poiseuille's law and other stuff

A few comments

1) Its gas
The recent annoucements were sufficiently vague re: oil vs gas but I've said for a while it appears to be gas on the weight of evidence. The people buying in on the expectation of oil always had a high chance of being burned. They are the same poeple screaming blue murder and claiming this is a duster. Buy high, sell low. Great way to make money, yes? Don't believe them of the people trying to make you sell for less than these shares are worth.

2) Its producing 200 BOEPD
Basic reading comprehension skills seem to be lacking. The well is NOT flowing 56 BOPD. The well IS flowing 56 BCPD (barrels of donsensate) and 1800 mcf gas per day. Now if you can pass you this basic english hurdle, you may even be able to combine it with some grade 4 maths and work out that the well is producing 200 BOEPD (barrels of oil equivalent per day ). The workings for this is as follow:

56BC = 56 BOE (approximately)
1800 mcfg = 1800 x 6/75 BOE = 144 BOE *
Total= 200 BOE *

* BOE is cash equivalent terms. Pricing at $6 per mcfg and $75 per BO

3) Poiseuille's Law
If you want to get all erudite, you may realise that flow rate increases by the fourth power of the radius. Or in simple terms, if you increase the radius by 2, flow rate will increase by 16 (ie 2x2X2X2). Obviously this has to be balance against sufficient pressure and its a bit different for compressible substances but you get the concept. The bottom line is
a) they have very good flow through a small choke
b) they are in an overpressured system so they should be able to open up that choke --> expect better flow rates

4) Looking forward
a) This is the lowest zone of the gas sand so I assume that higher zones in this sand will not have the high ammounts of condensate seen so far. You can see this has the glass half full or half empty.
b) The gas interval is 300ft+ thick when they were expecting 180ft. They have also increased their acrage so expect a big resource upgrade both in therms of size and confidence (1P vs 2P)once the well goes commercial
c) The higher intervals are almost certainly the oil producing Siph Davis sands. Everyone has forgotten them?

5) Options
Tick tock. Why are people still buying them?

I probably sound a bit condesending .... but really!


Dis: Holding VIL, GGPO. Continue to expect VIL to rerate to mid teens over the next few weeks- months. Buy at current levels