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To: Bearcatbob who wrote (166350)3/27/2012 4:24:40 AM
From: tom pope
   of 185368
 
Coming from you, that gives me pause... My loss on my covered call is still very manageable so it might be best to unwind rather than cover and write a new position in a lower strike.

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From: Dennis Roth3/27/2012 6:06:45 AM
2 Recommendations   of 185368
 
New players staking claims to Ohio’s Utica shale land
ohio.com

excerpt:

Projections are that 160 wells will be drilled in 2012 in Ohio, with another 650 wells in 2013 and 1,075 wells in 2014.

====

The associated gas with all those new wells should help extend the NG supply glut.

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To: tom pope who wrote (166352)3/27/2012 6:20:13 AM
From: Bearcatbob
1 Recommendation   of 185368
 
Good morning Tom,

When I read Jim Bob's letter a couple of weeks ago I took away the message that DJ is a process and not an event. Unfortunately I played it as an event and not a process. In this case I did not want to settle for the "bunt single" approach of CCs and SPs.

In my working days we would occasionally have projects that simply were one problem after another. We called these jobs "science projects" that kept sucking money. Ending the bleeding usually took a strong action with full management backing. Sometimes the sales guys simply sold stuff that did not exist in the real world. $2 gas and $200M wells strike me as a clear example of a "science project".

If we go back to December when DJ was supposed to test the share price was north of $15 and there was huge premium in the up strike and out month call options. Since then the cost of the well has soared and the price of nat gas has crashed - a bad combination. If the well cost north of $200 million and gas at the well head is $2 then the only financial hope I see is if there are a large amount of liquids in the production flow. 50 mmcfd at $2 would be $100k per day and ~$3M per month. Does anyone here have an idea of what the operating costs are to define a cash margin?

EXXI on the other hand has a large large oil component to sales and a large inventory of oil prospects. EXXI can profit if the UD ever works. Take away the near term uncertainty of DJ and I hope EXXI can trade on its own oiliness.

To me the end game for MMR is to prove up the resource and have it bought out by a major to put the resource in inventory. A successful test of DJ2 later this year (with emphasis on LATER) would IMO help prove the concept.

I would appreciate the thoughts of "oil guys" on the board. Has MMR found a gazillion cubic feet of a semi worthless commodity?

Bob

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To: Bearcatbob who wrote (166350)3/27/2012 6:20:53 AM
From: Salt'n'Peppa
   of 185368
 
"How many $ per day is the rig?"

Bob, a DP floater in the GOM will range from $800,000 to $1,200,000 per day full operating cost. That is just the rig (including 3rd party service personnel, equipment rentals, supply boats, helicopters, etc.). Then you have onshore logistics plus all the office support staff. Not a cheap game to play!
S&P

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To: Salt'n'Peppa who wrote (166355)3/27/2012 6:23:01 AM
From: Bearcatbob
   of 185368
 
Salty, DJ is not a floater. I would like your thoughts on my "science project".

Bob

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To: Bearcatbob who wrote (166356)3/27/2012 6:32:38 AM
From: Salt'n'Peppa
   of 185368
 
Bob, if DJ is using a jack-up, then you can probably halve my figures to $400,000 - $600,000 per day full operating cost. Just a guess though.

S&P

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To: Kayaker who wrote (128561)3/27/2012 6:36:24 AM
From: elmatador
   of 185368
 
Obama Destroy Any Hope Of U.S. Energy Independence?

"North America, the New Middle East?"
online.barrons.com

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From: Bearcatbob3/27/2012 6:50:35 AM
1 Recommendation   of 185368
 
Test:

JRH	 		$159.95 
Bread on the Water $136.00
Revolt Napper $128.00
Ken Robbins $125.35
Peter von Stennis $125.00
a.handbag $124.00
E_K_S $121.03
Eric $119.00
edward miller $114.50
22jt $111.00
donc $110.50
Dennis Roth $108.15
Vierya $107.95
Salty $105.00
Renovator $104.00
Sweet Jane $103.60
Dave $102.00
Jim Thurman $101.00
robohogs $100.00
Keith J $ 98.62
kidl $ 96.00
Bearcatbob $ 95.00
ruperthered $ 88.88
pz $ 88.50
tom pope $ 88.00
whitepine $ 86.80
Mario $ 77.30
Stock Gamer $ 72.15
Ave. $107.05

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From: riskyinvesting3/27/2012 7:52:10 AM
2 Recommendations   of 185368
 
BC - MMR is a work in progress. If the ultra deep works, it will produce about the lowest cost gas in the country. At prices in the range of $4-6, which is necessary for the dry shales to work, the ultra deep will generate huge profits.

I posted news of the first perforation gun failure a few days back. Nothing really changes, other than they will go back at some later date and try again. I was hoping for some flow data. Maybe Jim Bob will mention something this afternoon.

I also think the ultra deep play extends on shore. It is my understanding that MMR is leasing up land on shore.

While DJ1 was very expensive, I think they can get well costs down to below $100 million. There has been a lot of expense tied up with engineering the equipment, which is a one time cost. If the play works on shore, the wells will be very cheap.

The end game I think is for MMR to prove out the play and then be sold. I think any deal is a year off. It the play comes anywhere close to 100 TCF, a LNG terminal out at mainpass is probably in the future. NA gas needs to enter the world market for the price to stabilize.

Risky

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To: Bearcatbob who wrote (166354)3/27/2012 8:17:13 AM
From: tom pope
   of 185368
 
Thank you, very much appreciated, Bob.

(The tournament went from an Ohio fest to a Kentucky fest in the blink of an eye, didn't it?)

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