SGC Q & A11 Dec 2017 09:30
to such gas reservoirs is not possible with normal horizontal perforations at the rate of 6 shots
per foot. Stimulation is designed to increase the permeability for natural gas to flow by
creating interconnecting fractures up and down to connect a much greater volume of
permeable and porous gas‐filled reservoirs in the proximity of the horizontal perforations. We
are doing this work expecting to see very significant improvement in flow. Otherwise, why
would we bother? Depending on the results, we may test other zones to add to production
after we do this reservoir stimulation work. As expected before drilling, we have confirmed
that there is a tremendous amount of optionality in our efforts to fully assess the Dempsey
gas discovery. As various aspects of the discovery are confirmed and sustained higher rates
of production are established, the information gained will in turn help calibrate and map out
future appraisal and development plans along with other exploration appraisal drilling.
2. So have your observations / conclusions to date about Dempsey changed?
It is our view that Dempsey is a large, clean dry natural gas charged structure without any
observed water with the potential for significant production below the Rancho Capay field
reservoirs.
In my view, Dempsey is already a very significant natural gas discovery. There already is and
will be increased competition for other prospective areas in the Basin and consequently we
must, in the interests of investing shareholders, protect some of the detail that does not have
direct monetary impact on shareholders, but which provides us with competitive advantage.
The evaluation and learning process for us all is continuous and exponentially material due to
the under‐explored nature of the Basin.
To summarise:
o We already have a significant natural gas resource at Dempsey in the lower interval
of interest;
o We expect to be soon producing quality gas and seeking to improve flow rates;
o The testing of Dempsey has only just begun and my views of its potential are perhaps
changed in technical detail, but not diminished otherwise.
Moreover, the more important message is that we are the first company in almost 100 years
of exploration to prove up the older structures in the Sacramento Basin, and the associated
potentially huge petroleum system; and, furthermore we are poised to lead the appraisal and
development of it.
For a small company, Sacgasco has an impressive lease and infrastructure base in the Basin
which we have built up over the last few years so we are in the box seat here.
3. So what’s next for Sacgaso Gary, and what should investors be looking forward to in the nearterm?
Firstly, we are actively working to have Dempsey 1‐15 well in production selling natural gas in
the next couple of weeks adding to our existing revenue base.
We are concurrently designing and permit
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