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  • Heavy Earth Resources, Inc. (HEVI) Has Well-Positioned Oil Production/Potential In Colombia And Guatemala 0 comments
    Dec 6, 2012 2:05 PM | about stocks: HEVI

    Heavy Earth Resources has assembled a significant position in some of the most exciting hydrocarbon targets Colombia and Guatemala have to offer. The company is continuing to pursue an acquisitive strategy focused on diligent identification of strong petroleum geology fundamentals in proven production areas, as well as under-explored targets showing equivalent commercial promise.

    HEVI holds a 50% interest in a large (some 57.3k acres) exploration and production contract in the prolific Llanos basin (~1.5B bbls total documented recovery potential), including the exceptional Morichito block, via their Colombia-focused subsidiary, DCX SAS, who is busily managing the company's interests in the country from their HQ in Bogota. Morichito is sandwiched between four producing fields, including two 20k bopd producers (CEPSA's Caracara field and Hocol, S.A.'s Guarrojo block). This play also takes advantage of the Bicentennial Pipeline (Morichito block to Coveñas) construction, in combination with the expansion of production/storage infrastructure in Cartagena.

    Latest word has it that HEVI is ready to enter the first stage of their current drilling/development program for the Morichito block and the company has retained noted industry veteran (and recent Board appointee), B.A. (Brian) Hepp, to take the COO position. Production was slated to commence on the Morichito-5 discovery well in the October report (as the company had acquired all necessary accoutrements to start commercial production on the Morichito-5), with drilling on the Morichito-5B sidetrack well also beginning. HEVI looks to be on-target for their projected Q1 2013 production milestone and the latest report on the company's net share of prospective resources at Morichito (P10 calculation with customary discount at 0 and 10% before deduction of income tax) indicates a value on the 37.42M bbls somewhere in the range of $1.079B to $585M (P50 calc on 7.89M bbls using the same application yields a range of roughly $128M to $80.1M). HEVI was also able to capture a huge database of 3D seismic data on the Morichito (some 58 square miles worth), opening up even more potential production targets and reinforcing the rich resource model for the site already envisioned by the HEVI team.

    Another 25% interest via DCX SAS in a similar exploration and production contract (here some 27.7k acres, acquired in mid-May) in the Lower Magdalena basin, is also surrounded by serious production (Cicuco, Boquete, and La Creciente Fields). Easy drilling characteristics in the geology, which is largely porous/highly-permeable shallow water sandstone/limestone, makes the (late 2009-drilled) Noelia-1 exploration well an easy node to develop from at the La Maye block and HEVI has three other prospects already identified here for drilling.

    On HEVI's Guatemalan front we have some ridiculously under-explored targets in the north (haven't seen activity since the late 80′s) which are on-trend with and show analogous hydrocarbon geology to the prolific Xan and Chocop fields. Seven massive exploration blocks offer abundant opportunity for the company to employ their advanced 2D/3D seismic and explorative drilling capabilities, thus we should see some high-energy bid activity here before the close of the year, with awards looking more like Q1 2013.

    For further information on Heavy Earth Resources, visit HeavyEarthResources.com

    Please see disclaimer on the QualityStocks website: disclaimer.qualitystocks.net

    Stocks: HEVI
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