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Harken Energy Corporation (HEC) Message Board

  • dhrosier dhrosier Jul 13, 1998 2:45 PM Flag

    Parkcrest Prospectus text

    I have nothing to add to Ed Ajootian's comments.
    While they have stopped testing it at the moment there
    is some discussion of engineering details that
    suggest they may have not given up on it. They mention a
    3D seismic study that they received recently and
    will study soon.

    I am going to attempt to post
    the segments relevant to Harken. If it is not too
    pretty please forgive me. In order to copy it I had to
    translate it from Acrobat through WordPerfect and then past
    it here.

    The balance of this post is the text
    from the prospectus, or at least as much as Yahoo will
    allow me to put up at one time.

    4. Terms of
    Harken Agreement
    The Harken Agreement gives the
    Corporation certain options to earn interests to be held
    beneficially through HDC in the Alcaravan Contract Area on a
    prospect by prospect basis by paying certain fees in
    relation to prospect generation and administration and by
    paying a disproportionate share of the costs of drilling
    the first well on each prospect. The Harken Agreement
    obligates the Corporation to advance its share of costs in
    relation to prospects in which it participates and
    includes provisions which, in the event of failure by the
    Corporation to make such advances in a timely manner, may
    cause it to forfeit some or all of its interest in the
    Alcaravan Contract Area. The Corporation may be required to
    advance monies up to six months in advance of the actual
    work taking place. Because any interests which the
    Corporation earns under the Harken Agreement are held
    beneficially through HDC, the Corporation cannot become a
    party to the underlying Association Contract, nor can
    it hold direct title to such interests. It has the
    ability to make representations to the operator at
    regularly convened management meetings, but HDC holds a
    controlling voting interest at such meetings and the
    Corporation can exercise little control over the nature,
    timing or cost of operations which are carried out by
    HDC under the Association Contract. The Corporation
    will be delivered its share of revenues outside
    Columbia and will be assessed by HDC for imputed Colombian
    taxes, based on the assumption that operations under the
    Harken Agreement are the only operations undertaken in
    Columbia by HDC. Additionally, the Harken Agreement places
    restrictions on the Corporation�s ability to sell or otherwise
    dispose of its rights and obligations under the Harken
    Agreement, since any assignment may only take place with the
    prior written consent of HDC, which consent may be
    withheld without reason or regard. In the event that HDC
    becomes obligated to make any partial relinquishment of
    the Alcaravan Contract Area, such relinquishment will
    be made solely by agreement between HDC and

    The Harken Agreement obligates the Corporation to pay
    to HDC a monthly overhead fee of $5,000 (U.S.), over
    and above the other fees, charges and overhead costs
    relating to activities under the Association Contract in
    which the Corporation participates.

    On December
    29, 1997, HDC signed an association contract for a
    new area (the �Miradores Contract Area�). This
    contract has now been executed by Ecopetrol and the
    Corporation will have options to participate in this area
    under terms substantially the same as those pertaining
    to the Alcaravan Contract Area.

    {more coming}

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    • Here's the latest on Estero as explained to me.
      There was great discussion between Hec and PKC as to
      where Estero 3 should be located. PKC felt the initial
      3-d show a stratigraphic (sp?) trap was indicated.
      The feeling is that this non-success proves up the
      theory and are they are now waiting for the new 3-d to
      re-inforce this. They still believe the have the 300 or more
      million barrels there and will use Estero 1 and the
      pipeline to move it. Great volume on PKC today apparantly
      and Escondido joint venture and financing to come in
      next couple of weeks.

    • I disagree that failure of a well that has
      previously been reported as successful is in the category of
      "every little thing"

      I have never seen Tracy post
      on this thread, and doubt that she would due to
      considerations of Press Release legalities.


    • Just finished an hour long conversation with a PR
      consultant representing Harken. He has been in the oil and
      gas business for quite some time. In fact he and
      Faulkner joined Arthur Anderson's Texas based office years
      ago representing the industry and has known Faulkner
      for over 20 years. His firm was hired to spruce up
      HEC's image as well as improve upon and increase HEC's
      press relations. A much needed move in the right
      He is putting together information for me to give to
      CNBC. Let's hope they bite!!
      In the meantime, let's
      not forget specific facts. First and formost is the
      fact that Faulkner not only has an accounting
      background but a solid background as well as a degree in
      I truly believe he knows what he is doing! If
      someone out there can tell him how he could secure better
      financing arrangements, feel free to contact HEC.

      Finally, the upside is tremendous. My only concern is the
      fact that contractually HEC must start drilling
      Cambulos. If the news is dissapointing, this could start
      the spiral downward, not financing arrangements. This
      fact coupled with low oil prices must be addressed by
      Harken. That is, Cambulos is just a piece in the biggest
      oil play puzzle in Colombia!!

      Keep the faith!

    • Just because a well is shut in ,doesn't mean it
      is finished.And also there are commitments on other
      contracts that have to be met or they lose those
      contracts.So let's keep up the info and not jump to
      conclusions just yet.Maniac please post what Tracy tells
      you,better yet ask her to post for us.Thanks DhRosier for
      the prospectus.I am sure that HEC is not going to
      make a news release for every little thing that comes
      up.Let's hope the big news comes out in the next 60 to 90
      days.Then we will be on CNBC.Sorry for the long posts,I'll
      crawl back in scouting mode now.

    • Earlier on this thread, I read about a news
      release to be given out on the 14th. Any sign of it yet?
      From the looks of the price ont the stock right now it
      sure could do for a kick in the up direction.

    • NP value,
      I agree with your post! Based upon
      the information I have received, I believe the
      possibility of a bad cement job in the ESTERO #3 Wel lis what
      is causing all of the problems with the water
      intrusion. There are no (and never have been) any gurantees
      on cement jobs.A cement bond log has been run on
      this well and conclusively confirms the problem. I am
      advised from very good sources that this is the case. No
      need for laying blame on HEC or Parker Drilling, but
      the problem needs to be identified as what it really
      is.......not as a bad well. It appears to me, that without
      this clarification, some may jump to the conclusion
      that ESTERO #3 is a thow away well. NOT THE
      Chuck Strain is not a novice at what he does. He is
      credible, otherwise industry people would not subscribe to
      his professional opinions and evaluations. This board
      does not need to chunk a spear at him. I believe his
      estimates on the ESTERO #3 were made only considering the
      UBAQUE sand feature ...not the Miradores and the
      Guadalupe Sand features.
      My concern is grounded in why
      HEC has not completed its testing and its evaluation
      of the wells it has drilled. The ESTERO
      #3 was
      to have been drilled and tested in 75 days from
      December 14, 1997. Whaaaa Lhaa, its been 213 days and
      there is still work to be done? The ESTERO #1 was
      supposed to have additional long term test on it....where
      is that at? Canacabare is still to be tested,
      waiting on flood waters to go down. I am told that the
      log in this well is very encouraging. I hope that HEC
      will come forth with some news that might shed further
      light on this situation....but then again, they did not
      choose to do that when they screwed up on the pump in
      the initial testing of the ESTERO #3 well. Let's wait
      and see. I am still optomistic that the ESTERO #3 is
      in fact a good well and it will prove up substantial

    • I think the most distressing thing about the
      Estero 3 situation is how supposedly competent petroleum
      geologists / engineers (Chuck Strain included) can go from
      forecasting a potential reserve increase of 200 to 400
      percent (translating into 300 to 500 million barrels) to
      0. How could they be that wrong? There is no doubt
      that Strain has a tendency to get overly optimistic
      about his reserve estimates, as demonstrated with other
      companies. But this is ridiculous. (I am convinced the PKC
      report is accurate, as I see no compelling reason why
      they would want to deliberately lie about

      I have stated several times that Bolivar reserve
      estimates need to be speedily determined, since this is the
      only major definite success Harken has right now.
      Cambulos is by no means a sure deal.

      HEC only has
      six months to prove things to the market. After that,
      things could get real ugly.

    • The sections following are the reports on the
      prospects drilled. Remember that Estero 3 is part of the
      Palo Blanco, the first one in this

      Palo Blanco Prospect:
      Under the Harken Agreement,
      the Corporation has earned a 25% interest, held
      beneficially through HDC, in the "Palo Blanco Prospect Area"
      (located within the southern part of the Alcaravan
      Contract Area) in the Llanos Basin, South America. The
      location of the Palo Blanco Prospect Area is shown in the
      maps attached hereto. The Corporation�s 25% beneficial
      interest is subject to Ecopetrol�s rights described under
      the heading �Oil and Gas Rights in Columbia�

      To earn the 25% interest in the Palo Blanco Prospect
      Area, the Corporation paid a $250,000 (U.S.) prospect
      fee to HDC, which included acquisition and seismic
      costs, and 33.3334% of the costs of the Estero No. 1
      well (estimated at approximately $1,500,000 (US). This
      well discovered a new oil accumulation and was tested
      at the rate of 4,116 BOPD of 16.4 o API gravity oil,
      from a 38 feet net interval within the Cretaceous
      Ubaque Formation. The reservoir exhibited porosities
      averaging 25% and permeabilities in excess of 2 Darcies (a
      �Darcy� is the unit by which permeability is measured).
      The low API gravity of the oil in the Palo Blanco
      discovery means that it is heavier than most other oils in
      the Llanos Basin, which will complicate production
      plans, since it must either be mixed with a lighter
      crude or heated before it is transferred to a pipeline.
      HDC is currently reviewing the available options for
      crude export. It plans to begin initial test production
      from Estero No. 1 in May 1998 by trucking the oil to
      the nearby Guarimena Field (see the maps attached
      hereto) and has begun work on building a short pipeline
      spur to link into the existing Guarimena pipeline.
      This spur is expected to be completed in September
      1998 and will enable oil to be produced at a rate of
      up to 2,200 BOPD.

      HDC spudded the first
      appraisal well, Estero No. 3 on December 14, 1997 and it
      reached a total depth of 10,980 feet in Paleozoic rocks
      on February 3, 1998. Casing was run on the well.
      While testing the Ubaque formation, oil flow rates up
      to 1500 BOPD were obtained but could not be

      Oil and gas shows were encountered in the basal
      Tertiary Mirador Formation in both Estero No.1 and Estero
      No.3 and log analysis indicates that this zone may be
      capable of oil production, possibly with high water cuts.
      Such analysis is subject to considerable uncertainty
      because the formation waters in this area are of low but
      variable, salinity. Oil shows were encountered in low
      porosity sandstones within the Paleozoic sequence of
      Estero No. 3. However, initial testing of this zone
      through a liner failed to produce hydrocarbons. The rig
      has now been moved off location, and further testing
      of Estero No. 3, including the Ubaque, Guadalupe and
      Mirador zones has been terminated. No additional reserves
      have been assigned from the Estero #3 well, however
      management of the Corporation suspects this is due to cement
      isolation problems resulting in water flow.

      coming on Estero 3.}

      • 2 Replies to dhrosier
      • What is the date on the Parkcrest stuff you have

        Parkrest states:
        "HDC spudded the first appraisal well,
        Estero No. 3 on December 14, 1997 and it reached a total
        depth of 10,980 feet in Paleozoic rocks on February 3,
        1998. Casing was run on the well. While testing the
        Ubaque formation, oil flow rates up to 1500 BOPD were
        obtained but could not be sustained.

        May 19 , 96. HEC Press release
        The two zones
        tested, known as the Upper and Middle Ubaque have a
        combined thickness of approximately 50 feet. During
        preliminary testing the well produced oil from these
        intervals at a combined rate of 2,036 BOPD with significant
        water produced from the Middle Ubaque.

        Which is
        right? Does the Parkcrest information predate the
        Harken, and the Harken is right?, or is it the other way
        around. Harken has had all good news about Ubaque in
        Estero #1 AND #3, along with the 200-400% increase in
        potential reserves...

        Harken has no press release
        that indicates Estero #3 is not a producer in the
        Ubaque... (they have instead indicated that it is a

        What gives?


      • Balance of analysis of Estero 3

        A 3-D seismic program was recorded over the area in
        April, 1998. The 3D seismic data has been acquired; this
        date is currently being processed, to be followed by
        interpretation. The results of this survey, testing of Estero No.
        3 and pressure information from extended test
        production of Estero No. 1 should provide additional
        information on the size of the Ubaque accumulation. No
        reserves have been assigned to the Mirador Formation until
        the results of testing of this zone are available.
        The results of forthcoming development and pipeline
        engineering studies will assist in determining the number of
        additional drilling locations which the Palo Blanco
        accumulation will support. In the meantime, a conservative
        view has been taken of the accumulation and proven and
        probable recoverable reserves for Palo Blanco have been
        confined to the Ubaque in the immediate area of Estero No.
        1. The Corporation�s share of costs associated with
        the 3-D program, test production, first phase
        pipeline installation and engineering feasibility work are
        expected to fall within the provisions of the Harken Loan
        Agreement (as hereinafter defined). The Palo Blanco
        discovery is described more fully in the Chapman Report
        (see �Reserve Report - Palo Blanco�).

        Chapman Report is rather long. It will be in its own