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
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
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.
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.
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.
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
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.}
What is the date on the Parkcrest stuff you have
"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.
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
Harken has no press release
that indicates Estero #3 is not a producer in the
Ubaque... (they have instead indicated that it is a
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