Ann: Atzam 4 - Project Update , page-15

Nice post delux73. Imo, the outcome of the pressure and flow test is certaintly positive, if the expectation was to flow 200 bopd as agreed in the acquisition/farm in term. All information to date support this. All oil production will decline more or less, fast or slow but will decline. So far, the 10 days testing with shut ins, flows at different choke sizes provided them many useful parameters to estimate the extent of the reservoir and prediction of maximum rate. If oil water contact is predicted to be very deep (could be 500ft to 1000ft in my calculation, if there is no over pressure), then they could open up the choke to flow more oil without worry for now the influx of water. The 300-400 psi well head pressure also tell the oil gravity of 36-37 API with gas (making it even lighter during flow). In certain production, they have to inject gas (gas lift) to lift oil out of the hole. We have this naturally. A dodgy manager would go straight into flowing 1,000 bopd+ doesn't matter what just to pump the sp up but LAR is doing a proper job at the moment (or by the book at least). Operationally, I don't see any issue there. Production will be our short term gain.

The 36-37API would attract high price like Brent crude if sulfur content is low. I would expect Atzam oil to have some amount of sulfur, however, it still attracts high price for being a light oil.

As we can see from a few other junior like AJQ, AKK, LKO or even RRS, none can flow a well at 600 bopd. RRS might hold a 10 million bbl reserves but it means little if a few hundred wells need to be drilled to produce all that. Other names hold large land, potential shale gas, shale oil which could cost them $5m+ per well to drill and fracc and we expect that 1-2 MMscfd of gas flow or couple hundreds bbl of oil would be maximum they can achieve. The decline rate in shale gas/oil is higher than in a conventional one.