gee Odd1 there r still some more boxes left to tick b4 they actually call is commercial, my thoughts below.
The JV knows nothing other then what the 3D seismics, DHI's, WL logging & MDT pressure data tells them alongwith the seismic signature of the in-situ fluids.
They don't know if the nxt well will flow xxxx bopd & with what ratio of water & gas.
The pressure gradient & collected oil samples at SNE r indicative of a charged oil column, which is ideal to come back & appraise this discovery.
They must drill a few kms either side from the first well to define consistency in the Albain Sands reservoir, which were oil bearing at SNE-1.
So $1.20 at this point in time is a bit wishful, unless the SP is 12c & they consolidate 3127mil shares to 312.7 million or something along those lines (given future dilution after the first 3 wells r completed).
I am just giving u a counter argument for the sake of discussion as we don't know the following:
- how the reservoir pressure connectivity works for the appraisal wells,
- presence of local faults that could truncate the sands &
- my worst nightmare - fining up of sands & blockage of pores
- actual pressure reading/depletion on variable choke settings, eg 1/2" or 3/4"
So lets drill SNE-2 & 3, & when everything is derisked, then by all means Cairn & Co will call it Commercial.
We really need flowrates & pressure data from extra wells to take it to the nxt level.
MDT logging tool is a std practice these days as its basically a mini-DST that provides
- drawdown of fluid frm an interval in xx seconds/minutes,
- in a set volume sample chamber alongwith
- the pressure reading.
Together with another suite of logs eg NMR, they can tell that the fluids (ie HC's) r movable or not & the best interval that will flow.
This pressure reading & collected fluid is what Cairn r quietly confident about hence all the hidden messages to the universe, u see.
Pls remember appraisal drilling is crucial for any project, as it helps the Operator to fine-tune their Volumetrics. An extended well test (EWT) is what makes or breaks the campaign.
Classic example is Chinguetti where the Operator WPL had to drop the 2P by 50% from 123 mmbbls (amongst many other examples in our own backyard, Torosa, Longtom etc etc).
For now, post SNE-1 they know,
- the size, ie area in sqkms,
- porosity frm the logs,
- resistivity data,
- pressure drawdown,
- fluid API frm SNE-1
- mobility of HC's
- OWC (not sure abt the gasil ratio) &
- Thickness of the sands
That's the reason why Cairn (& its consultants ERCE) have gone ahead & banked their 40% net work interest as 120 mmboe for SNE last month.
They just need more data to validate their model & bank the reserve to a 1P-2P category from 2C contingent.
Just my thoughts for now. Cheers
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