Gulfport Unloosen Energy As Well As Wexford Uppercase (Part Iv): What Is Left Afterward Gulfport Sells The Permian Assets To A Wexford Related Party?

In the last post I demonstrated that 12.885 1000000 out of 19.367 1000000 barrels of fossil oil equivalent (BOE) inwards "proved reserves" was existence sold yesteryear Gulfport to a related political party of Wexford. These were the Permian Basin fields every bit per the tabular array below.

																												Proved Reserves
Field		NRI/WI (1)				Productive Wells (2)								Non-Productive Wells								Developed Acreage (3)								Gas				Oil				Total
		Percentages				Gross				Net				Gross				Net				Gross				Net				MBOE				MBOE				MBOE
West Cote Blanche Bay Field (4)			80.108/100				95				95				189				189				5,668				5,668				352				3,617				3,969
E. Hackberry Field (5)			79.424/100				30				30				93				93				3,291				3,291				226				1,606				1,832
W. Hackberry Field			87.5/100				2				2				23				23				592				592				—				76				76
Permian Basin			35.4/46.87				121				57				—				—				8,880				4,119				2,008				10,877				12,885
Niobrara Formation			39.7/47.9				6				3				2				1				3,954				1,977				26				500				526
Williston Basin (6)			2.8/3.3				6				.2				—				—				1,708				132				7				67				74
Overrides/Royalty Non-operated			Various				133				.2				—				—				—				—				3				2				5
Total							393				187.4				307				306				24,093				15,779				2,622				16,745				19,367

The tabular array is from the 10K.

Given that most the reserves in addition to most the cash flows of Gulfport are existence sold to a related political party it is worth considering the character of the assets left. After all - if you lot are a Gulfport shareholder that is what you lot are buying.

Lets simply accept the Niobrara acreage.

The claim of one-half a 1000000 barrels of fossil oil inwards the Niobrara raised my eyebrows because I idea most that acreage was locked up. Indeed it was this claim that attracted me (as a short) to Gulfport inwards the start out place. I wanted to run across what they based their claim of one-half a 1000000 barrels of proved fossil oil on.

Here is what the 10K says most the Niobrara acreage:

Location in addition to Land 

Effective every bit of Apr 1, 2010, nosotros acquired leasehold interests inwards the Niobrara Formation inwards northwestern Colorado, in addition to held leases for 14,993 acres every bit of Dec 31, 2011. We are the operator on the acreage. 

Area History 

The Niobrara Formation is a shale fossil oil stone formation located inwards Colorado, Northwest Kansas, Southwest Nebraska, in addition to Southeast Wyoming. Oil in addition to natural gas tin live constitute at depths of 3,000 to 14,000 feet in addition to is drilled both vertically in addition to horizontally. The Upper Cretaceous Niobrara formation has emerged every bit some other potential unsmooth fossil oil resources play inwards diverse basins throughout the northern Rocky Mountain region. As alongside most resources plays, the Niobrara has a history of producing through conventional technology scientific discipline alongside some of the earliest production dating dorsum to the early on 1900s. Natural fracturing has played a primal purpose inwards producing the Niobrara historically due to the depression porosity in addition to depression permeability of the formation. Because of this, conventional production has been real localized in addition to express inwards surface area extent. We believe the Niobrara tin live produced on a to a greater extent than widespread pose down using today’s horizontal multi-stage fracture stimulation technology scientific discipline where the Niobrara is thermally mature. 

Geology 

The Niobrara Formation fossil oil play inwards northwestern Colorado is located betwixt the Piceance Basin to the S in addition to the Sand Wash Basin to the north. Rocks mainly consist of interbedded organic-rich shales, calcareous shales in addition to marlstones. It is the fractured marlstone intervals locally known every bit the Buck Peak, Tow Creek in addition to Wolf Mountain benches that draw organization human relationship for the bulk of the areas production. These fractured carbonate reservoirs are associated alongside anticlinal, synclinal in addition to monoclinal folds, in addition to error zones. This proven fossil oil accumulation is considered to live continuous inwards nature in addition to lightly explored. Source rocks are predominantly fossil oil prone in addition to thermally mature alongside abide by fossil oil generation. The producing intervals are geologically equivalent to the Niobrara reservoirs of the DJ in addition to Powder River Basins which are currently emerging every bit a major unsmooth resources play. 

Production Status 

In the 4th quarter of 2011, our internet production from our Niobrara acreage was 3,390 BOE, or an average of 37 BOE per day, 100% of which was from oil. From Jan 1, 2012 through Jan 31, 2012, our average daily internet production from our Niobrara acreage was 41 BOE, 100% of which was from oil. 

Facilities 

There are typical solid pose down fossil oil in addition to gas processing facilities inwards the Niobrara Formation. Our facilities located at good locations include storage tank batteries, oil/gas/water separation equipment in addition to pumping units. 

Recent in addition to Future Activity 

We drilled 3 gross (1.5 net) wells at Niobrara during 2011. We lead maintain completed a lx foursquare mile 3-D seismic survey over our Craig Dome prospect, lead maintain received a processed version of the seismic in addition to are selecting hereafter drilling locations. We currently intend to drill 5 to 7 gross wells at Niobrara during 2012.

Production - internet - was 37 barrels of fossil oil per solar daytime during the 4th quarter of 2011. In Jan they raised this to 41 barrels of fossil oil per day.

The most recent 10Q filing contains this text.

Niobrara Formation. Effective every bit of Apr 1, 2010, nosotros acquired leasehold interests inwards the Niobrara formation inwards Colorado in addition to held leases for to a greater extent than or less 14,993 acres every bit of March 31, 2012. Aggregate internet production from the Niobrara play during the 3 months ended March 31, 2012 was to a greater extent than or less 2,638 BOE, or 29 BOE per day. During Apr 2012, average daily internet production inwards Niobrara was to a greater extent than or less 66 BOE due to completion of our 2011 drilling activity.

So for the start out quarter the production savage to average alone 29 BOE per solar daytime afterward averaging 41 BOE per solar daytime inwards January.

41 BOE per solar daytime inwards Jan implies production of 1271 barrels (approx) inwards Jan (being 41 BOE per solar daytime times 31 days).

We are told that production inwards the quarter was 2638 barrels. Simple arithmetics implies that production inwards Feb in addition to March was 1367 BOE. Assuming lx days inwards those months (29 inwards February, 31 inwards March) nosotros larn production of 22.8 barrels per day. Influenza A virus subtype H5N1 fairly abrupt driblet from 41 BOE per solar daytime inwards January. This may live a spend upward charge per unit of measurement or it may live conditions or other shut-in (we ambit non know). However shut-ins are to a greater extent than probable inwards Jan in addition to then spend upward is a reasonable guess.

After completing drilling activeness for 2011 the production rose to 66 BOE per day.

These are non large numbers in addition to production drops appear large. Indeed catamenia rates almost halved within the start out quarter.

However the companionship states that 500 chiliad barrels of fossil oil inwards reserves are proven inwards this field.

It is a cliche that you lot alone know what the reserves of an fossil oil plain were when the terminal barrel is produced. There are many fields that lead maintain surprised to the downside in addition to some that lead maintain surprised to the upside.

I volition exit it to my readers to justice - whether on the pose down of the relatively modest production in addition to high spend upward rates demonstrated - they regard the 500 chiliad barrels of proved reserves listed hither every bit a venture number.





John