Hart Energy: Let’s start off by talking about a real push for E&Ps to generate free cash flow. With Protégé Energy III LLC focusing on that. Walk us through your thoughts there.
Marty Thalken: For us and our industry to be competitive with investment options in general that investors have, we have to be generating free cash and either dividending that to the investors or using it to grow the company. In our case we are doing both. We're growing the company into next year and beyond, 10 to 12% a year. Spending roughly 60% of our EBITDA. Therefore, we have roughly 40% that we plan to distribute back to the investors. That's a good thing for them because in today's environment since we're private equity-backed, typically we look for a sale or monetization of assets. Today it's very difficult to do. So, returning cash to investors is really very attractive to them.
Hart Energy: Can you talk to us about what makes the Eagle Ford play a good focus for Protégé Energy III LLC?
Marty Thalken: It's really good for us, particularly the assets that we own. Because the infrastructure was already there. The prior operator built a system that can handle 40 to 50 thousand barrels of oil a day and a water frac water, fresh water handling system with 1 and 1/2 million barrels of storage. We have our own freshwater wells. We are currently drilling a saltwater disposal well so we can handle the disposal of the produced water. So, infrastructure is critically important to enhancing margins overtime and we have a fabulous infrastructure network that we acquired when we bought these assets. In the future we look for opportunities and situations were that infrastructure is in place.
Hart Energy: Any focus in the upper Eagle Ford?
Marty Thalken: The upper Eagle Ford has significant oil in place. It’s thicker than the lower and the porosity across the section is lower than the lower your Eagle Ford. I would say it requires higher oil prices than today to be really attractive to pursue in the current environment. So I think it's something we'll pursue down the road.
Hart Energy: Are there any industry trends that you are focusing on as a company?
Marty Thalken: I think enhanced oil recovery is the biggest opportunity for us. It’s a fairly simple process and submissible hydrocarbon gas injection where do you inject gas you let it soak for a short period of time. It comes in contact with the oil molecules that are trapped. It reduces the viscosity of those molecules and they begin to flow to the wellbore. With just primary recovery, we’re probably going to recover eight to twelve % of the oil in place. So, that leaves a very large target to attempt to produce. Enhanced oil recovery is going to be the next most economic step to enhance the overall recovery.
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DUG Eagle Ford: Well Interference, Focus On Drilling Inventories
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DUG Eagle Ford: Venado Oil & Gas On Fast Cycle Times
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