why the long wait , page-24

rex

I am not an insider - I just listened to the Sanchez webcast.

"ash" is possibly not a totally representative description. There were comments that it looked little different from the Eagle Ford shale. However, there was a comment that suggested that it had less integrity than either the chalk or the shale (it sounded as if it crumbled into the hole before liner could be inserted) and they had trouble drilling from it into the (hard) shale at shallow angles (sounds like they were 'bouncing off' the shale).

So, it might be permeable.

As it sits between the shale and the chalk as a type of transition zone, it probably has HCs but it might not fissure or split as does the hard, brittle, laminated shale or the similar chalk. I cannot even start to guess what happens to the fracc fluid once it gets into that layer but if that layer is permeable it may bridge between natural fractures and faults in the two impermeable layers. So, instead of the fluid disappearing into the rock in the immediate vicinity of the well it may travel.

I'm not a petroleum geologist or engineer either. I doubt that it will cause any issues for production but it does possibly mean that water could be recovered for some time to come and, on a tight choke, that could displace some of the HC production.

Some of MRO/AUT's wells have shown better 60 day figures than 30 day. Unload of fracc fluid might be a reason but they haven't said.

It would be more relevant for fracc design. They want to split and fissure the rock with the fracc fluid pressure. If the fluid breaks through to a permeable layer (if it is), the pressure will drop dramatically. Those fraccs are costing between $175k and $200k / stage (Sanchez webcast). However, it looks to me, from the number of stages planned, that the fraccs were designed to produce more limited penetration, possibly because of that transition layer.

The geology is not uniform and it is a thin transition layer. It might be local. It might even enhance long-term production.

We'll just have to wait for STX's comment.

As I've said, it's the first well and they're probably doing a lot of data collection.