today's meeting

I’m back from getting my nephew’s nose checked – it wasn’t broken but he’s got an impressive black eye and bruising in various parts of his body. He was photographing the sculptures at Lake Ballard when a group of locals worked him over. He’s lost money, credit cards but fortunately the US embassy was holding his passport. A truck driver brought him all the way to my door. Some welcome to outback Australia.
Back to the NEN meeting. DJR gave you a great summary. I’ll just flesh it out.
The only time I contribute to this forum is by way of meeting reports. I seldom have anything I can contribute given that we have so many members who freely give up all their expertise. And once again I thank them for being so generous.
(DJR, I was the age challenged person with the big mouth asking all the questions).
In all the times I’ve attended these meetings this was the first time Ken has not given us a formal report. I was taken aback when they were going to close the meeting after the formal agenda was covered.
At best there were a dozen people there and the morning became nothing more than Ken responding to questions. I’m not great on technical issues so these are general impressions.
First Paloma. As you all know OXY are very active. Ken said they’re spending enormous sums just on exploration in this area. He briefly mentioned another major entering the scene (I think Chevron). With their huge budgets NEN can’t compete for not only services but the grab for land. He feels we may have the best prospects in the region and when someone asked whether a takeover was a possibility his answer was two fold. First OXY prefers to wait until the target proves their resource before moving but secondly NEN’s ground could well be completely surrounded by OXY. Anything is a possibility.
The testing question. We gained the impression that he’s as frustrated as we all are. As DJR said, we’re hampered by the majors swallowing the available services and ……sometimes when they do get contractors in, their equipment is frustratingly inferior.
Having said that a while ago they established that the PD 1 well flow of over 200 bpd came from Lower Stevens rather than Fruitvale. As we’ve heard testing is underway and there should be something within a week. Ken said he wants to see steady flows over at least a week before making an announcement – too often such flows drop off in the early days. The chairman of the meeting chipped in with a comment that hopefully there will be definite news at the time of the AGM. (DJR could you verify that I got following technique correct) At the target depth they use a frac pack. They inject fluid to open channels and then insert ceramic beads to keep those channels open.)
They are still very positive about Paloma.
N.San Ardo. This water disposal is still a problem given that this is a green belt of horticulture. They can’t reinject the water because of aquifer considerations. This is not an area where they can create evaporation ponds either. They’re actively working on the problem but at the moment production is not quite covering their overall costs ( slightly less than the 300 break even figure). We were assured that this is not a financial problem for the company.
I’d also asked about the injection of steam. I admit it, I had this all wrong. I posted on Hotcopper the drilling animations site Ken had given me but San Ardo is not covered. This is probably info you already know but here goes. The usual technique in this heavy oil field is a vertical well. When I asked about horizontal applications of steam he said it wasn’t appropriate in such shallow wells as the steam is quickly absorbed within the aquifer. Too much steam turns to water. They’re developing techniques some of which were submitted by the Canadians we had previously heard about.
Once the water issues are resolved further developments can be progressed.
We were reassured the water that’s extracted is treated to a level that is environmentally friendly.
Paris Valley and the Glau Nearfield Exploration Lease.
Consider the protest groups within the coal seam gas territory of N.S.W. California can match them and more, especially in Monterey county. NEN is quietly and patiently meeting these groups, dealing with local govt who are not oil/gas friendly. We were assured that our representative there has developed good relations with the farmers on whose ground we hope to drill but Ken would not put a time line on Paris Valley. Working quietly with all concerned is preferable than working through lawyers - this would only bring out the more vocal environmental groups.
They hope to begin appraisal work on Glau Nearfield shortly.
In both areas NEN has very high hopes of success.
Kellerman is of no further interest.
Vietnam I’d not heard Ken speak openly before on his expectations that NEN would be a billion dollar company within three years.
At the last meeting we’d been told about Exxon’s success’s. This time he was obviously excited by the propects of the recent 3D seismic programme of Block 120. It has all the hallmarks of the Exxon field.
The Vietnamese are very impressed with ENI coming on board. That multi national company is held in great respect by the V. Govt.
The other 3D results will be received in Nov.
Ken’s words “Everything looks positive on a grand find.”

Finally, I should mention that it is obvious that Ken reads Hotcopper. He understands the frustrations of shareholders but he reiterates the same theme, “we only want to issue statements when we have assured ourselves of the quality of the information.” He also kept reminding everyone the problems of being a small fish among multi national powers. They are only a 9 person office here in Perth and a $150 million company. He mentioned the resources of Exxon and Occidental – it must be rather intimidating having them as neighbours.
James