Ann: Trading Halt , page-58

Proga,

I think that the real development is the fraccing. The EME accounts had brief reports on COP's attempts with the Block A wells and that for Kunde 3 would almost be funny if it had not cost us so much money.

It is off topic to some extent but it does highlight the difficulties of fraccing that formation (in Live Oak nearby). The well was drilled in the Austin Chalk formation. The well was spudded on 22nd May 2007:

"A 4 m liner was cemented to 14,586 ft on 3 September 2007 which again was an operation not without its problems. Fraccing and testing operations were put on hold until the adjacent Block AP2 well could be made available for seismic monitoring purposes. This technique enables the operator to determine the efficacy of the fracc operation at the TCEI Block AP1 well.

The first attempt to fracc on 13 December 2007 resulted in the fracc being unable to be injected into the reservoir, as did a second attempt on 20 December 2007.

Sufficient injection rates required to fracc could not be achieved without exceeding the 7 casing limitations, and on 17 January 2008 Empyrean announced that 4 1/2 inch casing was being tied to the top of the liner and being run to surface to enable higher injection pressures.

Three further attempts to pump the fracc sand to the reservoir under high pressure were unsuccessful.

The operator made the decision to shut down the well on 9 Feb 2008 and initiate a detailed reservoir engineering post-mortem which includes a 3-D simulation study. This study was performed to re-evaluate the options on offer.

Operations recommenced on site on 14 April 2008. On 21 April 2008 Empyrean announced to shareholders that the well unexpectedly began to flow commercial quantities of gas and condensate during operations to prepare the well for a fracture stimulation and flow test programme. Initial flows of 2.0 mmcfepd were measured which increased to 2.4mmcfepd before the well was shut in to obtain pressure build up measurements.

An acid fracc was successfully completed over a 900ft horizontal interval through five sets of perforations on
28 May 2008.

The operation resulted in a six fold increase in deliverability. On 28 May 2008 Empyrean was able to report
an average gas flow of 2.5mmcfgpd accompanied by 950 bcpd and no water through a 14/64 choke. This equates to approximately 12 mmcfgepd based on present gas and condensate prices."

They fracced it 6 times. They spudded at the end of May 2007, cemented liner at the beginning of September 2007 and flow tested at the end of May 2008. It took 12 months.

That was ConocoPhillips.

Compare that to the three weeks or less that Hilcorp takes to drill and the couple of weeks or so that Hilcorp takes to fracc.

The farmout to Hilcorp was the making of this company, in my view.

However, note the final IP obtained from that pulverised 900 ft lower section.