Empyrean Energy Share Discussion Threads

[safiande] 21/12/2017 15:53

KevJames 21 Dec '17 - 10:22 - 14329

dafrog

"They have tested the bottom 2 zones, areas which have not previously been tested. The other zones are producing elsewhere."

I may have miss something here - where is the evidence that the other zones are producing elsewhere?? Thanks.

...........................


Kev,

As you know there is no evidence as the other zones are not producing elsewhere. Top 2 traditional zones are commercial at field level. Enough to pay for the well at least prior to all of this extra work. Bottom 2 zones are sub commercial at present but gas is of good quality.

From PCL:-

“The lower most sand, thin and of lesser quality nevertheless flowed good quality dry gas to surface.”
( 30 Nov 2017 )

Nothing producing in between. Not even tested yet tmk. Tulainyo will be very interesting in this respect. Proof of concept well, drilled to 1737m only rather than to total depth.

[dafrog] 21/12/2017 15:43

FSAwatcher negatively spamming o&g shares. Must have a boring life.

[currypasty] 21/12/2017 14:46

11/dec
" we are actively working to have Dempsey 1‐15 well in production selling natural gas in the next couple of weeks"

[nithbank] 21/12/2017 12:53

Seems to be a new layout on the ADVFN iPhone app which doesn't show the number of each post. Also, messages sorted latest at top rather than at end.

[showme01] 21/12/2017 11:45

Curry, I only buy to keep. My financial advisor went nuts when I asked him to buy £75k AIM shares to put my SIPP. I might make him even nuttier :-))

[currypasty] 21/12/2017 11:38

showme.. 500k T20 lol

[showme01] 21/12/2017 11:31

V Tempting at these levels

[brimsley] 21/12/2017 11:12

Buy more showme much more plenty on offer see you at 8p

[currypasty] 21/12/2017 11:03

Sacgasco directors know where this is going...

"HAYDN-SLATER, Philip 14 Dec 2017 Buy Direct Shares 1,000,000 $85,000"

[michmcd] 21/12/2017 10:22

why is anyone even responding to this lowlife gobsh*te. He is clearly taking great joy out of other peoples losses with his stupid patronising comments, serving nothing but to wind people up. I suspect he is laughing and adding at the same time (or rather his master is adding) at these rates. If everyone ignores him he will no longer serve a purpose and go away, disruption is his objective. Ignore the fool.

[kevjames] 21/12/2017 10:22

dafrog

"They have tested the bottom 2 zones, areas which have not previously been tested. The other zones are producing elsewhere."

I may have miss something here - where is the evidence that the other zones are producing elsewhere?? Thanks

[buffythebuffoon] 21/12/2017 10:21

Superb post Kev.

I've always been accused of not being cynical enough.

Well I'm afraid people may be right, but I just cannot convince myself to believe that, mechanical failures aside (and that's just a short term problem), this well won't be commercial.

Everything said so far about the operations, and the strategy adopted, together with the known knowns of the geology points to a very successful well.

I was invested in Caza Oil, and had extensive discussions with one of their engineers (including a forty minute discussion on the intricacies of fracking fluids). The technology is so massively more sophisticated than just 10 years ago.

Some zones will be quite tight, others less so. The big takeaway is that we may have something quite decent in the existing zone, and that was expected to be half of the hors d'oeuvre, not the main course.

My dilemma is similar to Kev's. When is the optimal point to back up the truck, kick out the old pallets and load up?

Some think we will sell our 10% in Indonesia. Is that likely to give us enough to drill Alvares and three Dempsey Trend wells?

I mentioned Caza Oil earlier. The operational side went swimmingly, but they got caught out by the precipitous fall in the oil price. Of course, there was the additional problem of needing to ramp up production quickly to outrun the decline curve.

I hope Empyrean manage the finances well. I am confident they will.

So...when to put those reversing lights on...

Buffy

[kevjames] 21/12/2017 10:19

Jemjem

I went for the worse case of a total write off - so it could be better! However, in reality they still have to prove the known (Forbes) upper zones up and although frequently stated by SGC that it will pay the well costs, this is yet to be proven and we certainly don't know the flow rate (it could take many years to pay back). That said, I am still fairly sure they will stimulate the lower zones successfully, but I am well aware of the risk/reward in this business, so I try to add balance.

[brimsley] 21/12/2017 10:06

8p yes showme you made the same comment when i called 12p enjoy

[jemjem] 21/12/2017 10:05

Kev
In your $5m write off (not sure how you get that high), did you factor in the higher levels will be able to flow commercially and "pay for the drill costs" ?

[dafrog] 21/12/2017 09:58

They have tested the bottom 2 zones, areas which have not previously been tested. The other zones are producing elsewhere.

[kevjames] 21/12/2017 09:54

Shareprice is not quite where I would have liked it at end of year!! In reality it is no surprise that it has fallen due to the fact that the Dempsey project is not delivering any meaningful income and continues to demand further investment to prove up the potential. IMO, Dempsey has zero valuation at this level - but does this make sense?

There are really only two outcomes to this event:

1. The gas can not be extracted from this play at a commercially economic rate.

2. The opposite of 1.

For sure these are low permeable “tight “ sandstone targets and for those that are interested, the following link gives more on the topic of this type of play and how developed and successful these plays are in many areas of the world and particularly in the USA.



So, back to Dempsey, some are openly saying option 1 is already the outcome ie it’s a duster! Others are saying it’s going to be best new play in the region - “It’s just the beginning” etc. The reality is we don’t know the outcome yet. Bashing people who think 1 is the outcome is slightly blinkered, on the other hand assuming all is rosy in the garden is also dangerous. What we know is the two deeper zones will not flow economically without stimulation. However, we don’t know if they will flow economically after stimulation. That is the next "big event" and forms the next stage of testing and it is unlikely to be complete until Q1 18. Additionally, we know even less about the flow characteristics of the other higher zones in the well and that is likely to be the reality for a long while. The brutal fact is that after spending weeks (and lots of money) successfully drilling and casing the Dempsey well, we will now have to spend many, many months further testing and not gaining any substantial revenue. Sadly, we have really no choice and no other strategy makes sense unless we decide to miss out on data that could help develop the full potential of the area. It will now be a case of wait and see, the upside is a transformational new play worth lots. The downside, well from this share price, it looks pretty limited to me.

The two questions that remain in my head are 1) Have EME got the funds to continue testing without the need to raise capital? 2) Will stimulation open up the flow rates to an economically sustainable level? I don’t know the answer to either 1 or 2. However, if this is an economically viable play, its value will be considerably more than the current zero value attributed to it. People unwilling to pay 11p share today will be rushing to buy at 20-30p in short order if they think this is commercially viable. From my research it seem probable that stimulation will work - but of course it is not a given. If however, it proves too difficult to flow gas commercially, EME can and would probably bail out of this project at that point. That would result in a write off of around $5 million for the Dempsey investment -bad, but not a company killer. Definitely more of a killer for SGC.
I am now looking to top up big time but the decision point on when to buy is still in the balance. Trigger points to buy for me are either at any capital raise or if the flow rates from the first Tulainyo zones are good (which will (IMO) be read across to the other currently untested zones in the Dempsey play). I expect PLC to report the first Tulainyo zone flow rates in mid January- so not too long to wait.

Going back to the early question - Does it make sense to value Dempsey at nothing? The answer is yes if you believe it will never be commercial and no if you believe the opposite. However, given that statement, it appears that the markets have already decided that this is a failure - and that is the bit I would have an issue with. There is still lots to play for and no way could it be classed as a failure with the current known facts.

EME may also soon drop some news on China or Duyung, so this level is getting very tempting as a top up point. Good luck to all. DYOR AND AIMHO etc

Finally, Have a great Christmas and New Year and remember to stay healthy and happy. The latter can sometimes be hard when if like me you are a Stoke City supporter. That said, it could be worse, I could be a Newcastle fan :-) - Happy Xmas Toon.

[brimsley] 21/12/2017 09:50

Track away conspire away but the only one responsible for your loses is you see you at 8p

[birotop] 21/12/2017 08:09

seagreen - very interesting & thanks..