), it would take 60 BCF of production (200 months at 10 MMCF/d) to determine, with 95% certainty, that the pool originally contained 600 BCF. And what it also means is, since on the first flow test the 3-22 well produced in the order of 20 or 25 MMCF, we can be 95% certain today that the reserves exceed 0.2 BCF!! [That's not a hell of a lot of help, is it??] Before dropping the subject of reserve calculations I will add that it is a fact that when an exploration well is drilled and it discovers a "small" new pool, the initial reserve estimates for that pool tend to over-estimate the reserves. On the other hand, when the discovery is of a "large" new pool, the reserve estimates for that pool tend to under-estimate the reserve. Why?? Because our initial estimates tend to be weighted towards the "normal/average case", not the extremes!! I will also add that the simple fact that the 3-22 "tight hole" status was tightened to a "need to know basis" for info exchange between Apache and partners SUGGESTS (but does not confirm) that their find is huge. #2 --I expect that after the acid frac stimulation of the well, it will AOF (Absolute Open Flow) at over 300 MMCF/D. Now, while AOF's are rather impressive big numbers they are also very meaningless. Deliverability is a more meaningful value and I think the well will have a deliverability of somewhere in the 35 to 50 MMCF/D range (against flowing tubinghead pressure of about 1000 psig). When the well is tied in and placed on sustained production, I expect that daily rates will be in the order of 12 to 15 MMCF/D for the first 8 to 10 years. Remember, if a well produces 10 mmcf/d for 365 days, that is 3.6 BCF of production annually. At 20 mmcf/d it is 7.3 BCF annually. At 50 mmcf/d it is 18 BCF annually (and a 60 BCF pool would have a life of only 3+ years)!!! A great weekend to you. Later, grayhairs