Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on December 3, 2010 at 16:28

Report date 12/3/2010, 133 days drilling ahead @ 20,118'.

Permalink Reply by Checkmateking on December 5, 2010 at 9:24

Gosh Darn, there was no conspiracy theory in the vertical well on your families Elm Grove land, a vertical HS well would produce very small amounts. Some Cotton Valley wells do come in gangbusters and will easily outperform even the best of HS wells.

Permalink Reply by Bob Nies on December 5, 2010 at 9:59

What Mainland is trying to prove up is if the Haynesville zone is gas charged, if vertical fractures exist, and confirmation of the pressure (energy) in the formation..... this does not preclude possible horizontal wells to gain full production potential in the future.

Hydro-fracking this vertical well will give a good "first" indication on the proper chemical composition of the fracking fluid and whether production can be stimulated/enhanced in this well. If the whole of the Haynesville is gas charged and producible we have a giant gas discovery on our hands in addition to the up the hole potential already being reviewed and evaluated by independent soureces.

Secondarily, poking into top the Smackover only enhances the upside to this project, (possible good porosity on its own adding multiple BCF's), while defining the full extent of the thickness of the Haynesville which could now be over 2,850' thick at this apparent downthrown fault location. If the casing program can handle the BHP, drilling all the way to the Smackover could be a big bonus on its own....

Permalink Reply by Skip Peel - Mineral Consultant on December 5, 2010 at 11:33

I think your description is a good one, Bob. The Burkley-Phillips #1 is a high-risk, potential high-reward test well with multiple zones that may have commercial value. Mainland only needs some of those zones to prove productive to make a profit even if none are the Haynesville. To hit a home run, they will need the Haynesville to have sufficient net pay with the attributes you mention in order to attract a JV partner capable of large scale development. IMO, Mainland didn't have to misrepresent their Haynesville Shale experience or resort to the Internet touting that is so typical of Pump and Dump schemes to get to this point. I hope they make a well.

Permalink Reply by Bob Nies on December 5, 2010 at 12:32

Skip,

We all tend to be optimistic for sure...... whether a successful frack program for this particular shale sequence can be developed that provides an economic return is going to be the key differentiator IMO.

I found this information which adds some tidbits to this particular well off the AEXP web site in a 10-Q filing they had made.

Management believes that over-thickened Haynesville Shale units can be isolated which are rich in organic carbon, possess superior rock properties and are gas-charged. A deep well drilled to a depth of 22,000 feet on the leases in 1981 confirmed the presence of highly over-pressured natural gas within an exceptionally thick Haynesville shale section. The well was drilled to a depth of 22,000 feet, reaching total depth while still within the Haynesville shale.

Extensive geo-technical work has been completed on data from the old well and geophysical data from the area encouraged the drilling of a new well. Two independent geophysical assessments of the property were completed and a gas in place assessment was completed by a leading petrophysical group who has experience with the Haynesville Formation. The results of these extensive studies suggested that the leases of interest contain significant hydrocarbons. In that the Haynesville is so thick in this locale, vertical wells may be used to develop the property, reducing costs and many of the drilling challenges associated with horizontal wellbores. Drilling costs were estimated by an engineering company experienced in the project area, to a depth of 22,000 ft. Based on observed production rates within the Haynesville Formation of NW Louisiana and other Bossier Formation wells in East Texas, the highly over-pressured Haynesville observed within the leases of interest may produce at very high rates. Economic analyses conducted suggest that rates in excess of 8mmcf/day will generally be economic, if gas prices are stable in excess of $4/mcf. As of October 25th, 2010, contract natural gas prices were $3.30/mcf.

In July 2010, the Burkley-Phillips No. 1 well commenced drilling on the Buena Vista prospect in Mississippi. The new well is being drilled approximately 1,000 ft. away from the original well drilled on the property in 1981 and also has a planned total depth of 22,000 ft. The Haynesville is the primary target, although other secondary targets may be encountered. As of October 26th, 2010 the well continues to successfully drill towards the targeted depth.

Permalink Reply by Skip Peel - Mineral Consultant on December 5, 2010 at 14:17

Bob,

Early in the LA. Haynesville Shale Play there was much optimism associated with reports of gross thickness. The fact that thickness does not necessarily equate to economic production was a big surprise for many when wells completed in their area were a disappointment. Some of us also kept tabs on a marine shale play in SE LA. not far from the Burkley-Phillips #1 that held much promise. It turned out to have a problem with near well bore permeability. The wells exhibited impressive flow for a short time before super gluing themselves shut. Some may not realize that a successful frac design in the Mississippi area of the Haynesville formation is not a given. Within the economic area of the Play here in NW. LA. we are seeing some significant variance in production that appears to be a function of the difference in brittleness or clay content of the shale over relatively short distances. All the areas I mention could to some degree be described as having the data and geophysical assessments mentioned in the AEXP filing. The problems or variances were not obvious until wells were completed. Optimism in cases such as the Buena Vista Prospect are fine when tempered with a recognition of the still unknown petrophysical characteristics of the formation. Hopefully Mainland's luck will hold and the well will be completed as designed. I look forward to a discussion based upon the completion report.

Permalink Reply by Bob Nies on December 5, 2010 at 14:27

Right on Skip.... it'll all come down to the frac job in the end....

Permalink Reply by Les Bamburg on December 5, 2010 at 17:29

Bob, actually it is more about the basic parameters of the formation. Those are the most critical and if not right cannot be "repaired" by the fracture stimulation design.

Permalink Reply by Les Bamburg on December 5, 2010 at 17:42

Skip, I see people use that term but I have not seen any technical verification of wells "super gluing" themselves shut. A dramatic fall off in rate sounds more like a formation permeability issue or very short fracture lengths.

Permalink Reply by Skip Peel - Mineral Consultant on December 6, 2010 at 2:44

Les, dramatic fall off is fine. The problem was described by the operator as near well bore permeability, or more accurately impermeability. Regardless of the details I think it illustrates sufficiently that all shales are not the same and that it can take multiple attempts to get the completion design correct. In cases of low brittleness there may be no design which will make a shale commercially productive.

Permalink Reply by Skip Peel - Mineral Consultant on December 6, 2010 at 4:01

Jay, S/N 237776?

Permalink Reply by Bob Nies on December 8, 2010 at 6:38

Heard they got a 21' core sample... anyone got the details?

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