ami

When is an Area of Mutual Interest (AMI) not quite what it seems - When Antares is involved with it!!

I was busy trying to get production data on the Big Star area for some of the wells most notibily Stuart 12 no1 which I have posted about many times as being long over due the release of IP 30 and 60 day numbers, but that's another issue in itself.

Anyway I was going back through the texas RRC website looking at well permits etc when I came across several other wells that have been permitted and drilled in Dawson county by Big Star Oil & Gas, Antares operator for the area.

Now there is meant to be an AMI covering some 40,000+ acres, where Antares is giving a very generous free carry to Big Star (ie Big Star only pay 10% of the costs up to payout then then get a 25% WI well by well, there is no sign that this free carry is limited to a certain number of wells and over time could be expensive upfront for Antares, ie paying out $330K a well on Big Star's behalf then recovering the money over the next year! Imagine the cost with 6 or 8 rigs running, its millions and could go to $20M plus) Just to put it in context Antares gets a 6.67% free carry from Petrohawk in the Eagleford and is giving away a 15% free carry here.

Having given such generous terms to Big Star I would have thought that anything Big Star were interested in, close by would have been in the AMI and Antares would have backed into them on the same ratio as the AMI and paed back such costs to Big Star.

Obviously not

The Stuart 12 no1 well is located in "35T4N section 12"
Simmons is located in "34T4N section 27"
Esmond 20 is located in "34T4N section 20"
Woodward 7 is located in "34T4N section 7"
Cline 46 is located in "34T5N section 46"

A fair spread of locations as per the diagrams shown in the presentations of the Big Star area.

However wells Providence 3R, Providence A and Providence 1 all in location "34T4N section 26" don't appear to have anything to do with Antares. (near to Simmons and Esmond)

Nor does Baron in location "34T5N section 43" (near Cline)

You have to ask why is this the case?

Did Big Star just cherry pick the leases it wanted and build the AMI around it?? in which case there should be gaps in the pictures that Antares show to us as the AMI and its lease position.

Some explaination is required to show that no conflict of interest occurs from Big Star as to who's leases get priority etc and why all of these are not in the AMI.

LOTM