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Gold/Mining/Energy : Harken Energy Corporation (HEC) -- Ignore unavailable to you. Want to Upgrade?

To: Ed Ajootian who wrote (3533)	9/7/1998 10:38:00 PM
From: Arktic	Respond to of 5504

Trying to buy at the absolute bottom is akin to selling at the absolute top. Difficult if not impossible. HEC is a "heck" of a buy at current prices in light of reserves and the potential of the Islero #1. Ed... the geologists with whom I have discussed the Emerald Mountain structure support the notion that the pay in the HEC concession is most likely much thicker than the SEV acreage. SEV has 250 feet of pay. Prudhoe Bay is about 300 feet thick if I recall correctly. If HEC has 650 feet, and most of it is oil bearing, look out above. Even if the Islero #1 is dry (which I consider an unlikely scenario), the other proved and probable reserves makes this investment a no-brainer at today's prices. Also, regarding the comments on "water" in the Estero #3, one other factor that can influence when water starts to be produced from an oil well is the rate of production from the well. If oil is being produced from a layer of sand with water below, then producing the oil too quickly can cause the water to "cone" up and the oil no longer has access to move into the well bore. Imagine an inch of oil floating on a bathtub. Put a straw about one half inch into the oil and start sucking very fast (don't try this at home... remember... I'm a professional <ggg>). Fairly quickly, you'd be producing water through the straw based upon the fluid dynamics involved. Same thing can happen in an oil well if the oil water contact is close to the producing zone and if the rate of production is too fast. I have no idea what happened with the Estero well but know that well bores are frequently re-entered to sidetrack or recomplete. Then again, if 3D seismic suggests a better well-bore site, then a grassroots well may be much more economic. HEC has been beaten down with the rest of the industry but it's not about to disappear or dwindle away. Paul L. Craig