This is a thread to bring together a few posts on valuation and the upside. It is early days, but the upside is huge.
Comparing this hole to the Songo Songo field next door....
SS-10 (Songo Songo) has a pay of 101m and production flow looks to be 55 mmscf/d when on production.
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http://www.orcaexploration.com/news_07_5_nov.asp
The well was flowed at a peak rate of 52 mmscf/d, and a sustained rate of 40 mmscfd through a restricted 1" choke at a 1,900 psi wellhead pressure during a 24 hour test that was restricted by surface facilities. It is estimated that the well will be able to flow at an initial rate in excess of 55 mmscf/d when on production. This makes SS-10 one of the most productive wells in the field and increases the total deliverability of the six production wells to over 200 mmscf/d.
The well was drilled to a total measured depth of 2,426 meters within the main Neocomian reservoir. The top reservoir was encountered on prognosis at a measured depth of 1,909 meters (-1,700m TVDSS) and a comprehensive suite of wireline logs, the first on the field for over twenty five years, was successfully acquired. From evaluation of the logs, 101 meters was perforated in the reservoir.
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Given a similar ratio, would it be fair to say this hole could flow about 33mmscf/d?
A few cals (I'm no Gas expert), 33mmscf = $9 (Gas price) x 33,000 (33 x 1000mcf) = $297,000 day. 20% net to KEY = $59,400 day = Revenue of $21.6M p/a.
This is only one well.... This points to huge upside for the rest of the field.
With a market cap around $20M at 22c (89M shares) and last quarterly listing $12.4M in cash, this has a long way to run.
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Posted by Ya
As a thumb rule I was working with a fig of 30MMCFD sustained flow, so gas priec of apprx $10 gives KEY $330,000 * 20% share, $66000/day. Ideally one would hook this gas to a prodn line & sell it.
My first net-estimate for the sands was about 30m (50% of what the gross sand height). Mind you the ann'mnts have been patchy in a way as they havent exactly told us the depth of these sands. We know the TD is 2030m. At what depth were these sands encountered, I'm not clear (ie from-to).
Hopefully the next ann'mnt would b more informative, althou' I know I'll b looking out for the MMCFD figures. Ideally 60m or thereabouts should result in 20 MMCFD+ gas flow. Anything more then 55MMCFD would b considered a risk for the Caroil-6 rig (as a safety measure ie).
This result will rekindle some interest in Offshore East Africa once again. Success at KN #1 should perhaps incite KEY to come up with a new well program since they planned only 2 wells as part of this program.
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Posted by the TheSoothsayer
"Hardman's success may hold the key for Key Petroleum Email Print Normal font Large font Barry FitzGerald March 19, 2007
Page 1 of 2 | Single page GARIMPEIRO
TED ELLYARD'S track record speaks for itself. During his eight-year tenure as chief executive of Hardman Resources, the company's value soared from $5 million to $1.5 billion.
That growth was underpinned by Hardman's lead role in the Mauritanian oil and gas discoveries. It was Ellyard that first introduced Shell, and then Woodside, to Mauritania when its oil potential was very much frontier stuff.
Ellyard finished up at Hardman in late 2004 due to a health scare and a recognition that with production about to start from the first of the Mauritanian oil discoveries, his job as an explorationist and creator of development opportunities had been done.
Hardman shareholders that rode that eight-year value surge have been waiting for Ellyard's return to the oil and gas business, particularly as Hardman has since been taken over.
Last week's lodging of a prospectus for the $19.2 million float of Key Petroleum (64 million shares at 30� each) marks that return. The underwritten float (Blackwood Capital and CommSec) is typical Ellyard stuff in that it zeroes in on international opportunities.
If there is a key difference this time around, it is that Ellyard has made sure there won't be any frustrating delays in bringing discoveries to market. Key's exploration portfolio is almost entirely geared towards acreage that sits close to existing production and infrastructure.
Key's other point of difference from all other floats is that more than 70 per cent of the company is on offer. The unusually low rake by promoters/vendors presumably helped in Key securing its underwriting agreement.
Key's main interests � Ellyard and Key's managing director, Ken Russell, can be expected to add to it over time � are in Tanzania, Italy and Suriname.
In Tanzania, it starts out listed life earning a 20 per cent interest in the 1300-square-kilometre Nyuni offshore block by funding 30 per cent of the cost of drilling two wells in the back half of the year.
The block is next to the producing Songo Songo gas field in the southern portion of the Mafia Basin.
Some 11 prospects/leads have been identified in the Nyuni block, and although the basin is considered to be gas-prone, limited exploration to date means it's too early to rule out oil pools being found.
The Italian portfolio includes onshore and offshore plays.
Most interest in the Italian portfolio will be with Key's Borsano permit near Milan in the Po Valley. A well is planned for late 2007/early 2008.
The block lies eight kilometres from the 250-million-barrel Villafortuna oilfield, the biggest in the Po Valley from Triassic carbonates at depths of 5500-6000 metres.
Two previous wells in the Borsano block pulled up in the Tertiary sands, so did not test for the prospective Triassic carbonates. Seismic work to define drill targets will be the initial focus.
The Suriname interest is small at 1.75 per cent but it does give Key free-carried exposure to a big drilling program in a major (heavy) oil province. As an aside, the Hardman link continues as the Suriname interest is held through a trust arrangement with Hardman, now part of British-listed Tullow."
(20min delay)