Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
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Good drilling practice (well cleaning, pressure surges , BHA design), the now started learning curve, an adjusted drilling fluid for reheology and inhibition, filtrate, mudcake etc, with optimized mud weight can make the difference to drill the 2.000 m horizontal section - but no guarantee . And ORG should have the motivation not to give up. Not the first time an oil company needs another sidetrack and another and another ... to finish the well.
Newtofo,
I think Origin will make all the executive decisions, which mostly would be contracting with Ensign and SLB. But, Ensign would be in charge of the drilling and SLB would be contracted for the completions. BTW, I've made the mistake in the past to believe that just because a Major (Schlumberger, Halliburton or Weatherford)has hired didn't mean you got their best talent. It is totally critical to vette the actual personnel that are going to be on the ground, and not assume that it will all work out because we hired a Major. Let's hope for the best, and that they've already made great progress on finishing the horizontal.
Darnitagain, the good thing with dealing with a company like Origin -- is they have contracted the drilling program out to Schlumberger -- one of the top two drilling companies in the world. I am sure that Schlumberger has the mud expertise to draw upon, or source, after ten's of thousand's of well completions.
That could also be why we haven't heard anything further about the new horizontal leg being underway? Schlumberger may have called in mudding experts from the US - where there has undoubtedly been some comparisons to what they are finding in the lower Kyalla.
Wet,
If nothing else, Origin should bring mud engineer experts for consultation before redrilling the horizontal. They screwed up the first attempt, and perhaps they need fresh eyes on the problem, rather than just trying the same thing going in a different direction.
Newtofo: Yes - the Kyalla is still a bit of the unknown. I can tell you however that Origin was extremely pleased with the downhole pressure, gas shows, continuity, etc. Origin needs to figure out a solution to the sloughing off of the formation - for them to immediately come back and redrill makes one think they have that solution. I talked to an guy last night about the sloughing off and he said his company had that issue in a well they had to finally abandon it - the drill pipe kept getting stuck with the hole basically caving in. I don't think we have that big of an issue in the Kyalla - seems they drilled 700 meters before they encountered the problem - may have just been in one section. Anyway - it is wise for everyone to not count their chickens on the Kyalla until it is completed. The Kyalla is a new formation and that in itself carries some inherent risk. With that said I am still very positive on its potential and look forward to getting that initial 24 hour flow test result. GLA
It is well worth keeping some perspective regarding the current Kyalla well program. It has been clearly shown already, with the shut down of the first horizontal leg, -- that we have a fairly high risk to keep in mind - that this Kyalla well will not perform as well as we would all hope.
However, we should not have any doubt that the Mid- Velkerri in Beetaloo is a world class asset -- that has just had a significant confirmation by Santos on how prolific the Mid-Velkerri will turn out to be for all of us. As noted below from the Davy report that came out early last summer -- the Mid-Velkerri still has 86 TCF of potentially recoverable gas and Falcon's portion of that is valued at a 42 P -- WHICH WAS BEFORE the confirmation that Santos just handed to us next door.
EXCERPTS FROM THE DAVY REPORT:
VALUATION IMPLICATIONS:
Clearly - it is not possible to pre-determine the outcome of the next two years’
work; however, if the US Marcellus basin is the type model, there is a very good
chance of establishing a wet gas play. By contrast, oil/condensate – albeit very
fungible and high value add – is a less likely outcome. We see the dry gas play as
a baseline for Falcon and value this at 42p per share. After this, a separate wet
gas play would be a very good outcome as the increased calorific value results in
a higher price and enables sales to both dry gas and natural gas liquid markets.
At this stage, we value this on a significantly risked basis at 8.4p per share. The
balance of the valuation for the tight oil option, South Africa, central charges and
cash amounts to 1.0p. As we view the various plays as independent, we can
combine the outcomes – bringing our group valuation to 52p per share.
The net outcome is that the dry gas play still forms the backbone of our valuation and now
stands at 42p per share.