Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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The gas PPM is a confusing part to me too. And I haven’t seen any comparisons.
Thanks mark.
I believe the COS is 60-70%, it's my guess that its gas migrated from a zone producing across the border in Chile
Hi all - I appreciate the Palermo Aike well is not as significant as TA, but with testing ongoing and the share price near 1p it can make a big difference.
I think Julian mentioned that reservoir effectiveness was the key risk here too. Anyone know the COS on this well and particularly on the reservoir effectiveness?
And because this is a fine Monday, a minor top up - just to take advantage of the very low SP.
WT
Agreed the workovers might start declining over time but one would hope the 15 identified wells have the best chance for success with optimum lifespan.
Just to confirm Argentina trade on Brent not WTI so current average would be $52 for Feb.
I feel the workovers would add value and help boost our income and pay for any costs the company are running. more income less chance for dilution.
nyforever
We will have to spend money, in order to recoup higher revenues.
That breakeven point may be one year hence, or even longer.
The current WTI price is $45 before operating, transportation, taxation & selling costs.
The last time we did a series of workovers, we did not see how the end point of the exercise panned out.
If there was any medium term benefit, CGC got to enjoy them but we did not see the numbers.
And for those who have not been involved in workovers, after one there is normally an increase in production. Then over time, depending how quickly the new perforations get blocked by sand/debris from the formation the well production reduces until it falls to a number approximating to where you started from. Some wells can be a terrific success and some not so much. I am not saying that Echo should not go ahead with a workover program, what I do say that expectations should be reined in as the benefits can be marginal.
We must trust Echo on this workover program, but be aware that there may well not be a big jump in our revenue stream.
And I welcome a cost cutting program in Santa Cruz and a desire to increase production. The process of well optimisation particularly with an oil well and the proximity of the oil/formation water boundary can be a dangerous game to play. Once coning occurs, that can be an oil well ruined. Do we really think that the previous operators or Santa Cruz owners were so technically inept that they could not balance a well correctly?
My guess is that they took production in the last few months of their ownership to the very edge of increasing watercut (that is what I would do), but heck - what do I know??
WT
Agreed we own the workover rig and I highly doubt they will frack either. From memory a workover costs around $100,000 to complete. That includes the cost of the rig so we could take a % out of that. @ 70% cost to echo its not that much.
I worked out that the 15 workover rigs if produced a minimum of 20bbls a day would generate an extra $996,450 per annum net to echo @ 70%. total figure per year is actually $5,694,000 ( based on an average rate of $52 barrel ).
that is of course at 25% of the barrel. we could get more % depending on costs. I know royalties are at 12%. Also that figure is only based on 20bbls. we could indeed produce more, just depends how they want to play it.
Also if the barrel price improves we will get more. they work out an average for the month and base the price we get on that.
I think the workovers would add value and any extra income would help echo right now and the sp.
We actually own a work over rig, came with PA. I can’t see they will frack them all, more overhaul beam pump etc or install an ESP.
But any revenue will just be for running costs etc, TA the prize
We have several, actually 3 bites of the cherry in Western Tapi Aike which is the "raison d'etre" of Echo Energy.
We have a chance of something in Palermo Aike.
I put no value on Bolivia, the Eastern Tapi Aike well or working over the 15 SC wells.
And if you look at the cost of a well workover.
The cost of the "hire of the workover rig.
Re-perforating the well.
The cost of a hydraulic fracturing operation.
Etc.......x15. Yeah, that'll be right!
And why did the previous owners not do it.
I know, because they did not have a team of top class geologists, such as we have.
So far, 5 wells and nothing economic to date!!
And Western TA is what I am waiting for.
The rest is pure window dressing with some income from SC, that may fall off the edge of a cliff in a few years time.
And the SC income will get chewed up by Mr Parsons and his friends unfeasibly large salaries.
Agree, or disagree but that is what I think!
WT
Certainly nice thoughts but starting to feel there will be no fairy tail ending here, that said, who knows.
I think the next few weeks will be exciting and interesting. A commercial discovery could turn this around, and a solid workover programme starting in March may well send this in the right direction before H2 and tapi aike.