A few comments from me about 88e following yesterday's get together. I am not quoting anyone as that's unfair from private conversations with Wall, Staley and Basinski.
There is no structure as such, just some musings that come to mind through a bit of a hangover.
In the last 2 years, there have been some amazing improvements in the technology of shale plays. these enhancements continue at a pace. Its these which have made fields very profitable that previously would have seen them mothballed.
So the low oil price has brought about focused attention on developing the science of fracking techniques.
88e continues to develop its detailed laboratory work to maximise the benefits of the science. Dave Wall says there is no point at this stage in advertising what the production cost has fallen to. Without a well that flows, its purely academic. Much better to evaluate the costs alongside flowrates.
Basinski maintains HRZ profitable @$35 price of oil.
Flow rates: its vital for shareholders to understand the parameters prior to the drill. Apart from the flow rates, there will be a plethora of other readings taken. Its the combination of the flow rate and the information gleaned that is important.
Basically 125 barrels per day is success because it is proven science that such a figure is mutliplied by 15-25 times for actual production from horizontal well.
Ideally 150 flow rate.
My expectation is 325 barrels IF all goes to plan with the drill and logging.
There are stacked plays and drilling conventional, would also permit going down to HRZ.
88e has all of the sweetspot as regards HRZ following the land grab. That term means high flow rates. Without the flow, HRZ would not really be that economic - money could be made but more risky. There is no other HRZ with such volatile pressures available for majors.
The size of the land holding means its extremely attractive to majors once proven. You can multiply are stated resource by a factor of 2.5 but Dave says whats the point in telling the market. They wont value it without flowrate from ICE2. How many billions do you want to see - makes no difference at this stage.
Dave wall says none of us will be around to see the financial world developing our land holding. We will have creamed the curve and passed the top level of benefits on to major.
SP will very likely climb towards ICE2 spud and then be volatile indeed as drilling is underway.
The risk is 50/50 = ICE2 could fail. Lets be honest about that fact.
Basinski says that all of the Eagleford experts he knows have examined ICEWINE and confirmed that indeed the massive oil reserve is there.
There is the added bonus that we have the best fraccing expert in the world working with the team.
To Basinski the risk of not getting oil to flow from HRZ is less than 1%. Thats a different point to assessing the risk of a single well. Things do go wrong with drilling - hence the comment 50/50.
(20min delay)