03
Apr

BPI Energy – Illinois CBM Minnow With Big Fish Talent

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BPI Energy (BPG) $0.78 April 3, 2007 Open.

Snapshot: This is not a report and it’s unlikely to turn into one given it’s very small size but here’s a quck run through. It’s a snapshot done at the request of a reader and while interesting I personally don’t need any more single digit midgets in the portfolio right now. Still it is a grower and apparently well run. Here’s my 15 minute look from the Howard Weil conference.

Tiny (< 1 Mmcfgpd) coalbed methane producer in the Illinois Basin. Debt free and management has skin in the game (11% ownership). The company has roughly 500,000 acres now.

First, this is not your father’s CBM play. Forget what you know about production rates in the Rockies. This is generally thinner coal with lower saturation per ton. As dewatering occurs production typically climbs to ~80 over 18 months, drops to 60 by year 4 and tails out over 20 years. Not exciting but if you drill enough wells you’ve got a nice, low cost, long reserve life annuity.

  • 50 well program in 2H07. When this was announced the stock shot up from $0.60 to $0.90, gave most of that back quickly and then shot up to .
  • Management includes former Chief Engineer of Burlington Resources who has undoubtedly got lots of CBM experience with BR’s huge program in the San Juan Basin. Field Ops guys is from HAL’s CBM Solutions Team…not too shabby.
  • Technical: Two more seasoned staff from BR and two from Energen

Areas of Operations:

1) Southern Illinois, Delta project: single seam wells. 100% WI and NRI, 86 wells onstream - ~ 700 Mcfgpd and 3,500 bpd of water. Four productive horizons present. First well was drilled back in 2003 and the first pilot took place 2005 so I’d bet that their first 10 wells or so make up a vast majority of production here and that the rest will begin to make their presence felt over the next 12 to 24 months.

2) Northern (Shelby) project: multi seam wells 10 wells onstream, flaring , 2 more awaiting completion. 20 Mcfgpd and 1,000 bpd water, has some nitrogen but it doesn’t sound like a problem. The company appears to be getting bottom hole pressures down well which takes time and as that occurs, prodcution will climb.

3) Macoupin (additional Northern Basin potential): 4/07 - begin 10 well pilot.

LOE - probably pretty darn low.

F&D - very shallow, 500 feet, <$200K to drill and just under 0.2 Bcfe reserves per well yield very attractive finding costs.

llinois is criss crossed with infrastructure and has a good local market. Gas here trades at a premium to Henry Hub and Rockies.

3 Responses to “BPI Energy – Illinois CBM Minnow With Big Fish Talent”

  1. 1
    Zman’s Energy Brain » Friday Random Thoughts Says:

    […] (BPG) to speak at IPAA on April 25th. This an interesting little Illinois Basin CBM minnow I did a snapshot piece on earlier this month. Since that report on April 3, (BPG) has done nothing go up and currently […]

  2. 2
    zman’s Energy Brain ~ oil, gas, stocks, etc… » Blog Archive » Friday Random Thoughts Says:

    […] Comments Loren on Oil MacroZman’s Energy Brain » Friday Random Thoughts on BPI Energy – Illinois CBM Minnow With Big Fish TalentJoe on Suggestion Boxzman on Thursday – Meet UNG, Natural Gas’ Very Own ETFzman on Thursday – Meet […]

  3. 3
    zman’s Energy Brain ~ oil, gas, stocks, etc… » Blog Archive » Monday Morning – Earnings in Earnest Week 2 (the small fry reporteth) Says:

    […] good news if you didn’t get in when I first wrote up this little gem back in early April. Click here for a snapshot of company. (BPG) will continue to monitor one of it’s pilot CBM projects that so far has shown lower […]

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