Current Drilling

Anyone care to comment on current drilling operations in Danial's county? Does it look like any production equipment has moved in?

They are building the pad for the fouth wellsite. It is located south west of Four Buttes.

What township,range and sec would this be in.



Lee Humbert said:

They are building the pad for the fouth wellsite. It is located south west of Four Buttes.

Here's the article from Daniels County Leader about the 4th wellsite. www.danielscountyleader.com

NEW DRILL PAD is being prepared about five miles south and five miles east of Four Buttes off Police Creek Road. The new site, Strong Pad, is located on State Land on temporary drill spacings for Section 4 and Section 5, T34, R46E. Each section is a separate drill spacing. This will be the fourth drill pad built for Apache Western Exploration in Daniels County. The Bakken/Three Forks Formation is Apache’s primary goal, but if they are not successful in the Bakken/Three Forks they wanted the flexibility to, and have been permitted, for horizontal wells into the Ratcliffe Formation.

No official word yet on the completion status of the Lindley well site north of Buttes or the Haworth well north of Scobey although each site has one pump.

Currently Apache is drilling about 3 miles east of Four Buttes, (Wescoe Pad) about a half mile north of Highway 248.

Thanks to all for the info.

Dennis said:

Here's the article from Daniels County Leader about the 4th wellsite. www.danielscountyleader.com

NEW DRILL PAD is being prepared about five miles south and five miles east of Four Buttes off Police Creek Road. The new site, Strong Pad, is located on State Land on temporary drill spacings for Section 4 and Section 5, T34, R46E. Each section is a separate drill spacing. This will be the fourth drill pad built for Apache Western Exploration in Daniels County. The Bakken/Three Forks Formation is Apache’s primary goal, but if they are not successful in the Bakken/Three Forks they wanted the flexibility to, and have been permitted, for horizontal wells into the Ratcliffe Formation.

No official word yet on the completion status of the Lindley well site north of Buttes or the Haworth well north of Scobey although each site has one pump.

Currently Apache is drilling about 3 miles east of Four Buttes, (Wescoe Pad) about a half mile north of Highway 248.

The legals are probably correct but it is five miles south and five miles WEST of Four Buttes. rather than east in the above quotes. The rumour mill and signs in the air seem to abound with talk of drilling to an ocean of brine. so much for rumours. The only good rumours I recall was the Fleetwood Mac album of past days, now that was good.

Hi Lee,

Every Friday the state web site http://bogc.dnrc.mt.gov/activityletters/20130110.pdf show's permits that have been approved for the week. Here's all the information. Daniels Wildcat
Apache Western Exploration LLC Strong 4-1
019-21154
SHL: C NW 4-34N-46E (1322 FNL/1320 FWL) EL 2695' GR 30506
Approved: 01/08/2013
PBHL: 9123' SE NE 4-34N-46E (1322 FNL/660 FEL) Ratcliffe
I verified it;because, as you said there is alot of rumors. I believe Daniels County has oil. In 1990 the Fugere well,which was drilled in the Madison formation had production up to 19700 barrels a month. As I recall the operator was trying to maximise production and pushed the well too hard and wrecked it.
Lee Humbert said:

The legals are probably correct but it is five miles south and five miles WEST of Four Buttes. rather than east in the above quotes. The rumour mill and signs in the air seem to abound with talk of drilling to an ocean of brine. so much for rumours. The only good rumours I recall was the Fleetwood Mac album of past days, now that was good.

I agree with you Dennis, there also were a number of producing wells south and west of Four Buttes and south of Peerless. I was just pointing out the narrative description of the pad being east of Four Buttes was incorrect. it is south west of Four Buttes. Today's buzz word is Bakken , who knows what the future holds? At one time in the past Bakken was just the family name of a North Dakota farmer.

Thank you Lee for the information. I appreciate your unbiased data.

Lee, I agree with you, Bakken and horizontal well both are excessively revered and overused.

Some people also think that if it isn't a horizontal well, it ain't poop, but I have looked at verticle wells in Mt that had very respectable production. Looked at another way, if your verticle well on 80 acres settles down to 50 bbl a day, how much would a long lateral Bakken well have to produce to equal what you could make per acre from a verticle well? 8 times for a 640, 16 times for a 1280. I wouldn't expect a long lateral to settle down at 800 bbl a day. You might have more acres in the larger spacing but they would have to be working very hard since they will be paying royalty to people who aren't necessarily being drained to hold their acres by production.

Getting paid a royalty on all of your acres isn't necessarily the same as getting your fair share of production.

A verticle, slant drilled or short lateral well would make me just as happy if not happier than a long lateral well. If not all my acres are under the well, I have more that I can lease next time.

Convential plays in Daniels County are limited.

Very limited.

The primary target in Daniels County the last 40 years for exploring companies was the Nisku. Geologists thought that incredible Nisku production that was found south of Daniels County in neighboring Roosevelt County- might be present in Daniels.

There is no Nisku production in Daniels County. All Nisku tests were failures. And there are many. There is some scattered Mississipian production in the county.

It appears the only horizontal hopes for Apache might be the Ratcliffe. The Ratcliffe will be stratigraphically defined and will not be a blanket resource play.

The cold reality is that hundreds of geologists in the last 35 years have reviewed all the data on all the wells drilled in Daniels County (this includes the Fuguere well) and conclude the county has marginal potential to sub-marginal potential for commercial oil.

Mineral owners/Lessors have limited knowledge of the exploration history in the areas they live. They hear rumors passed down the years. Most mineral owners are convinced they have oil underneath their land--when in fact they do not. They are ignorant that a well drilled 20 years ago probably condemned their acreage.

Is there oil in Daniels County? Sure. But there is probably oil in every Montana county. You want to risk your money and drill 30-40 wells to find out the scattered pockets/fields?

Exploration companies have better prospects elsewhere.

I do have confirmation that Shale is renewing some options on the leases in Daniels County. I guess that is some positive news. We can all guess Shale knows what is happening out there.



Matt Roberts said:

Convential plays in Daniels County are limited.

Matt,

You seem to know a lot about Daniels County? Also very negative on your assesment.. Are you a Geologist and did you drill some of the historic dry holes in Daniels?

Very limited.

The primary target in Daniels County the last 40 years for exploring companies was the Nisku. Geologists thought that incredible Nisku production that was found south of Daniels County in neighboring Roosevelt County- might be present in Daniels.

There is no Nisku production in Daniels County. All Nisku tests were failures. And there are many. There is some scattered Mississipian production in the county.

It appears the only horizontal hopes for Apache might be the Ratcliffe. The Ratcliffe will be stratigraphically defined and will not be a blanket resource play.

The cold reality is that hundreds of geologists in the last 35 years have reviewed all the data on all the wells drilled in Daniels County (this includes the Fuguere well) and conclude the county has marginal potential to sub-marginal potential for commercial oil.

Mineral owners/Lessors have limited knowledge of the exploration history in the areas they live. They hear rumors passed down the years. Most mineral owners are convinced they have oil underneath their land--when in fact they do not. They are ignorant that a well drilled 20 years ago probably condemned their acreage.

Is there oil in Daniels County? Sure. But there is probably oil in every Montana county. You want to risk your money and drill 30-40 wells to find out the scattered pockets/fields?

Exploration companies have better prospects elsewhere.

I do have confirmation that Shale is renewing some options on the leases in Daniels County. I guess that is some positive news. We can all guess Shale knows what is happening out there.

Matt,

You seem to know a lot about Daniels County? Also very negative on your assesment.. Are you a Geologist and did you drill some of the historic dry holes in Daniels?



Matt Roberts said:

Convential plays in Daniels County are limited.

Very limited.

The primary target in Daniels County the last 40 years for exploring companies was the Nisku. Geologists thought that incredible Nisku production that was found south of Daniels County in neighboring Roosevelt County- might be present in Daniels.

There is no Nisku production in Daniels County. All Nisku tests were failures. And there are many. There is some scattered Mississipian production in the county.

It appears the only horizontal hopes for Apache might be the Ratcliffe. The Ratcliffe will be stratigraphically defined and will not be a blanket resource play.

The cold reality is that hundreds of geologists in the last 35 years have reviewed all the data on all the wells drilled in Daniels County (this includes the Fuguere well) and conclude the county has marginal potential to sub-marginal potential for commercial oil.

Mineral owners/Lessors have limited knowledge of the exploration history in the areas they live. They hear rumors passed down the years. Most mineral owners are convinced they have oil underneath their land--when in fact they do not. They are ignorant that a well drilled 20 years ago probably condemned their acreage.

Is there oil in Daniels County? Sure. But there is probably oil in every Montana county. You want to risk your money and drill 30-40 wells to find out the scattered pockets/fields?

Exploration companies have better prospects elsewhere.

I do have confirmation that Shale is renewing some options on the leases in Daniels County. I guess that is some positive news. We can all guess Shale knows what is happening out there.

Shale Exploration is a fairly new company and has not been leasing long. If Shale is renewing some leases, the leases they took must have been very short term. If someone is telling you Shale is renewing leases, you should probably be checking your sources.

I believe the comment was "exercising options". Which means they are paying off options and coverting the leases to primary term. That could be a good sign.. usually a company takes an option for two reasons.. 1. they don't have money to pay full primary term lease or 2. They want to prove up a concept before spending a bunch of money.

I'm still curious as to how Matt knows so much about Daniels County? Also, why he is so negative on potential of economic oil production?

Point taken. "Renewing options" was what he said. Those two in conjunction threw me.

mmiller3 said:

I believe the comment was "exercising options". Which means they are paying off options and coverting the leases to primary term. That could be a good sign.. usually a company takes an option for two reasons.. 1. they don't have money to pay full primary term lease or 2. They want to prove up a concept before spending a bunch of money.

Perhaps this is Matt?

http://www.linkedin.com/pub/matt-roberts/44/762/b1b

mmiller3 said:

I'm still curious as to how Matt knows so much about Daniels County? Also, why he is so negative on potential of economic oil production?

I am not a Daniels County mineral rights owner, but my wife's family (both paternal and maternal) homesteaded in Daniels County and still have connections there. E.g., my wife is Lee Humbert's cousin.

Also, for the record, I don't "know" anything regarding what's going on "on the ground" except what I read here. Further, just because I hope people in the extended family enjoy positive outcomes, I hope for the best with regard to Apache's activities. That "hope" probably biases my analysis.

OK, so those disclosures made, here's what I as a CPA think based some professional understanding of how large corporations work, the SEC, the rules for financial accounting and reporting, etc.

1. I accept as highly, highly credible comments made to investors and investment analysts by the CEO of Apache. It's not really too much of an exaggeration to say that intentional or misleading statements by Steve Ferris may result in him doing hard time in jail. Further, he's got a team of securities law attorneys coaching him about how to talk to the financial community in an appropriate, honest, accurate, etc. manner. Accordingly, if he said the oil logs "look good," I think people can assume that at least at the point in time he made that comment that that was very, very accurate information. (To emphasize this point, think about how careful any of the rest of us would be if a misstatement/misdirection/etc here, on this forum, might mean we would get a prison sentence. Yikes.)

2. Big companies have to make big decisions and some of those decisions end of being wrong, of course. But it certainly appears as if Apache has invested somewhere around a quarter of a billion dollars on the Daniels County opportunity. And they may have bumbled that. But they would have had teams of geologists with lots of experience looking at all the data that Matt Roberts references. They would have had capacity to spend millions on their due diligence (and probably did if only to protect themselves in case of failure). This work doesn't guarantee success obviously. But if any extended family member asked me, I would suggest that this is not yet the time to be negative about outcomes. Again, based on what the Apache CEO said about this situation all becoming clear "quickly" I would say to a family member, "wait a few months..."

Steve



r w kennedy said:

Point taken. "Renewing options" was what he said. Those two in conjunction threw me.

mmiller3 said:

I believe the comment was "exercising options". Which means they are paying off options and coverting the leases to primary term. That could be a good sign.. usually a company takes an option for two reasons.. 1. they don't have money to pay full primary term lease or 2. They want to prove up a concept before spending a bunch of money.

hey Steve, nice to read your wise council. Patience is a virtue. Best wishes

Lee