I read an interesting opinion from a Canadian chatsite regarding the potential that MAY be present in the Thai field being opened up by Pan Orient and Carnarvon. The view below urged investors (gamblers?) to jump into POE but of course is equally applicable to CVN as the 40% junior partner.
Such opinions are cheap and numerous I know, but as someone who has struggled to interpret the geology of the volcanic formations being drilled, I found it both interesting and encouraging. Personally, while I would never use such views as the basis for my investment decisions, they are all "grist to the mill" and often help me piece together the broader picture of where a company may be headed. I offer it in that context and no other.
What do others make of the optimism evident? Wishful thinking - or plausible? Today's price action would suggest that those of an optimistic bent have gained the upper hand, though whether only temporarily is too early to say.
I neither condemn nor recommend the views expressed but thought I'd throw them in for discussion. Apologies if this has been posted earlier on another thread that I may have missed. For what it's worth, here's the opinion:
"Buy Pan Orient shares before they release test results on their two current wells in the Na Sanum East in the south and central compartments NS5-D1 and NS8-D1. The shallow volcanic oil structures are the big money, so if they extend north from Na Sanum East into the Bo Rang structure the combined oil reservor area is 33 square kilometers.
"Severe lost circulation (porosity) is encountered while drilling through the UPPER 46 meters OF ZONE 1. Conventional logs indicate the best potential volcanic reservoir section encountered to date on preliminary logs from NS5-D1.
Of particular note, in the NS5-D1 well, is the discovery of a new oil reservoir zone approximately 60 meters in measured thickness of what is interpreted as highly porous and fractured volcanic tuffs, which was encountered above the main volcanic reservoir section (zone 1) discovered in the last three wells.
The Na Sanum East block is the current big producer and POE hopes that the Bo Rang structure will also produce big oil from the volcanic reservoir and the newly discovered fractured volcanic tuffs. The newly discovered zone and the lower volcanic zones are a big bonus for share price appreciation.
View the presentation again, reread the total depth of volcanic oil pay column - 335 meters, over 1,000 feet of oil pay. L44 flowed 1,260 bopd from just 14 meter penetration into zone one. If the lower fractured volcanic zones have oil reserves, anywhere close to the upper 60 feet, this has all the makings of a big oil discovery, that will take years to explore, develop and produce.
The Bo Rang structure and the Na Sanum East have a combined area of is 33 square kilometers. The newly discovered volcanic oil reservoir is what POE hopes extend from Na Sanum East south compartment, into the central compartment, then into the north and Bo Rang. The two fields share the same water oil contact and sandstone shelf, so hopefully the big oil is also in Bo Rang.
Pan Orient has plans to drill 3 wells a month thru 2008 into the volcanic oil structures of Na Sanun East and Bo Rang. The recent press releases notes the development wells are 400 meter step-outs from the previous well.
These blocks are under current appraisal/development/production drilling and Pan Orient notes these areas:
Na Sanun East South block is estimated at 1.6 - 3.6 km2 Na Sanun East Central block is estimated at 2.6 - 6 km2 Na Sanun East North block is estimated at 4.4 - 6.1 km2 Bo Rang is estimated at 2.5 - 16 km2 Total area 33 square kilometers
Their fifth volcanic block is undergoing technical evaluation.
As an example, POE has applied for eighteen new drilling permits. Draw a picture, do the math a 33 km2 oil pool will support drilling for a very long time.
The way I understand the drilling program, Pan Orient will keep drilling step-out development wells every 400 meters until they find the outer boundary of the oil pool. The step-out drilling occurs both ways on a two-dimensional grid. As long as they don't deviate too far from the grid of successful wells, I'll guess the development wells have a medium rate for success.
The initial exploratory (wildcat) wells in new locations have a lower chance for success. After a successful exploratory well, the appraisal and development drilling begins on anew step-out grid.
Over the 14 months, I'll estimate a 60% success rate and 500 bopd average, increasing production by 9,100 bopd, (650 bbls per month). Success above 60% or production increases over 650 bbls / month, would IMO exceed the price targets of the current analyst ($12.50 - $14.75). 12,600 bopd,(exiting 2008) should maintain the share price in the $14.75 range."
I have tried to source and acknowledge the original poster, but this was passed to me second-hand so any bouquets or brick-bats will be cheerfully deflected.
DYOR and caveat emptor.
Gupper
CVN Price at posting:
0.0¢ Sentiment: LT Buy Disclosure: Held
(20min delay)
