a new era for gdn is approaching, page-8

TCF - thank you for pointing that out. I admit reading that statement could be confusing for some, however it was not intentional. I guess I have done a little more research than most - and have been following GDN since 2005. So my use of certain terminology may not be what is commonly used on Hotcopper.

So let me again thank you for this opportunity to more clearly and in more detail explain my thoughts. And I encourage any GDN investor to read on... because like most people reading these forums.. key facts are so easily lost in the 'junk' that is posted on hotcopper. So here is my take.. and to keep it real.. i'll use where possible factual information. And I'll let you decipher the rest.

So we begin..


Best point of reference would be the Quarterly activities report for the Dec09 quarter. 29th Jan 2010 it was announced on the ASX.


Para #1
Production rates of 3.3mcfpd recorded. Suspended to date pending results of para#3 well.

I quote:

"It is proposed to either recomplete the existing wellbore or should the lateral completion in para#3 confirm improved production then Rig234 will be skidded over para #1 to drill a short radius lateral completion into the ismay formation"

My interpretation/translation:

Para #1 was drilled to test leadville which is considerably lower than the ismay. The alkali gulch and barker creek also had significant gas shows on the way down. However leadville was a big stuff up. After penetrating leadville after substantial delays in 06, they found the flow rates were hampered by water and other factors. So they retreated and flow rates for ismay, barker, alkali and leadville were tested and they decided the ismay was the best way forward. flow rates of 3.3mcfpd were recorded.

3.3mcfpd is definitely commercial (just look at VIL/GGP who have commercial gas on their recent Fause Point well of just 0.5mcfpd, YES they are getting cash flows and deemed it a commercial well at 0.5mcfpd; that is ZERO POINT FIVE million cubic feed per day). But technically para #1 it is not commercial because they have not completed the well for commercial production - and that is for a reason. The reason is that para #1 was not designed to produce from the Ismay. The 3.3mcfpd is viewed to be subdued and hampered by well design. So what did they do? drill para #3 which is fit-for-purpose, and if flow rates exceed 3.3mcfpd... well they will shoot the rig over back to para #1 and emulate the para #3 and perform a short radius lateral completion into the ismay. Short radius is basically horizonal drilling, similar to what they are doing at SSN and BCC.

So to conclude on para #1, yes it is not technically commercial. However they can easily complete the existing wellbore and produce at 3.3mcfpd if para #3 fails. They will get cash flow, however they chose to wait and see if they can get more bang for their buck out of para #1. Hence my references to the importance of para #3 and its impact on future AND EXISTING producing wells. You see if they completed para #1 and started commercial flow rates.. there is no going back! They are stuck with 3.3mcfpd. The alternative was to wait and see if they could do a better job with #3 and repeat the process.. hence economies of scale reference.

Para #2
This is an interesting one. Para #2 was not drilled as deep as para #1. And I can see GDN's thinking. Para #2 flowed 1.6mcfpd. Not exciting, but better than VIL/GGP's 0.5mcfpd. And yet GDN are not satisfied, and I can understand why. GDN have stated on the quarterly activities report that the two alternatives for para #2 are:

a) if para #3 are successful, emulate that and produce from the ismay at greater than 1.3mcfpd

b) deepen the well and test the leadville formation

My interpretation on para #2
Now this tells me that GDN are content with 3.3mcfpd.. but won't settle for 1.3mcfpd. VIL/GGP are happy to produce commercial gas at 0.5mcfpd... but obviously GDN have bigger plans.

But again it looks like if para #3 is succesful.. we are doing another short radius completion for para #2.


OK I am tired.. and I think you get my point. And although para #3 has no proven commercial gas. With these shows (6 in total, most recent at 3000+ units), there is good reason to believe that para #3 is going to be the template for future and existing producing wells.

YES this may mean that leadville will have to wait. But trust me, and do your own research, but 3 wells above 5mcfpd.. or even above 4mcfpd... is a very very very solid outcome for a company with a market cap of $28m. And how much do they own of this field and its wells? Yes thats right.. 100%. Compare that to your BCC's, VIL/GGP/, SSN. None of this sharing business. GDN is the real deal.. they play for keeps.

So thanks again for the opportunity to lay down the facts. I hope you can acknowledge it with a thumbs up TCF. And I appreciate the thumbs up all, cheers. And don't forget to add me to your favourites if you like what I'm doing here. I want a heart too!!