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grease · Jun 29th, 2007, 23:08

Ian McQueen

I think you will probably give an update on the Basal Conglomerate in the Mako6 well, can you comment on that please and the other question is how would the H2S affect your ability to produce from the six existing wells.

MB: First of all, we are going to make an announcement at the appropriate time on Mako6 so I am not able to comment on that. On the second part of your question. What happens here in terms of testing procedure is that these are test wells not production wells, but because we have the H2S, we need to have tubing and packers in order to be able to test the different zones. If we didn't have to use tubing and packers we could test up through casing and everything would be much much quicker.

We also are going to have to whenever we test a particular frac job, because we want to understand what the productivity and the concentrations of the gas concentrations whether it be methane, CO2, H2S condensate or oil or water or whatever, we have got to test each individual zone to be able to determine what its productive rates are. And in any particular section the important thing is for example in the Basal Conglomerate when you finish this in the Basal Conglomerate, you would pull the plugs out of whatever you plugged off to produce at all, or whatever portion you want to produce. And the answer is when all the different frac jobs are done, you are going to run a permanent H2S resistant tubing and packer in the hole to be able to produce it and to put online.

Lyle: That is exactly correct.

That's what we will be doing. We will be using tubing and packers. This is not going to be necessary in our view for the Mako4 well because we are going to be running a long string of H2S resistant casing in that well, as soon as we locate it, * so we don't have that problem and the completion process can go quicker. Once the testing stage is finished in these different wells and we understand what each individual zone will contribute we are able at that point to do multiple frac jobs and stages for example like they do up at Pinedale all at one time and not test each individual sequence. So that is going to be real big advantage in the future when we go to exploitation phase. But right now we need to know what we have got. All of our strategic partners are going to want to have the same type of testing programme that I have just described to you so they understand whenever we ramp up the operation to go into the exploitation phase what size drilling rigs we are going to need, what depths we are going to be drilling to and what we are going to be completing in. This is a process that unfortunately takes time and unfortunately will take more time in these 6 wells because of the fact that we have these minor amounts of H2S

Paul Ballantyne with Paul Greatbatch here at Genesis

Q. The first potential partner you mentioned in the list you gave was a service company. Are there any constraints on the progress of your activities through access to contractors or services? Are you now deprioritising the Szolnok formation and if so could you give us a sense of what the thinking behind that? Have there been any issues in the conversion of exploration licences to production licences?

MB: Taking last question, no in terms of any issues, we now have the pl in hand. There are reporting requirements and things we have to do in terms of to the government. We have the production licence well in hand.

In terms of the service providers we have used Halliburton and Schlumberger and one of the real important things is that on our last frac job on the Mako10 [!?] we had 23000 horse power on location and I think that's more horsepower than has ever been at least in Hungary and if not Europe and one of the things that we found and I think this is important is that we had no problem fraccing these wells. We can frac these wells. We are not concerned about that risk factor.

Also at this time we don't have any issues with access to the service providers. When I was Chairman of Ultra Petroleum we made those service company deals with Halliburton and Integrated Solutions and I'm very confident that at the particular time when we absolutely demonstrate the potential of a lot of different frac jobs and these service companies feel comfortable, I really feel comfortable that some kind of arrangements can be made with some of these service companies at the appropriate time. This may be early days. Frankly at this point I would put them on lower part of the list in terms of making a deal now. I mean I don't want to discourage anyone from talking to us. On curve of who is going to be the most interested, I think its going to be these gas marketers and these upstream majors and large independents. And certainly the majors and the upstream independents feel comfortable with where are with the 50 frac jobs we have got to do in terms of going forward with this. *

John Tunburry

Q. When can we expect firm announcement on flow rates and what is worst case for announcement?

MB: As I mentioned the next frac job we are going to do is the Magy1 and those two frac jobs to frac 300m is going to happen in July. That's what we expect. We expect to have the results in August. Its important to understand that we have 50 frac jobs to do. That's going to take some time, also we have modelled these 50 intervals that have good chance of being economical. I think the probability of a large number of those frac jobs failing is small in my opinion. One other thing to mention. You have to start at the bottom and work your way up when you are completing these wells. We drilled Mako4 in order to do the Szolnok and what has happened is that we hit the overpressure quite early and based on our interpretation of the 3D seismic, we feel we have at least another 300-400m to get through Szolnok. We had to set the 7 5'8 casing.

One of the things that has happened to us is that we've got this oil discovery in Magy1 and we want to see what it does before we decide whether to stop at that 300-400m or do we want to drill deeper down into the Endrod. So unfortunately that has put the Szolnok programme back because what you can't do, although I guess you could, is go to one of the deeper wells, Mako6 or Mako7, and skip 15 frac jobs and then jump up into the Szolnok but with as much money as we have spent and with what appears to be a very large discovery, I don't think make a lot of sense to do that. The unfortunate thing you know at this point, is that we may need some patience to see what happens in Szolnok. We have some Szolnok possibilities on some of the edge wells that we are evaluating now to maybe look at those.

Q: We have been waiting for flow rates for some time and looking at the expectation that we have some flow rates in July.

We will have frac July and the results in August.

Q: At least August?

My hope sooner. Some of my Engineers told me not to give absolute dates. My hope is that it would be sooner rather than later, lets see how it goes.

Darron Preston

Q: I am slightly mystified as to the current status on Mako6. I know that we are still cleaning up the frac fluid but suddenly it seems to have gone completely off the radar as it were and I am surprised we are not going to have an earlier cleanup. Perhaps you can explain why it seems to have gone a little bit more on the backburner?

MB: Its not on the backburner, it is something we are working on every day. Let just me give you a little history on the Mako6 if I might. When we fraced the Mako6 we had to be ready for the H2S you recall the delays after we had some H2S shows on the S1 well. We had to be ready for this. We had some significant gas flows almost immediately with about 20% of our load back and we had some H2S entry into the borehole and we immediately had to kill the well. So the situation is in order to get ready to flow the well with the tubing and the packer, we shut that well in for over 5 weeks. So when we brought it back on, we were experiencing some plugging and one of the things we mentioned in the press release is that we have some obstructions and some plugging, that we are dealing with. That's where we are right now, it something we are trying to resolve, and until we make a press release I am not really prepared to comment any further than that.

Q. Do we have some sort of time as to when the press release will be issued regarding the situation at M6?

MB: As soon as we have it resolved in terms of what we are doing, we will give you the press release.

Jim Gerald

Q. Can you get JG to comment on the thickness and extent of the oil in the Endrod that he and his team have mapped?

JG: I cannot give you the exact thickness. The Hungarian scientists did their best in mapping it. We are now looking at it. But we are talking of the order of hundreds of metres. It varies a little bit across the basin but it is very formidable. That's my best estimate. That's a forward looking statement and all that. It is literally in last two days that I had the talk with the scientist so it requires more look. To me the original prospect generated here10 years into this, this is really exactly what I was looking for originally. Now, in my opinion, we know where the giant Algyo field got its oil from and so on. But I am not prepared to give you numbers because they are not my numbers and I need to have the details. But I am sure Marc with your permission that I may say that it is something that that is worthy of a press release in the very near future. (background laughter)

Q. We have had two significant delays from H2S so far with S1 and Mako6. Have you nailed down the source of the H2S in the basement yet?

JG: This is in contrast, it is not the type of H2S you find for example around the Caspian where Chevron is finding several percent in its gas. This is due to minor inclusions of pyrite iron sulphide in the rocks in the deeper part down in the Triassic dolomites that form the basement and it is from that that the H2S is generated. Again I am here relating Hungarian scientists that I talk with frequently and I will say that this is a question that we have no doubt that this is indeed the case so therefore we do not expect any surprises it is common in many and most wells and consequently Falcon also has to be prepared to deal with it as you heard Marc say. It is vexing and irritating and it has been delaying but it is something that can be handled and MOL's processing equipment and so on is available and can handle this at the surface from a treatment standpoint. *

MB: I might add that over in Magy1, what we are producing in terms of what H2S is coming out of the gas would go into the pipeline and be taken in the plant at MOL. It is more of a casing problem at this point than a pipeline problem.

Q. Do you have an engineering report planned to follow up Scotia report?

We have a very good group of people at falcon. I want to let everyone know we are working with John and its very interesting before John sold this to Falcon, John had talked to a lot of these strategic investors himself and is familiar with a lot of the technical teams of a lot of these people and John has been working with us throughout this process. It is frankly my belief that JG understands better than anyone. He is going to be working in the data rooms with our team of people at Falcon and these strategic investors. So a lot of them already know he is going to be working with us.

JG: If I could answer this even more directly. At present time we are trying our best to find parallels from other fields in the world. I am happy to say that there are indeed fields that produce from this type of marl as we are talking about in the Endrod so we try to make our models from that. We are then trying to come up with the most likely result we can get. We have been charged by Falcon to come up with what do these fracs cost and what might we expect and this will then give Falcon the management tools to go forward with this number of fracs. Of course, if indeed predictions come true then Falcon has wonderful problem to decide whether or not they should let such excellent wells continue to flow and provide cash flow. It is a tough decision to cut off a very very good flowing well to test another zones. That's a wonderful problem to have.

MB: A lot of people might want to know our thoughts on probability of finding a partner. Do you think we are going to have any trouble finding a partner?

JG: I have to defer on one point. *I am not totally familiar with the Bank of Montreal you know detail things but assuming that the confidentiality agreement are the standard across the industry, I am absolutely, I have no doubt whatsoever this is a giant business opportunity for many types of companies you are talking about. And my own experience up to the point where you and I made the deal, up to that point I was talking with several major companies and I was talking with large electricity companies. The latter were actually just looking for who could operator and I JG, with just a small consulting company, could obviously not operate like you have been able to do. So such possible strategic deals should now be available to you particularly as the gas situation and the energy situation in Europe has sharpened.

Jamie Somerville

Q. Looking at chart of your share price the market valuation has been pretty volatile. In looking for strategic partners firstly I wanted to ask do you have any preference for retention of any interest, any operating interest. Secondly whether you can give any indication as to what you actually think a fair market valuation of this asset is at this point in time, regardless of upcoming coming test results.

MB: I think that is a difficult question because we don't have the test to put a value on it. It is my belief that with the Szolnok with the previous 51-101 that was done with Scotia and what we have discovered now that the value is considerably higher than certainly our market cap now and I feel very comfortable that a deal with a strategic partner - we have property big enough to make several deals with several strategic partners, it doesn't need to be one. Any kind of deal is certainly going to require capital not only to finish what we have already started with the 6 wells* but to do additional drilling, infrastructure and that kind of thing. I just don't think there's much question with 50 fracs to do and once JG finishes modelling the potential of those 50 frac jobs, I am very comfortable that we are going to find some people to make a deal with. There are certainly some obvious things that you should be thinking about and who some of those people might be. In this part of the world this is the right place at the right time and the right deposit that could change the complexion of Europe if it works out in the way we hope and believe it will, so I don't think there's any question there's are a lot of people who are going to be interested and there are already people that are interested, I'll tell you. And we are talking now.

Q. With regard to retaining operatorship or control?

I am not going to rule out a strategic partner in terms of operations. I don't rule that out. I am not saying we have to have that. I am saying its my belief that it is big enough that we could have several operators and we could operate different parts of it and we could still operate in there. I think there is flexibility and we have flexibility to cut many kinds of transactions that would be beneficial to shareholders. I am very confident on this that we going to do very well there.

Jun 29th, 2007, 23:08	#781
grease Junior Member 注册日期: Mar 2007 帖子: 9	Ian McQueen I think you will probably give an update on the Basal Conglomerate in the Mako6 well, can you comment on that please and the other question is how would the H2S affect your ability to produce from the six existing wells. MB: First of all, we are going to make an announcement at the appropriate time on Mako6 so I am not able to comment on that. On the second part of your question. What happens here in terms of testing procedure is that these are test wells not production wells, but because we have the H2S, we need to have tubing and packers in order to be able to test the different zones. If we didn't have to use tubing and packers we could test up through casing and everything would be much much quicker. We also are going to have to whenever we test a particular frac job, because we want to understand what the productivity and the concentrations of the gas concentrations whether it be methane, CO2, H2S condensate or oil or water or whatever, we have got to test each individual zone to be able to determine what its productive rates are. And in any particular section the important thing is for example in the Basal Conglomerate when you finish this in the Basal Conglomerate, you would pull the plugs out of whatever you plugged off to produce at all, or whatever portion you want to produce. And the answer is when all the different frac jobs are done, you are going to run a permanent H2S resistant tubing and packer in the hole to be able to produce it and to put online. Lyle: That is exactly correct. That's what we will be doing. We will be using tubing and packers. This is not going to be necessary in our view for the Mako4 well because we are going to be running a long string of H2S resistant casing in that well, as soon as we locate it, * so we don't have that problem and the completion process can go quicker. Once the testing stage is finished in these different wells and we understand what each individual zone will contribute we are able at that point to do multiple frac jobs and stages for example like they do up at Pinedale all at one time and not test each individual sequence. So that is going to be real big advantage in the future when we go to exploitation phase. But right now we need to know what we have got. All of our strategic partners are going to want to have the same type of testing programme that I have just described to you so they understand whenever we ramp up the operation to go into the exploitation phase what size drilling rigs we are going to need, what depths we are going to be drilling to and what we are going to be completing in. This is a process that unfortunately takes time and unfortunately will take more time in these 6 wells because of the fact that we have these minor amounts of H2S Paul Ballantyne with Paul Greatbatch here at Genesis Q. The first potential partner you mentioned in the list you gave was a service company. Are there any constraints on the progress of your activities through access to contractors or services? Are you now deprioritising the Szolnok formation and if so could you give us a sense of what the thinking behind that? Have there been any issues in the conversion of exploration licences to production licences? MB: Taking last question, no in terms of any issues, we now have the pl in hand. There are reporting requirements and things we have to do in terms of to the government. We have the production licence well in hand. In terms of the service providers we have used Halliburton and Schlumberger and one of the real important things is that on our last frac job on the Mako10 [!?] we had 23000 horse power on location and I think that's more horsepower than has ever been at least in Hungary and if not Europe and one of the things that we found and I think this is important is that we had no problem fraccing these wells. We can frac these wells. We are not concerned about that risk factor. Also at this time we don't have any issues with access to the service providers. When I was Chairman of Ultra Petroleum we made those service company deals with Halliburton and Integrated Solutions and I'm very confident that at the particular time when we absolutely demonstrate the potential of a lot of different frac jobs and these service companies feel comfortable, I really feel comfortable that some kind of arrangements can be made with some of these service companies at the appropriate time. This may be early days. Frankly at this point I would put them on lower part of the list in terms of making a deal now. I mean I don't want to discourage anyone from talking to us. On curve of who is going to be the most interested, I think its going to be these gas marketers and these upstream majors and large independents. And certainly the majors and the upstream independents feel comfortable with where are with the 50 frac jobs we have got to do in terms of going forward with this. * John Tunburry Q. When can we expect firm announcement on flow rates and what is worst case for announcement? MB: As I mentioned the next frac job we are going to do is the Magy1 and those two frac jobs to frac 300m is going to happen in July. That's what we expect. We expect to have the results in August. Its important to understand that we have 50 frac jobs to do. That's going to take some time, also we have modelled these 50 intervals that have good chance of being economical. I think the probability of a large number of those frac jobs failing is small in my opinion. One other thing to mention. You have to start at the bottom and work your way up when you are completing these wells. We drilled Mako4 in order to do the Szolnok and what has happened is that we hit the overpressure quite early and based on our interpretation of the 3D seismic, we feel we have at least another 300-400m to get through Szolnok. We had to set the 7 5'8 casing. One of the things that has happened to us is that we've got this oil discovery in Magy1 and we want to see what it does before we decide whether to stop at that 300-400m or do we want to drill deeper down into the Endrod. So unfortunately that has put the Szolnok programme back because what you can't do, although I guess you could, is go to one of the deeper wells, Mako6 or Mako7, and skip 15 frac jobs and then jump up into the Szolnok but with as much money as we have spent and with what appears to be a very large discovery, I don't think make a lot of sense to do that. The unfortunate thing you know at this point, is that we may need some patience to see what happens in Szolnok. We have some Szolnok possibilities on some of the edge wells that we are evaluating now to maybe look at those. Q: We have been waiting for flow rates for some time and looking at the expectation that we have some flow rates in July. We will have frac July and the results in August. Q: At least August? My hope sooner. Some of my Engineers told me not to give absolute dates. My hope is that it would be sooner rather than later, lets see how it goes. Darron Preston Q: I am slightly mystified as to the current status on Mako6. I know that we are still cleaning up the frac fluid but suddenly it seems to have gone completely off the radar as it were and I am surprised we are not going to have an earlier cleanup. Perhaps you can explain why it seems to have gone a little bit more on the backburner? MB: Its not on the backburner, it is something we are working on every day. Let just me give you a little history on the Mako6 if I might. When we fraced the Mako6 we had to be ready for the H2S you recall the delays after we had some H2S shows on the S1 well. We had to be ready for this. We had some significant gas flows almost immediately with about 20% of our load back and we had some H2S entry into the borehole and we immediately had to kill the well. So the situation is in order to get ready to flow the well with the tubing and the packer, we shut that well in for over 5 weeks. So when we brought it back on, we were experiencing some plugging and one of the things we mentioned in the press release is that we have some obstructions and some plugging, that we are dealing with. That's where we are right now, it something we are trying to resolve, and until we make a press release I am not really prepared to comment any further than that. Q. Do we have some sort of time as to when the press release will be issued regarding the situation at M6? MB: As soon as we have it resolved in terms of what we are doing, we will give you the press release. Jim Gerald Q. Can you get JG to comment on the thickness and extent of the oil in the Endrod that he and his team have mapped? JG: I cannot give you the exact thickness. The Hungarian scientists did their best in mapping it. We are now looking at it. But we are talking of the order of hundreds of metres. It varies a little bit across the basin but it is very formidable. That's my best estimate. That's a forward looking statement and all that. It is literally in last two days that I had the talk with the scientist so it requires more look. To me the original prospect generated here10 years into this, this is really exactly what I was looking for originally. Now, in my opinion, we know where the giant Algyo field got its oil from and so on. But I am not prepared to give you numbers because they are not my numbers and I need to have the details. But I am sure Marc with your permission that I may say that it is something that that is worthy of a press release in the very near future. (background laughter) Q. We have had two significant delays from H2S so far with S1 and Mako6. Have you nailed down the source of the H2S in the basement yet? JG: This is in contrast, it is not the type of H2S you find for example around the Caspian where Chevron is finding several percent in its gas. This is due to minor inclusions of pyrite iron sulphide in the rocks in the deeper part down in the Triassic dolomites that form the basement and it is from that that the H2S is generated. Again I am here relating Hungarian scientists that I talk with frequently and I will say that this is a question that we have no doubt that this is indeed the case so therefore we do not expect any surprises it is common in many and most wells and consequently Falcon also has to be prepared to deal with it as you heard Marc say. It is vexing and irritating and it has been delaying but it is something that can be handled and MOL's processing equipment and so on is available and can handle this at the surface from a treatment standpoint. * MB: I might add that over in Magy1, what we are producing in terms of what H2S is coming out of the gas would go into the pipeline and be taken in the plant at MOL. It is more of a casing problem at this point than a pipeline problem. Q. Do you have an engineering report planned to follow up Scotia report? We have a very good group of people at falcon. I want to let everyone know we are working with John and its very interesting before John sold this to Falcon, John had talked to a lot of these strategic investors himself and is familiar with a lot of the technical teams of a lot of these people and John has been working with us throughout this process. It is frankly my belief that JG understands better than anyone. He is going to be working in the data rooms with our team of people at Falcon and these strategic investors. So a lot of them already know he is going to be working with us. JG: If I could answer this even more directly. At present time we are trying our best to find parallels from other fields in the world. I am happy to say that there are indeed fields that produce from this type of marl as we are talking about in the Endrod so we try to make our models from that. We are then trying to come up with the most likely result we can get. We have been charged by Falcon to come up with what do these fracs cost and what might we expect and this will then give Falcon the management tools to go forward with this number of fracs. Of course, if indeed predictions come true then Falcon has wonderful problem to decide whether or not they should let such excellent wells continue to flow and provide cash flow. It is a tough decision to cut off a very very good flowing well to test another zones. That's a wonderful problem to have. MB: A lot of people might want to know our thoughts on probability of finding a partner. Do you think we are going to have any trouble finding a partner? JG: I have to defer on one point. I am not totally familiar with the Bank of Montreal you know detail things but assuming that the confidentiality agreement are the standard across the industry, I am absolutely, I have no doubt whatsoever this is a giant business opportunity for many types of companies you are talking about. And my own experience up to the point where you and I made the deal, up to that point I was talking with several major companies and I was talking with large electricity companies. The latter were actually just looking for who could operator and I JG, with just a small consulting company, could obviously not operate like you have been able to do. So such possible strategic deals should now be available to you particularly as the gas situation and the energy situation in Europe has sharpened. Jamie Somerville Q. Looking at chart of your share price the market valuation has been pretty volatile. In looking for strategic partners firstly I wanted to ask do you have any preference for retention of any interest, any operating interest. Secondly whether you can give any indication as to what you actually think a fair market valuation of this asset is at this point in time, regardless of upcoming coming test results. MB: I think that is a difficult question because we don't have the test to put a value on it. It is my belief that with the Szolnok with the previous 51-101 that was done with Scotia and what we have discovered now that the value is considerably higher than certainly our market cap now and I feel very comfortable that a deal with a strategic partner - we have property big enough to make several deals with several strategic partners, it doesn't need to be one. Any kind of deal is certainly going to require capital not only to finish what we have already started with the 6 wells but to do additional drilling, infrastructure and that kind of thing. I just don't think there's much question with 50 fracs to do and once JG finishes modelling the potential of those 50 frac jobs, I am very comfortable that we are going to find some people to make a deal with. There are certainly some obvious things that you should be thinking about and who some of those people might be. In this part of the world this is the right place at the right time and the right deposit that could change the complexion of Europe if it works out in the way we hope and believe it will, so I don't think there's any question there's are a lot of people who are going to be interested and there are already people that are interested, I'll tell you. And we are talking now. Q. With regard to retaining operatorship or control? I am not going to rule out a strategic partner in terms of operations. I don't rule that out. I am not saying we have to have that. I am saying its my belief that it is big enough that we could have several operators and we could operate different parts of it and we could still operate in there. I think there is flexibility and we have flexibility to cut many kinds of transactions that would be beneficial to shareholders. I am very confident on this that we going to do very well there.
grease Junior Member 注册日期: Mar 2007 帖子: 9