“I am still trying to work out why LTIP was proposed in a rush. As you correctly pointed out that something's just don't add up”.
The LTIP was introduced to shareholders on the 24/04/2012 and was to be voted on the 30/05/2012 before it was cancelled.
I was going through the Announcements in February, March and April a couple of months before the LTIP was released to see what stage of the drilling SSN was up to with Australia 11 and Gretel 11 and if there was any coloration as to why it may have been rushed.
29/03/2012
Gretel II 12KA 3 #1-30H, (SSN 100%, subject to a 33.34% backin right)
"The Gretel II fracture stimulation of the Bakken Formation was successfully completed on March 28th utilizing the sliding sleeve frac method. 1.7 million pounds of proppant was pumped into 20 stages. This represents a 65% increase in the amount of proppant pumped into the formation as compared to the amount used in the Australia II well. The larger volume of proppant pumped was enabled because the reservoir quality was better and was able to accept larger volumes of proppant because of lower treating pressures than that experienced in Australia II. Some design modifications were also used based on the experience gained in Australia II. Two fracture stages were abandoned after a frac plug was set in the vertical part of the well. This plug and the perforating gun will be recovered when the well is worked over next week. This operation will drill the 19 ball drop valves. The well commenced flowing back at a rate of 1440 BFPD (all frac water) on Wednesday (March 28th) evening".
Australia II 12KA 6, #1-29H, (SSN 100%, subject to a 33.34% back-in right)
"The work-over rig successfully retrieved the stuck perforation gun out of the wellbore and is currently drilling out the remaining frac plugs. Following this clean out operation, a production string will be run to prepare the well for the rod pumping equipment".
10/04/2012
Gretel II 12KA 3 #1-30H, (SSN 100%, subject to a 33.34% backin right)
"As previously reported, the Gretel II fracture stimulation of the Bakken Formation was successfully completed, however a frac plug was set in the vertical part of the well. This plug and an attached perforating gun will be recovered when the work-over rig arrives later this week after having completed the Australia II work-over. The go forward plan is to recover the fish, drill out the frac valves and run the production string and continue the flow back".
Australia II 12KA 6, #1-29H, (SSN 100%, subject to a 33.34% back-in right)
"The work-over rig successfully retrieved the stuck perforation gun from the Australia II well and has drilled out the remaining frac plugs. This operation took longer than expected due to several breakdowns of the rig and associated equipment. The rig is currently running the production tubing after which the well will be flowed back. As noted, this rig is expected to mobilize to the Gretel II location later this week".
You will notice with Gretel 2 on the 29/03/2012 SSN said “The well commenced flowing back at a rate of 1440 BFPD (all frac water) on Wednesday (March 28th) evening”.
And on the 10/04/2012 SSN said “During the intervening period the well has been flowed back and has recovered 12,000 barrels of water. The stimulation operation injected a total of 43,000 barrels”.
SSN IMO would have known by the 10/04/2012 two week before the release of the LTIP that Gretel wasn’t going to produce to their expectations because it only took an additional 2583 barrels of water in flow back (or 8% more than the 12,000 barrels) for SSN to come out and possibly write off a 1/3 of the acreages north of the Broxton Fault line in Roosevelt.
Chand I would like to think SSN are doing the right thing by shareholders because the LTIP should have been bought up at the AGM not during the part completion of their drilling program.
Cheers Matsim
SSN Price at posting:
5.4¢ Sentiment: None Disclosure: Not Held
