SEA has 39,000 net acres close to Nighthawk's Jolly Ranch development, with both targetting the Atoka and Cherokee shales. Nighthawk has just released a simulation study from Schlumberger indicating oil in place per acre is 14 times more than previously estimated. SEA believes it has cherry picked the best land in the area.
"In total Schlumberger reckons there are 35,157 barrels of oil per acre compared with a previous estimate of 5,879 barrels" . Recovery is expected to be between 5 and 10%.
This has received plenty of press and Schlumberger have shale oil modelling experience, however, in moderation the data was only from the minor portion of Jolly Ranch which has been drilled to date (although expected to be contiguous), Nighthawk have made no progress in commercialising the resource, although as they have divested all other assets all money ($20m) is now focused on this outcome.
May be a long time before there is a positive outcome, but the anticipated lift in reserves should generate some more interest in this area, hopefully from one of the major players.
SEA Price at posting:
78.0¢ Sentiment: LT Buy Disclosure: Held
