psi .. 2 questions, page-4

I have no idea what DGO would pay for a bigger share of HW-3... I think from what they have seen to date though, they would probably be interested in getting more control of it.

Re: the reservoir 40m high... You're right, the first point to make is that if the reservoir came in 40m high, they didn't do a very good job of their depth conversion (where they convert seismic data from time in milliseconds to depth in metres). Given they had TWO other wells in this structure, one of which went to Abiod, and both of which should have had checkshot surveys, and then they shot a top of the range 3D survey over it seems a bit odd to be so far out. It doesn't get much better than 3D seismic and two checkshots when it comes to depth conversion.

However they have said before that the boundary of the Abiod is transitional, which means it won't show up very well on seismic (there is no sharp contact to act as a reflector). So that is probably the reason - they probably picked the wrong reflection as the top Abiod.

Now, onto the next bit:

I suppose he is implying that the reservoir is 40m taller than estimated … which is not necessarily true.

It's not necessarily true, but in this case they seem very confident about it which I think must mean that HW-2 intersected an oil-water contact. If this is the case, the OWC is at a known depth. If top Abiod comes in 40m shallower, then that DOES imply that the reservoir is 40m taller than first thought, because the OWC is fixed.

So I think they probably do have a bigger reservoir their P50 estimate of 111 MMbbls, which is great news. I look forward to a revised resource estimate.

You have to be a bit careful because getting your depth conversion wrong can change not just the height of the structure but also its shape - parts that were mapped in closure previously can suddenly be not in closure any more when you change the velocity field. So it could actually reduce the size of the structure - but that's mainly an issue with flat structures of low vertical closure. This is a big, high structure so I would say it's almost certain the volume of the structure will increase.

As for your second point - they may well try to enter the same well and sidetrack a new lateral which will save them having to drill through the shallower formations that gave so much trouble in this well, or they may decide to start from scratch altogether. Hard to say at this point.