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  • Marathon Oil Is 'Scooping' Up Value For Investors [View article]
    Anyone looking for spectacular IRRs should take a look at the naturally fractured Buda play in South Texas beneath the Eagle Ford. IRRs for the project as a whole is well over 100%. Multiple wells have reached payout in less than 60 days.

    http://seekingalpha.co...
    Sep 30 09:21 AM | Likes Like |Link to Comment
  • Buda Oil Well Rates Of Return Better Than Eagle Ford [View article]
    Contango has said it is not that easy to see the natural fractures on 3D Seismic. You can see the hydrocarbons.
    Sep 26 03:38 PM | Likes Like |Link to Comment
  • Contango Oil And Gas: Take A Good Hard Look At This Misunderstood, Undervalued SMID E&P Company [View article]
    "Given that the Buda is still somewhat of a "statistical play," delineation is key (how well it is tied into fracture network) and Contango is waiting on few more wells to further prove this formation."

    It is true Contango has called it a "statistical play." However, it is clearly a resource play. A statistical play is where it is not certain whether or not hydrocarbons will be present when the target zone is reached. A resource play is when it is fairly certain hydrocarbons will be encountered, although results may vary widely.

    There are other operators in the area that have drilled successful Buda wells on the northern side, eastern side, and southern side of Contango's leases. Conango has drilled the Beeler 9H well on the western side of its leases. In all, there have been over 30 Buda wells drilled in the general vicinity of Contango's Booth-Tortuga area. Every single well encountered hydrocarbons and has been brought into production. And every single well is still producing. Over 20 of the wells have achieved payout in less than 6 months, and several of those in less than 60 days. Contango has also stated the Buda project as a whole has an IRR well over 100% so far.

    By the way, nice article and thank you for bringing attention to these two companies.
    Sep 24 10:25 AM | 4 Likes Like |Link to Comment
  • Contango And U.S. Energy Are In Austin Chalk Sweet Spot [View article]
    The reserves would certainly be worth more per BOE if Contango were to up the number of rigs drilling in the area.

    I see they are presenting at the Johnson and Rice Energy Conference next week. Hopefully we will get clear update as to what their plans are.
    Sep 23 02:15 PM | 1 Like Like |Link to Comment
  • Contango And U.S. Energy Are In Austin Chalk Sweet Spot [View article]
    It depends on the extent of natural fractures and oil in place. Without more info it is not possible to evaluate. The key in both the Austin Chalk and the Buda is to find a sweet spot.
    Sep 22 05:41 PM | Likes Like |Link to Comment
  • U.S. Energy Is The Way To Play The Buda Oil Discovery [View article]
    The recent results are outstanding. To follow the production profile of the Buda wells I recommend going to the Investor Village message board for USEG. They have a group of people that post regularly and keep everything up to date.

    The last four wells Contango drilled on the lease have been home runs. The Beeler 17H started producing in June and by the end of July it had already reached payout. They plan to start drilling longer 9,000 foot laterals from here on out. Many of their earlier wells had laterals that were less than 4,000 feet.

    USEG is a steal at current prices. The market hasn't figured out how rapidly production is rising for them from the recent success in the Buda.
    Sep 19 03:39 PM | Likes Like |Link to Comment
  • Chesapeake Joining Buda Oil Rush In South Texas [View article]
    Let me illustrate the $500 million estimate. The Dan Hughes Heitz 302 3H well has been producing for two full years:

    Estimated Gross Revenue: $35.00 million

    Less 25% Royalty 8.75
    Less 4.6% Production Tax 1.61
    Less 5% Operating & Transportation 1.75
    Less Est. $4 million Drilling Cost 4.00

    PV-10 for Production to date: $18.89 million

    PV-10 Estimate for future Production 6.00

    Total PV-10 for Heitz 302 3H well $24.89 million.

    It would take 20 very good wells like this well to have a PV-10 value of $500 million. The gross acreage position on the Booth-Tortuga lease is over 14,000 acres. With 320 acre well spacing the lease contains over 40 drilling locations. So far Contango and USEG have hit 8 good wells and 5 so-so wells. They also have the drilling costs down to $2.6 million.
    Sep 18 10:20 AM | 1 Like Like |Link to Comment
  • Chesapeake Joining Buda Oil Rush In South Texas [View article]
    The $500 million is just for the Buda formation for the whole lease. The most recent well results indicate it could wind up much higher than that. USEG has a 30% working interest and their share would be worth $150 million.

    That doesn't count the Austin Chalk or the Eagle Ford. The Austin Chalk has the potential to be as productive as the Buda. There are already older Austin Chalk wells on the lease that are still producing.

    It also doesn't count the K.M. Ranch lease or the new Dimmit operator they are working with. It is not presently known if either of those leases are in a sweet spot.

    USEG also has Bakken leases and producing wells yielding over 600 boepd.
    Sep 18 08:57 AM | 2 Likes Like |Link to Comment
  • Buda Oil Well Rates Of Return Better Than Eagle Ford [View article]
    The EUR for the Jessica well could be over 500K BOE.
    Sep 12 09:43 AM | Likes Like |Link to Comment
  • Chesapeake Joining Buda Oil Rush In South Texas [View article]
    The map shows how close the Jessica well is to the drilling locations for Contango (MCF) and U.S. Energy (USEG). The Jessica well may have an EUR over 500,000 BOE. The decline curve looks similar to the results for the Heitz 302 3H well drilled by Dan Hughes. That well is closing in on 400,000 BOE after only two years of production and is still going strong.

    These results indicate the PV-10 value for the Buda for the entire Booth-Tortuga lease could be in excess of $500 million.
    Sep 12 09:42 AM | Likes Like |Link to Comment
  • Buda Oil Well Rates Of Return Better Than Eagle Ford [View article]
    Thanks for posting this. The Jessica well was spud on March 3, 2014. By the end of July the working interest owners of the Jessica well had already roughly doubled their money.

    The map shows just how close many of the Contango (MCF) and U.S. Energy (USEG) drilling locations are to the Jessica well.

    Based on the Buda oil well results to date, it is pretty clear the Booth-Tortuga lease is worth several hundred million dollars. A windfall for MCF and a company maker for USEG.
    Sep 12 09:01 AM | Likes Like |Link to Comment
  • Buda Oil Well Rates Of Return Better Than Eagle Ford [View article]
    It's possible, but it has not been tested. The K.M. Ranch lease you reference is near Matador's Glasscock lease. Matador has run 3D seismic and believes their lease could have natural fractures in the Buda.

    The lease is near the Pearsall Anticline, which is a major fault line. Dan A. Hughes Oil Company in papers filed with the Texas Railroad Commission has stated they believe natural fractures in the Buda and Austin Chalk occur near fault lines.

    USEG has another lease in Dimmit County they are participating in with a different undisclosed operator. They are drilling three Buda test wells. No results have been released.
    Sep 9 07:50 AM | Likes Like |Link to Comment
  • Buda Oil Well Rates Of Return Better Than Eagle Ford [View article]
    According to the Texas Railroad Commission the Booth-Tortuga lease in the Buda sweet spot had a sequential growth rate of 34% from June to July. Very impressive. Contango (MCF) has a 50% working interest in the lease and U.S. Energy (USEG) has a 30% working interest in the lease.
    Sep 8 04:37 PM | Likes Like |Link to Comment
  • Buda Oil Well Rates Of Return Better Than Eagle Ford [View article]
    I didn't think U.S. Enercorp was the new operator USEG is drilling with in Dimmit. But you make a compelling case and may be right.
    Sep 3 10:08 AM | 1 Like Like |Link to Comment
  • Buda Oil Well Rates Of Return Better Than Eagle Ford [View article]
    The new locations look like infill wells between some of their most prolific wells.
    Aug 14 10:22 AM | 1 Like Like |Link to Comment
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