Complete transperancy, hats off to Steve Hollis, DBLE shareholders are truly fortunate.
The rig will be moving off Cow Creek Deep within the next couple of weeks to Christmas Meadows , being replaced by a smaller less expensive rig to continue on with Cow Creek.
Cow Creek Deep
- running out drillstem
- will run in 7 in. casing from 4255 ft.
- will attempt to get casing as far as possible through the Nugget
- if unsuccessful, will deviate hole using oil based mud to drill through to Madison
- if successful they will simply continue drilling
- either case, it appears the current rig will only be used to set the casing than moved of to Christmas Meadows
- bottomline, they are likely going to salvage Deep Cow Creek!
- frac job did not sand off early
- frac went very well
- they anticipate frac will allow production from both coal and sandstone trough current perfs
- oil/gas saturated
- if successful flowrates are established (1 week) it will open up another 80 potential wells
- possible 5 more this year
As I stated earlier, the sky is clearly not falling, two huge winners if you read between the lines. Not a slam dunk yet, although the odds are moving clearly in shareholders favor.
The marketing campaign for Christams Meadows is going to be off the charts, they were thinking of a live webcam, not a go, thought better of it, I agree. Will likely have weekly updates, they are open to suggestions to add too Christmas Meadows profile. Their engineers are still anticipating 100 days for the well, that's only an estimate, a very ambitous one at that, in my estimation.
Christmas Meadows will likely spud early September. She's going to be one heck of a ride!
Conference call playback 1-800-642-1687 #4135365
I listened again to the conf call....Hollis stated that DBLE's interest in S. Fillmore is approx 60-65%...80 wells x 62% (mid-pt) yields 50 wells net to DBLE...If the flow data (due in approx 1 wk) indicates a "go", how prolific do you think each of these wells could be? Better than the 1 to 2 bcf/well of the cbm plays that DBLE has in Cow Creek?
As for Deep Cow Creek, is it your view that DBLE will attempt to develop the play at its current depth of 9000 ft, or are they determined to drill down to 12,000 as originally planned? If there is commercial gas at 9,000, wouldn't they wish to develop that and go after the deeper formation at a later time?
As for Xmas Meadows, you might be right about the new pr strategy's impact upon investor awareness. Nevertheless, I don't think that is the story at DBLE over the next 30 days....It will be a heckuva of a story if if if if it hits on or about Christmas 2006. That would be a delicious coincidence.
As for BLM/Anadarko in Cow Creek, it was nice to hear that the EIS decision could be as early as January...But, again, who knows with the bureacrats...If that should finally come through, that should be a HUGE shot-in-the-arm for the valuation of DBLE, given over 100 net wells in the play to DBLE's credit.
Finally, the approx 4 net wells that DBLE will get with the Anadarko drilling (Anadarko is drilling 20 wells, and DBLE has 20% interest) could/should come online in the next 2-3 qtrs, and the resolution of the Deep Madison, with a gas balance of approx 1.5 to 2 bcf is more gravy.
---...If the flow data (due in approx 1 wk) indicates a "go", how prolific do you think each of these wells could be? Better than the 1 to 2 bcf/well of the cbm plays that DBLE has in Cow Creek?---
Let's deal with what we know, a well flow back was done, indicating no water. That's of significance in that it appears there will be no need to dewater the CB. The frac encompasses both the CB and the overlying sandstone, two productive formations from one perf interval. One other significant note is that the people that analyzed our well stated that this was the third highest gas content that they had seen in a CBM. Simply put, yes expect higher reserves per hole.
---As for Deep Cow Creek, is it your view that DBLE will attempt to develop the play at its current depth of 9000 ft, or are they determined to drill down to 12,000 as originally planned? If there is commercial gas at 9,000, wouldn't they wish to develop that and go after the deeper formation at a later time?---
They are definitely going to try to drill this to TD in the Madison. It's all about seizing the oppotunity. It makes absolute sense to utilize your hole to it's max. They've already went to the expense of drilling to 9922 ft another 2400 ft. with no timeline restriction makes for an easy decision. Worst case scenario is that they are left with whatever they have behind the 7 inch casing, dependent how the current casing operations go. If they case through the Nugget than its a simple matter of drilling down, if they are only successful in casing part of the Nugget than they will deviate the hole and hopefully utilize the remaining Nugget formation.
What we do know is that the Frontier will be cased in it's entirety that alone could produce 2.5 mmcf/d. In the conference call Steve alludes to the Frontier and Nugget being "very good zones to produce". In my estimation it's not a matter of producing from this well, it's only a matter of "how much", dependent on casing success through the Nugget. DBLE and it's shareholders have a winner.
---As for Xmas Meadows, you might be right about the new pr strategy's impact upon investor awareness. Nevertheless, I don't think that is the story at DBLE over the next 30 days....---
I agree Sumark, Cow Creek Deep and South Fillmore will provide the headlines in the next month.
---It will be a heckuva of a story if if if if it hits on or about Christmas 2006. That would be a delicious coincidence.---
The heckuva story started @ 30 years ago, the climax is about to unfold. Steve mentioned that they are considering daily/weekly updates on Christmas Meadows.
If Cow Creek eventually turns into something akin to Drunkards Wash (ie EIA approved, wells drilled and Netherland Sewell FINALLY disgorges reserve numbers reflecting what the coals are capable of producing) this company is worth a hell of a lot more than it is trading for today.
As for Christmas Meadows, it is a play than can take us all into retirement.
good comments from Metaldog and sumark
My respose to sumark's question on Cow Creek deep for what it is worth as follows-if the casing is run through the Nugget and it looks good, there would certainly be a temptation to complete the well there. But with 7" casing in the hole and the problems sealed off behind pipe my understanding of what Mr Hollis said is that he intends to drill ahead to see the Tensleep and Madison. If they are not good then future wells can be designed more cheaply to reach the Nugget with maybe 5" casing. But if the 7" casing does not get to bottom, then i assume DBLE will make a judgement based on hole condition whether to complete in the Nugget or keep trying to get deeper with a sidetrack and oil base mud. Hollis did say they would try to deepen but we can be sure they will play it by hole condition.
I sent some comments yesterday to friends, again for what they are worth:
1) Hollis, the president, described a rational plan for the Cow Creek Deep wildcat and noted that the offset well flowed 15 million feet gas per day from the Nugget sand many years ago, or more than twice all DBLE's current production. They cleaned out the hole and will run 7" casing as deep as they can, hopefully all the way to the bottom, the Nugget. The rig will move off to Christmas Meadows and they will return with a smaller rig to drill down to the Madison (using oil base mud to reduce hole caving if they cannot get the casing all the way down). 2) He was quite optimistic on the Fillmore 1 test where DBLE potentially has 80 more locations if the present well produces at a good rate. Test results are expected in another week. 3) He reviewed the potential coal gas reserves to be developed once the BLM finishes their review. Those potential reserves I think were conservative because Netherland Sewell has been very conservative in appraising DBLEs coal gas properties. Even so, the volume of those reserves is enough to justify a higher future price for DBLE even if all the wildcats are dry. Since the coal gas reserves involve known coal beds which have been drilled in numerous oil tests in the area, and since these coals have been proven to produce quite prolificly at Cow Creek and elsewhere nearby, I think there is much less risk in the probable and possible volumes than would attach to conventional speculative reserves. 4) He reiterated the plan for the Christmas Meadows well to start about the end of this month on a large well defined anticline. If you are a shareholder, I suggest you listen to the replay of at least to the first part of his teleconference.
Despite the upbeat report the stock fell after the meeting. I suppose somebody was troubled by the lackluster results of the last 6 months (even though production picked up a bit in the 2Q and cash flow is adequate to finance the current activity). But when they were blocked from drilling in their bread and butter coal bed play, became a tax paying company no longer able to write off earnings against past losses, and gas prices fell, what can you expect? This stock is not about 2006 results, it's about its potential over the next 2-3 years. I actually bought a bit more stock today but there is really not much available at the current price. (yesterdays price was below 18).