TGD - Let's go drill a well...

Friday, Jan 22 2010 by
51

The previous experience on TGD was, well, quite an experience.

After all the excitement about the placing, I found myself slightly surprised by the 90% COS figure that sems to have been blurted out: the guys have given themselves a one-in-ten chance of not only looking a bit embarrassed, but also of having the share-price trashed to well below NAV for some time afterwards.

However, it's all been said and done and in the interim I have been amusing myself by considering the well design. (Yep, some of us do get our kicks that way - no pun intended.) Incidentally, the phrase "over-engineered" has been quoted a couple of times and I think it's been misplaced - it's the well that's going to be over-engineered, not the rig!

 

Background

TGD-1X

We know that in July 2007, pressures of 12,000 were reported when TGD-1X reached 4625m (along-hole depth, I don't believe we know what the True Vertical Depth was.) The well was suspended and in announcing plans for TGD-1X-ST1 in Oct 07 Soco said that they had assembled the proper high pressure drilling equipment which included a 15,000psi BOP.

TGD-1X encountered hydrocarbons in two Oligocene clastic sequences, which were separated by a volcanic layer. Well logs over the upper sequence showed about 30 metres of net pay and they were unble to log the lower section, though at the time they suggested that seismic interpretations show another 300m of sediments above the basement.

As far as I can work out, the section below the volcanics is overpressured; that is to say, instead of the pressure-depth graph being a nice straight line, there is not only a change in gradient just below the volcanics, but quite possibly a step out as well.

TGD-1X-ST1

Holy moley.

Here's a quote from Ed in Oct 2007:

"We are particularly excited to return to the TGD structure. Success in the
deeper objective section of this structure could totally transform this company
and represent a significant milestone in the history of oil exploration in
Vietnam. Accordingly, we are quite anxious to resume our evaluation now that we
have assembled the proper high pressure drilling equipment.

We were all pretty excited too. How did it go?

I'm sure you don't need much reminding. Here's one reaction from June 2008:

Certainly a lot should have been learned from this…

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SOCO International plc (SOCO) is a united Kingdom-based oil and gas exploration and production company. Its segments include South East Asia and Africa. It has field development, production and exploration interests in Vietnam, and exploration and appraisal interests in the Republic of Congo and Angola. In Vietnam, It’s Block 16-1 and Block 9-2 include the Te Giac Trang and Ca Ngu Vang Fields, which are located in shallow water in the Cuu Long Basin, near the Bach Ho Field. It holds working interest in Block 16-1 and Block 9-2 through its subsidiaries, SOCO Vietnam Ltd and OPECO Vietnam Limited. SOCO holds its interests in the Marine XI Block, located offshore Congo (Brazzaville) in the shallow water Lower Congo Basin, through its subsidiary, SOCO EPC. It holds working interest in the Mer Profonde Sud Block, offshore Congo (Brazzaville) through its subsidiary, SOCO Congo BEX Limited. SOCO's subsidiary, SOCO Cabinda Limited, holds participation interests in the Cabinda North Block. more »

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442 Posts on this Thread show/hide all

davjo 11th Jan '11 423 of 442
11

Interesting to note that the neighbouring block 16-2 has had two gas/condensate discoveries, the latest being reported last week. Very sketchy details but upper Oligocene is mentioned. What intrigues me, IIRC, is that this ex-Conoco block was marketed as being prospective for oil in the Miocene. This is a PSC licence operated by PetroVietnam. Since PV will be at the helm driving explo, I wonder if they’ve changed their objectives in what they’re searching for on the block. You can understand discovering gas/condensate whilst searching for oil once but hitting gas/condensate twice seems pretty unlikely unless it was targeted. Are they probing for Su Tu Trang lookalikes and similar based on 16-1 data?

PV could be feeling quite warm on Oligocene prospects south of TGT running into 16-1. Point being, they were most likely equally enthusiastic over TGD, hence their apparent support for licence extension.

Thinking on about the Ministry of Trade and Industry’s non-supportive stance, that was hardly surprising given what had gone before alongside their brief to promote new business, which isn’t quite the same as PV or the Ministry of Oil. PV has to produce both oil gas and more importantly profits, which for TGD under a new PSC wouldn’t necessarily be so attractive to them. Similarly, the Ministry of Oil has the same sort of objectives as PV. Long and short of it is that several layers of bureaucracy need to be negotiated through before the PM makes his decision. At the end of the day, two things matter. First and foremost, are Soco’s relationships with those who matter in Vietnam as good as they were with the earlier regimes? Secondly and crucially, do they know what the key is to unlock the TGD prize?

The jury is out. I’m not holding out much hope personally but as I always say, life is full of surprises!!

http://www.energy-pedia.com/article.aspx?articleid=143593
http://www.allbusiness.com/government/government-bodies-offices-government/14835768-1.html
http://www.hd.jx-group.co.jp/english/newsrelease/2010/pdf/20110105_01_01.pdf

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emptyend 12th Jan '11 424 of 442
2

In reply to post #52385

All good points, as usual. :-)

The jury is out. I’m not holding out much hope personally

It is difficult rationally to "hold out much hope" for TGD in isolation. However, in the wider scheme of things, TGD is just another element in a fairly complex negotiating map and I'd expect a resolution of some sort as part of a broader deal. These things are rarely as straightforward as they appear from the outside.

ee

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Gopher 12th Jan '11 425 of 442
2

Not sure whether anybody has viewed this - it was posted yesterday. I just wondered what exactly they had without TGD so browsed the website

http://www.socointernational.co.uk/index.php?cID=95&cType=document

Summary:
Substantial upside remains
Significant amount of near term news flow

Stock down 3% today in response!

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emptyend 12th Jan '11 426 of 442
3

In reply to post #52424

Yes thanks for that. It was mentioned over here in post 297 and there has been a limited amount of useful discussion about it.

Stock move today more likely to the Jefferies note out this morning, which seems to think nothing is going on (in contrast to the comments re upside and newsflow above). No surprise really - the analyst was equally negative when he was at MacQuarie, I believe, and I'd guess this was a "dusting off" of a previous note.

Re the upside/newsflow claims, we'll have to wait and see (though, if one ignores the obvious, it is very easy to see how Warn reached his conclusion).

ee

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davjo 12th Jan '11 427 of 442
4


A couple of points of interest relating to TGD from PetroVietnam’s presentation in London last summer, albeit could prove academic :-
http://www.slideshare.net/thepipeline/dr-phung-dinh-thuc

Projects 2010 to 2015

Slide 13 - Exploration tests for stratigraphic traps in Cuu Long Basin
Slide 14 - Exploration priorities - appears to encompass the business end of 16-1 in the Cuu Long circle (note colour codes refer to licence type I think eg JOC vs PSC - looks like PVN have the 9-2 relinquished acreage)

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jseth123 5th May '11 428 of 442
5

http://www.investegate.co.uk/Article.aspx?id=201105050700099688F

 
The Company has been informed by the Hoang Long Joint Operating Company, the Operator of Block 16-1 in the Cuu Long Basin offshore Vietnam, that PetroVietnam has relayed the Government of Vietnam's agreement to the extension period for the Te Giac Den  Appraisal area. The extension period is for 15 months (from 1st January 2011 to 30th April 2012) or 21 months (from 1st January 2011 to 31st October 2012) in the event that the Company elects to drill a well.
 
Several 3D seismic acquisition options are currently being reviewed and it is anticipated that acquisition of the 150 square kilometre 3D programme will commence in late June to early July 2011.
 
PetroVietnam has also informed the Company that the Government of Vietnam has approved the Full Development Plan for the Te Giac Trang  Field, incorporating the second phase development. Installation activities in the field are ongoing and the H4 jacket for second phase drilling and production has been installed. The project remains on target for Phase I production start in August 2011.
 

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Isaac 5th May '11 429 of 442

WOOOHOOOOOOOOOOOOOOOO!

The Company has been informed by the Hoang Long Joint Operating Company, the Operator of Block 16-1 in the Cuu Long Basin offshore Vietnam, that PetroVietnam has relayed the Government of Vietnam's agreement to the extension period for the Te Giac Den Appraisal area. The extension period is for 15 months (from 1st January 2011 to 30th April 2012) or 21 months (from 1st January 2011 to 31st October 2012) in the event that the Company elects to drill a well.

http://www.investegate.co.uk/Article.aspx?id=201105050700099688F

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tournesol 5th May '11 430 of 442

Isaac, does the WOOOHOOOOOOOOOOOOOOOO! represent a cry of pain?

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Isaac 5th May '11 431 of 442
14

RG

Is your stockopedia picture suppose to show that your bald? It's just that you are not bald......I know because we have met.

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thebuffoon 5th May '11 432 of 442
20

Isaac, it's far better for someone to keep their mouth closed and have people think they are uneducated, than to open it and remove all doubt.

Buffy

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kenobi 5th May '11 433 of 442
1


well this is surely good news yet the price hasn't moved yet, I wonder how all this fits in with different theories discussed here. I appears to be an extension so I assume that means it's the same company, and that costs will be recoverable against TGT production ? I'm also guessing it makes a vietnam deal less likely in the short term, which I guess explains the lack or reaction in the share price this morning ?

K

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kenobi 5th May '11 434 of 442
10


btw hat tipped to ee, one of the few who always thought this was likely, good call, I had my doubts,
what are you thoughts on how this effects the possibility of a vietnam based deal going forward ?

it's starting to look like 2012 might be another chance at 2010, with more drilling in Africa, and another shot
at TGD, hopefully with a better result this time,

As I write , I'm thinking guessing that soco has kept the same share of tgd, perhaps one option for a deal is to sell SOCO vietnamn to someone and at the same time have son of soco farm in perhaps on a carried basis to TGD ? allowing a deal to go through, and retain some upside in the outcome of TGD ?


K

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tournesol 5th May '11 435 of 442
4

I know that double negatives are usually incorrect, but on this occasion I have to state categorically that:

1) I am not bald (not even receding a little bit). I used to be told I looked like Gerry Adams, but I've subsequently shaved my beard and more recently have started to turn a distinguished shade of silvery grey.

2) I have never met Isaac nor anyone who could remotely be mistaken for him.

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freddythefish 5th May '11 436 of 442

In reply to post #56230

Maybe Isaac has met Gerry Adams

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wistman 5th May '11 437 of 442
1

In reply to post #56230

Tournesol,

1. Good call by you on TGD licence as well.

2. Did you look more or less like Gerry Adams than Alan Booth of Encore does?

3. Did Isaac meet:

                                    a) Alan Booth

                                    b)Gerry Adams

                                    c)You, but CONCEALED HIS OWN IDENTITY!!!!

4."but I've subsequently shaved my beard and more recently have started to turn a distinguished shade of silvery grey". I assume you mean your hair, otherwise please post a current (colour) photo.

w

 

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emptyend 5th May '11 438 of 442
6

In reply to post #56228

what are you thoughts on how this effects the possibility of a vietnam based deal going forward ?

I don't think there is any chance to the probability. There is one other material matter to be settled (re gas prices and reserves) and then it could be game on.

As I write , I'm thinking guessing that soco has kept the same share of tgd, perhaps one option for a deal is to sell SOCO vietnamn to someone and at the same time have son of soco farm in perhaps on a carried basis to TGD ? allowing a deal to go through, and retain some upside in the outcome of TGD ?

This is a theory I have advanced previously on these boards and, unless there is a whole company deal (which I still think possible), I'd expect the VN deal to contain this sort of feature. 60% of TGD is a tradeable commodity, given the OOIP size, at least if they still think that it may be moveable with wells in the right place and the right technology.

ee

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kenobi 5th May '11 439 of 442

ok thanks ee,

thats probably where the thought came from then,

I thought you had been suggesting a farm in if the licence had been in a new co, and the rest could be sold, I was assuming this result would block that, which is what made me think perhaps the licence goes to the buyer, but a farm in is done to new co,
only a subbtle difference I guess,

cheers K

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emptyend 5th May '11 440 of 442
4

In reply to post #56240

I'd suggested both versions as possible at different times, mainly to indicate that the economic value of TGD wouldn't have to be left for any buyer unless the price was right. It was a very different story when PTTEP still had a seat at the TGD table though, because there would have been fewer structuring options to play with.

All speculation though - the only thing that matters is what gets delivered and when.

ee

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anteos 1st Sep '11 441 of 442

'The Te Giac Den licence extension has been granted by the Government of Vietnam; seismic acquisition will commence later this month'

does anyone know if this has started, and how long it will take?

thanks

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emptyend 1st Sep '11 442 of 442
2

In reply to post #59717

No I don't know if it has started but you can assume it will take several weeks to do....and then several months to analyse! Don't expect any conclusions before year-end.

ee

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