Replies to This Discussion

Permalink Reply by david king on December 13, 2010 at 13:58

ray and i may be related!  i've been  in deals of all kinds since  about  1970 and i can honestly say that i've never seen anything like this-  for you guys that are risk-averse,  the risk now days is  in doing nothing- the dollar is headed  lower and inflation is here- we're just not being told about it-  your downside in mnlu is now about $.50 per share, which is less than a cup of coffee (way less in some places)  and the upside is anyones guess- mine is 5-10.00 per share on a stock swap   and my only regret at this  stage is that i don't have more of it-   best of luck to all of us   and  happy holidays  to all of you guys-   david

Permalink Reply by Bob Nies on December 13, 2010 at 15:22

 

On a risk adjusted basis  here is my estimate of upside potential for MNLU.

30% chance of 10x money ($5.00 per share)

50% chance of   5x money ($2.50 per share)

90% chance of   2x money ($1.00 per share)

 

Remember what that means.... 70% chance of less than 10x money... 50% chance of 5x money and 10% chance of a bust

 

As a risk taker I think those are great odds for success.... a lot goes into the above such as a solid economy, higher gas prices, inflation, favorable use of natural gas in solving our energy crisis, favorable legislation, etc, etc..... a lot has to go right to get the good returns projected, not to mention a Haynesville capable of economic production....

 

Merry Christmas to all and good luck on your wishes on this well.

Permalink Reply by CB on December 15, 2010 at 2:22

Are you people living in the real world. This is a wildcat, which statistically has a 1 in 7 chance of being profitable. And this is a high risk wildcat at that. Do you realize the productive capacity that this expensive well must have to make it economical? At least you'll have a tax write off, that's about the best to hope for.

Permalink Reply by The_Baron on December 16, 2010 at 4:46

This well could quite easily be a money pit. Just look at how long they have been drilling, no telling what has been spent so far, and they still have to complete the well and probally build a substantial pipeline if they make a well.

 

With all the hype mainland has put into this one well, if it fails to live up to expectations I prdict their stock price will crater. Maybe even a possible bankrupcy???

 

So they have shows, so what? Only time will tell if they can make a profitable well. Personally, I'd rather stay in the wilcox... dry holes are a lot cheaper there.

Permalink Reply by jeff boler on December 16, 2010 at 18:07

Back in July, when I first became interested in this company I too thought that they had greatly underestimated the cost of this project. However, research indicated that all of these expenditures were taken into account during MNLU's economic analysis. The well's location was chosen based on a number of considerations, one being the potential for immediate revenue. The Buena Vista Field has long produced oil & gas from the Lower Tuscaloosa Sandstone in this area and a well maintained pipeline infrastructure is avaliable.

 

The drilling operation is currently under budget and ahead of schedule. I believe that their stock has seen it's low, & I'm no accountant, but I don't believe that bankruptcy would accomplish anything. MNLU has no debt...

 

I would be interested in making investments in companies exploiting the Wilcox as well. I'm assuming that you are referring to the onshore trend and not anything like shell's perdido project. If you could point me towards a few companies that you find interesting, it would be appreciated...

Permalink Reply by jeff boler on December 16, 2010 at 18:55

Back in the late 70's & early 80's Shell and Chevron, realizing the potential of the Smackover, Independently embarked on exploration campaigns drilling deep wells all across Mississippi. They discovered a lot of reserves, but they were looking for HUGE oil-fields. There is a cased in Smith county where over 1 TCF of gas was bypassed, because the the operator simply wasn't interested. Chevron, about 100 ft from MNLU's well drilled and logged a well to 22,000 ft in an effort to explore the Smackover. Due to the limited technology of the time, high temps & pressures, they were forced to stop short of the smackover. It seems that drilling fluids can only support so much barite before it begins to fall out. With a 19.6 pound per gallon mud weight, Chevron was applying 22,422 psi to the formation, but it was not enough to control the well. Written logs from this effort account that the last 2,400 ft were drilled through a fractured shale. And the most advanced logging technology of the time was utilized to log the well prior to abandonment.

 

Because of low oil prices during the 1980's, the majors sold all of their assets in Mississippi. The rights to this well may have changed hands a dozen times since then and it's potential was lost to time. A few years ago the USGS set about on a study to estimate the Untapped resources potential of the Mississippi Interior Salt Basin. This and other studies sparked a new interest in the region and American Exploration got their hands on Chevron's Well-Logs from the above well, which proves the area's potential. This is why MNLU has, from the beginning, maintained that this venture is "low risk".

 

I do realize that the recoverable resources of this well would have to be huge!!! In fact it would have to be real huge!!! MNLU & AEXP believe that it's there. I know that the pressure is there, that is clear. I also know that the formation being penetrated is full of hydrocarbons. This well is lining up to have the flow rates best compared to offshore gas wells, and we didn't even have to build a platform or subsea pipeline!!! It looks like I'll be paying a capital gains tax as opposed to utilizing the tax credits.

Permalink Reply by Paul M. Hess on December 17, 2010 at 0:44

Well written, Jeff. Much better discussion than I would have made over the length of time to drill concerns. I am sure there are many records available across the lower gulf coast that will show long drilling times on many a deep well due to those very factors you mentioned should those concerned wish to research. A friend of mine re-entered a deep well and it took nearly a year to drill out and complete at only 18,000 feet. From a geological viewpoint, this well can be huge in redefining the play. And I believe it will. Too bad they did not permit and plan on going all the way to Norphlet. Perhaps they will in a future development well utilizing what they have learned in this effort.

Permalink Reply by Les Bamburg on December 17, 2010 at 4:15

Paul, I would believe they would stay away from the Norphlet given the likely quality of any gas produced from that formation.

Permalink Reply by jeff boler on December 17, 2010 at 11:00

rt data from the current drilling run...

 

I have made a decision not to share all of the data that I have uncovered based on three reasons: 1) I believe that divulging this information would influence the stock price. It is in everyone here's interest that shares remain as low as possible for as long as possible. 2) Though I wasn't specifically asked not to share the information given to me, I feel that it would be disrespectful to announce it in such a way. I feel that if my source wanted the world to know, then he would get on here and share it with the world. 3) Being in the Oilfield myself I always hate when I ask a question and someone says "it's a 'tight-hole'". Despite my feelings toward the 'tight-hole' concept, I feel ethically bound to uphold it.

 

I know that isn't the answer that you wanted, but it's the best I can do. I have a number of character flaws, but being dishonest is not one of them, I have no intent to confuse or mislead you or anyone else.

 

If your familiar with the Haynesville in North LA, I worked from spud to T.D. on the Calhoun, Carmel Trust, Schroeder, Arnold, Red River Bend, Tensas Delta Exploration 7H & 8H, _____ Forest, and I can't remember the name of two of them. The realtime data indicates to me that the formations being drilled are of higher quality with regard to hydrocarbon storage capacity than any of the wells mentioned above.

 

I have no idea if the wells I worked on up there were good producers or not, half of them are likely not even producing yet. I'm going to cross my fingers and hope that there is not a pattern of low productivity on the wells I worked on...

 

Permalink Reply by Wilmer Sparks on December 17, 2010 at 11:53

It sounds like the old "if I told you, I'd have to kill you" phrase.

Permalink Reply by BirdDawg, plain ole' idiot on December 17, 2010 at 16:29

Jeff,

If you have made a decision to not share all of the data you have uncovered, then why are you sharing any data at all? Misinformation is detremential.

Permalink Reply by Paul M. Hess on December 19, 2010 at 10:30

while I understand your concerns and respect your view BirdDawg, I fail to see any misinformation being presented. I see an effort to offer as much as can be without violation of a perceived trust! Personally, I sense a veiled bit of info if one is willing to "see" what one reads!

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