In response to the number of pessimistic posts I have been reading on here I decided to pick up the phone and call RM and we spoke for about 30 minutes on the situation at Cambay.... here is what I gained from our discussion:
I said the Market was reacting very negatively to the news releases …. He said that they were a group of Engineers and they said it the way they saw it and could not help if some people read negatives into it… also that they did not want the price to run way ahead of itself….
I asked him whether he saw 77H as a success? He said it was already a success as a Proof of Concept well as it was the first horizontal well in India to produce Oil and Gas. He said it only had a baby Lateral at 350m and was outperforming 73V which only had a single Frac
I asked him to explain …. He said once 73V had cleaned up and all Frac Water was removed, it produced 1,000,000 scft/d of gas , which eventually tapered off to 300,000 scftd of gas on a constant basis. 73V only has one Frac !
77H still has a 1,700m column of water in the casings that the reservoir has to push through because they haven’t got all of the water out yet. Even so it is pushing out 229 bowpd (oil &water/day) PLUS 410,000 scftd of Gas. The Gas has to push through the weight off the water, and yet it is still producing more than 73V can with no water and on a reduced 20/64 Choke.(229 Barrels x 200L/barrel = 45,800 litres of Oil & water is being pushed out of the casing each day…… that is about 45 tonnes being expelled, or lifted, by the well each day - my calcs)
In his opinion it is already a success as a proof of Concept
Obviously when the water is out, the Choke can be changed and we can expect better flow rates
He re-iterated there was NO Ground Water…. Only the Frac Water they had pumped into the well
The reservoir is approx. 35m thick. So the 350m Lateral has 10 times the drawing ratio by being horizontal. The future wells will have 600m (17 times reservoir thickness) to 1,000 m (28 x reservoir thickness), so they will have enormous production potential just like the ones being quoted on the social media pages. They can then afford to go easy on the draw rate and let the well be a long term performer. This well was only a proof of concept to authorise the following drilling program and development of the field…. Which he says it has done!
I asked him where the Drilling Rig was ? He said it had gone off to another job. But he said there would be a Bidding War from Drilling Contractors when they were offered a string of wells to drill ! There would be no shortage of applicants.
He also said they needed Indian Regulator/government approval to proceed with the drilling program ….. and he could not tell me how long that would take…..but they could not apply until they had conducted their Flow Test (after all water expelled)
He said the OILEX team was doing all the paperwork for the drilling program and they would not be doing that if they did not expect to gain approval and proceed!
He said when Tony Abbot was in India earlier this year, he escorted him to all the Indian Govt meetings and Conferences….. and all of the Indian Ministers and Officials were fully aware of Cambay 77H and the need to produce more Oil and Gas in India for their own Market… which was very encouraging !
So there it is, make your own decisions but I expect this field to be developed. Horizontal drilling technology works in India, just like it works in USA and Canada.
Cheers, Rusty
OEX Price at posting:
8.1¢ Sentiment: Buy Disclosure: Held
