Malcy's Update, page-8

"Why would you stop drilling early........ before connectivity has been proven?? I really don't get that especially when FAR have said they were going to update the market on commerciality in quarter 3. "

Hi DB I don't believe there is any great mystery, FAR has stated previously it supported continuation of drilling and obviously didn't get their way, however as CN mentioned in the last update there was equally good reasons for either continuing or stopping because of the Mountain of data to wade through, the JV have chosen the latter option..

Its interesting that FAR is expecting appraisal drilling to recommence in the second half but CNE didn't mention that.

What is much more interesting is that there were no intruments left in either SNE 1 or 2 and they are the wells that tested the lower blocky sands , the reason for that I believe is those sands don't require interference testing thats only being done for the thinner upper sands..

The most obvious conclusion one can draw from that is if the heart of the field is big enough to meet the three commercial requirements and doesn't need interference testing then they can proceed with a phased development relatively quickly and do a combination of development and further appraisal wells/ interference testing at the same time, so stop drilling now and study the cores and the new 3D and make decisions based on sound evidence....they will start with the easy oil first and the upper sands will likely be many years away from being developed....

It's already obvious from the extremely high flow rates from the blocky sands ( CN mentioning 30,000 Bopd from a relatively short lateral) that anything found in the thinner sands won't improve the over all initial economics of recovery that much only extend the life of the field.
In many ways SNE could be seen as two fields an upper and a lower with one eventually taking over from the other and both using the same FSPO...

Thats what I believe will be the gist of FAR's upcoming statement on Commerciality , they believe SNE is now commercial on the strength of the blocky sands alone, that of course won't lead to an official DOC it would still be some time away but probably sooner or later. COP like all JV partners will have their own geos working on the same data and will be making their own conclusions.

The real benefits I can see from FAR's upcoming statements are it will likely be on the back of increased reserves, may issue itself some reserves, possibly start the process of arranging funding and make it clear what they believe is the path forward , I imagine that wouldn't do the shareprice any harm.
The shareprice is obviously the biggest concern as it currently leaves us vulnerable, so anything that changes that and gives us a chance to get into the ASX 200 would be welcome...

Regardless of what FAR says the JV still have to go through the three acronyms of DOC, FEED and FID before starting development and that will take some time and why they do that they can appraise and do any interference testing. There is no real urgency to drill the development wells the FSPO will take the best part of 2 years to build / convert and deliver , that would be the main long lead time priority IMO.

Cheers Whisky