Ann: Good Oil Conference Presentation, page-20

Because if you don't encounter an OWC in drilling (which they did in the Crespin but not in the Caley, as they said in their releases) then the only way to come up with a volumetric estimate is by using the pressure measurements to calculate an oil column height from the pressure gradient. We know they took this data because they announced that they took it. Inferring a column height and water contact from pressure data is fundamental reservoir engineering 101.

Anybody who did a rough volumetric estimate of the structure after the announcement that the Caley was a 90-odd metre net oil pay sand already knew the structure was capable of holding a volume of oil in the high hundreds of millions to the billions of barrels. I said at the time that we shouldn't assume the 2C resource would be anywhere near that high because we couldn't assume the structure was full to spill, particularly since an OWC was encountered in the Crespin.

When the 2C resource was announced it was much lower than many people were hoping for, including me. I said then that it was probably evidence that the Caley pressure measurements had shown the structure was nowhere near full, because the difference was more than could be explained by uncertainty in porosity, net pay, saturation, FVF etc.

Now we have a cross section which shows the Crespin OWC in the Dorado-1 well exactly where they said it was, and also shows a Caley OWC which is nowhere near full to spill, which explains nicely why the resource estimate came in at the value it did. And the Milne OWC does suggest that formation is full, but unfortunately that's the thinnest sand and the lowest in the structure, so contributes the least volume.

You can expect that at least one of the next two appraisal wells will be located to intersect the modelled Caley OWC to confirm it is where they think it is. The Caley is so thick that even a small shift in the OWC will make a difference to the oil in place.

Amazing all the information I keep where the sun don't shine, isn't it?