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Didn't expect this first.
Most interesting is that PRD will not pay a further $1M to CEG, nor will CEG have the opportunity to buy back in 25% in the future. Also interesting to see that all 8 Herrera sands targets (which are all producing on the licence next door) are to be drilled & appraised, and the feild development programme has been approved for up to 20 wells, initially for primary oil production, later with CO2EOR.
@Dai. 1000 millidarcy = 1 darcy. Loose gravel has a permeability of about 1000 md. Helium, being a very small molecule, can cope with a less permeable reservoir than methane or oil, so even 100 md is pretty good. This is an outstanding result.
Since we are dealing with the same charged system, contrary to what some here are saying, NHE results do have a bearing on likely HE1 results. NHE have found:
* Helium shows at all 6 reservoir intervals.
* More than twice the expected net reservoir thickness - 45.7m found, 20m expected.
* Good intact seals.
* Excellent porosity (figure not quoted).
* Excellent permeability - in one case in excess of a whole Darcy (look it up).
* Helium concentrations in the range expected in 2022 CPR - which for Mbelele was 2.7%
* These samples have been contaminated by air, so expect downhole samples currently at the lab to be higher Helium concentration.
* Only the Upper and Middle Lake Beds have been drilled - the big stuff is in the lower formations that have been drilled at Tai-3.
I reiterate a hold tight position, I really don't care that someone here chooses to respond with offensive remarks - I think it is a safe bet that they are not currently wealthy, nor are likely to be.
@Joanne - just for clarity, when gas volumes are stated (in a CPR or here) it is the volume at standard temperature & pressure (0°C, 1 Bar / 100kPa). The in-ground volume is assigned a gas expansion factor (GEF or Bg) to account for the increased temperature & pressure. For example, the MOU-1 main reservoir had an estimated GEF of 140 based on the assumed conditions at that depth, meaning that the gas was squashed into 1/140th of its above-ground volume. On drilling, gas was encountered at 2700psi, which was a lot higher than expected - this overpressure has resulted in an upwards revision of the GEF to 186 (1 Bar equals roughly 14.5psi).
Overpressured wells can be problematic for drilling, but good for economic return!
The new licence applications on trend with Eyasi are very interesting. I really think you traders who risk life & limb to scrape off your 10% on a bent halfpenny change are missing the big picture. This company is a simple buy & hold - the hold being until there is a massive offer by an international major for the whole lot. Just my opinion of course. And Lorna's, I suspect.
CORRECTION.
The numbers derived from the data I presented earlier looked crazy, so I've double-checked the source for volume of methane per km³. It's clearly wrong, where it says BCM it should be BCF, so is out by a factor of 35. My profuse apologies for causing any over-excitement.
To cross-check, I've done things by a different route - so here's a detailed calculation for cfg per km³ of source rock, where I have taken detailed basic numbers from a reputable source, the British Geological Survey -
https://nora.nerc.ac.uk/id/eprint/509720/1/OR14056.pdf Section 3.1, p.10.
* Methane content mg per g of source rock: Fair - 3 to 5 mg/g, Good - 5 to 10 mg/g . Let's take 5mg/g. (conservative!)
* Rock density, assume 2.5 = 2.5 million g per m³
* 2.5M x 0.005 = 12.5g methane per m³
* Methane density = 0.657kg/m³
* 12.5 / 657 =0.19 m³ methane per m³ source rock
= 190mm m³ methane per km³ source rock
* 35.3 ft³ per m³ = 6.7 BCF per km³
Using the relatively conservative numbers provided previously for the Guercif graben, that comes to about 25 TCF, which looks a lot more sensible. NB - this is a conservative estimate for gas produced from the source rock, which is different to the GIIP.
Apologies again, think I need an early evening coffee.
Since the TDFI is approaching the 50% level, may I add a few comments to this highly interesting thread started by our friend Seabright on 15 Oct 2023 19:49? I suspect what I have to say will push the Indicator into crisis mode. I suggest you first re-read Seabright's post, key sentence: "Yes it’s huge, it’s all connected by major deep faults and it’s very hot in the kitchen", then consider GRH's short but to the point view repeated yesterday: "It's all BIG. It's all CONNECTED".
You will quickly appreciate that to form hydrocarbons, you need heat + organic material.
🦕 Heat
Some may be asking what is the heat in the kitchen all about? For the organic material in sediments to turn into oil, it needs to be 'cooked' at around 60-175°C - this is the 'oil window'. Gas is cracked from oil at around 175-225°C - the 'gas window'. This usually happens at considerable depth within the Earth's crust. I have posted a couple of charts on X:
https://twitter.com/KQuick20704342/status/1720617262783008771
showing the window temperatures at normal depths, plus a map showing the rather exceptional conditions around Guercif. How exceptional? I dug up this rather obscure paper showing a staggering 110°C per km depth just NE of Guercif.
http://www.lovegeothermal.org/pdf/IGAstandard/WGC/2010/1162.pdf
My view is that because of the high temperatures at shallow depths, we will see mostly gas rather than oil - this is good, since there is no functional oil infrastructure (pipeline, etc) in Morocco, and the only oil refinery has been mothballed for years. We wouldn't want an oil asset that is potentially stranded.
🦕 Organic material
Basically dead plant & animal matter deposited along with the other stuff making up sediments - usually expressed as %TOC (total organic carbon). Here's some info from a scientific paper that's also referenced in the PRD 2022 CPR under S. 4.1.2 - Source Rocks: p.1478 of Beauchamp, W. 1996 (very long link, suggest you just Google it) :
"Pliensbachian source rocks yield total organic carbon values between 1.66 and 3.87%" and "Maastrichtian source rocks yield high total organic values ∼18% and have excellent potential for generating hydrocarbons"
🦕 How much gas?
A useful rule of thumb is that for every 1% TOC, 1km³ of source rock will yield 3-12 BCM of methane (= 105-420 BCF). I'm not going to do this sum, for fear of ending up in the same loony bin as GRH if he reveals how much gas he thinks there is around Guercif. Why not assume the Guercif graben is 15 x 50km (it's bigger), with sediments 5km deep (they're deeper), with a TOC of 1% (it's more).
In the next couple of weeks, we will have confirmation whether all this gas has been trapped (it has) and can be flowed economically (it will) and if someone is prepared to buy it (they will).
Everything (in brackets) is my own view, you should not consider it reliable information on which to base an investment.
See you in the fun
@Voskos, just seen your second question on this subject: "is it reasonable to assume that the £1m we get back will offset against the £1m bonus?"
PRD do not 'get anything back' nor receive a discovery bonus - there is only one payment, and it is paid to Morocco by PRD. It can however be used to offset future tax. The fact that PRD need to pay $1M within 30 days in order to obtain an Exploitation Licence is the underlying reason for delaying declaring a discovery until all the ducks are in a row - including a gas sales agreement with at least a $1M upfront payment.
@Voskos. Here is the copied & pasted text of the standard ONHYM agreement, Section IV, Article 15:
Section IV.
ARTICLE 15.
BONUSES
15.1 Contractor Group agrees to pay the STATE, when a deposit of Hydrocarbons in the Area of Interest in which it has a Percentage Interest is declared pursuant to the Association Contract to contain commercially exploitable quantities, a discovery Bonus of an amount of one million US Dollars (US $ 1,000,000). This payment has to be made within thirty (30) days of the official granting of the Exploitation Concession.
15.2 In addition, starting from the date the total production of Crude Oil or Barrels equivalent Crude Oil, from all Exploitation Concessions in the Area of Interest in which Contractor Group has a Percentage Interest has reached and been maintained during a period of thirty (30) consecutive days at the daily production levels listed below, Contractor Group shall pay the STATE the corresponding bonuses payable within thirty (30) days of the end of the Month in which the aggregate levels of production have first been so maintained:
50,000 BOPD/BOE per day, one million US Dollars (US$1,000,000)
75,000 BOPD/BOE per day, two million US Dollars (US$2,000,000)
100,000 BOPD/BOE per day, three million US Dollars (US$3,000,000)
More than 100,000 BOPD/BOE per day, four million US Dollars (US$ 4,000,000)
It is understood that the Bonuses specified in Article 15.2 will be a one time, lump sum payment for each level of production when such level of production is reached and maintained for a period of 30 consecutive days.
The Bonus payments established in Articles 15.1 and 15.2 above shall be deemed development costs and shall be deductible for the calculation of Contractor Group’s taxable profits."
I hope that this has knocked this question on the head.
I don't bother with HotCopper - even worse than here. "Also weathered basement suggests possible atmospheric exposure before overlying sediments were laid down...Timing of helium release critical." Jeez, talk about trying to turn a positive into a negative.
* Reasons have been given here in detail yesterday for why 2D seismic is imprecise (especially by @seisprocessor at 19.59), and the CPR highlighted that issue. Investors should be delighted that the primary potential reservoir is a lot thicker than expected.
* The basement is up to 3 Bn years old. Yes, we know it has been uplifted and weathered on a number of occasions. The weathering will help the breakup of the top basement, facilitating Helium release. The Karoo Supergroup ranges from 360M to 180M yrs old, so was of course laid unconformably on the underlying basement. That's what basement means. Perhaps the HotCopper poster thinks that 300M yrs is a critically short time for Helium release and accumulation.
More questions on timing of test results on Telegram. My response, fwiw:
One thing you have to remember - upon a declaration of discovery, a $1M bonus has to be paid to Morocco within 30 days. I can't recall if that amount is held in escrow, but it will have to be handed over. You wouldn't want to make such a declaration until you had someone lined up to buy your gas, who was also prepared to pay at least $1M upfront. For that reason, I expect no announcement will be made until both sets of tests are complete - 2 wells minimum will be needed to ensure continuity of supply. I have said previously that a minimum would be 7 days testing for each well, plus 3 days to agree wording with ONHYM. That would give us the end of this week at the earliest. The recent Prospectus suggested 3 weeks for each well test using Sandjet - but PRD is testing a smaller number of horizons with faster conventional perforation equipment. If the tests took 2 weeks each, that would take us to around Thursday 16th November. All this assumes we started on 16th October as planned. If only one well is announced at a time, or results come earlier, I will be very happy to be wrong.
@DrillbitBill. You ask how there could be such a variation in depth from that previously forecast. Only 2D seismic was shot, which is far from ideal, but a sensible cost-effective approach for shallow onshore drilling. From your username I assume you know that in order to convert TWT (two-way time, the time taken for the seismic wave to travel from the surface, be reflected off the subterranean strata back to the surface) into actual depth, it is necessary to estimate the density of the rock - the denser the rock, the faster the transmission of seismic. Of course without drilling it is not possible to know the density of the rock, so they extrapolated from the two early hydrocarbon boreholes which are some considerable distance from Tai-C. The CPR recognised considerable uncertainty, and consequently already had a wide range of possible depths for the Karoo. I can possibly understand that your "confidence in HE1 is shot" were the potential principal reservoir only half the thickness initially proposed, but in fact it appears to be almost double. This will also result in a larger area for the closure. The CPR gives a 3U (high estimate) of 3.2 BCF for the Karoo. and that was with a miserly 1.75% He concentration. I suspect it will actually be well above 5.
However, I appreciate that there is a set of unscrupulous people on here who are trying very hard to make positives seem negative in order to get nervous folks to sell, thus driving down the share price in order to achieve their own agendæ.
"The primary exploration target for the Tai prospect is the Karoo Sandstone".
Fig 2.7 shows the Karoo to have an estimated thickness of 490m at Tai-C.
Oh look, the primary exploration target is 400m thicker than expected.
@EarlofAim - "scam RNS" - your ignorance never ceases to amaze me. Have you no idea at all what a spectrometer or a chromatograph do? Rule #1 is you really shouldn't invest in something you don't understand.
@Joe90 & @Fart123 - you are both incorrect in your negative interpretations, again.
@Blubay, there was Helium last time, it was not sampled for solely mechanical reasons - borehole conditions - not because there wasn't gas to sample. Everyone involved, from all the companies, already knows there is plenty of Helium at Rukwa.
This was a positive news release, but as I've just previously suggested, many folks here are missing the point of what is going on.
Looks to me as if NHE & HE1 are coordinating releasing TD / wireline results / gas composition results synchronously. This would reinforce the idea that all three Rukwa licence area companies are working closely together, and that an 'interesting' corporate transaction will result - it is that, and not the day-to-day share price, that is mu final goal of this investment.
The actual level of He detected in the gas mixture bubbling up in the drilling mud cannot be correlated with the concentration likely to be found in the reservoir rocks. This gas has come out of the formation despite the pressure from the drilling mud designed to stop it from doing so. On the way up to the surface, the formation (released) gas is contaminated by drilling mud and air. Nevertheless, this is an excellent sign that He is present, and the estimate of 60% net pay in the strata drilled so far is also very encouraging. When drilling for hydrocarbons, a level of 1% formation gas (in that case methane) is often indicative of a likely commercial prospect. Since He is 150 -300 times more valuable per given volume than methane, a much lower formation gas reading for He is still a positive indicator.
Also noteworthy is that despite He concentrations increasing with depth, this trend was not echoed by levels of CO2 or methane, demonstrating that this is likely to be a real indicator of Helium presence. Obviously direct in-hole gas samples will need to be taken, and measurements made both on-site and confirmed in the lab.
I suspect that this announcement by NHE will provoke HE1 into issuing an update today, including information on at least He shows, hopefully also measured He levels.
NHE has just closed at 24.5¢, 6.5% up on the day, after a peak of 26.5¢; +15% on the week; and +34% on the month. Imho, HE1 has some serious catching up to do.
This is what is happening underneath that cloud cover:
https://twitter.com/KQuick20704342/status/1718779534957482473/photo/1