Ann: Operations Update, page-448

A more in depth consideration, of the latest update on Merlin 1

Going into the drill campaign, it was known there were 3 targets, N20, N18 and N14. All three have been encountered.
Drill reporting shows at least one more zone has been encountered, it may consist of more than one layer, it is not clear, defining multiple is sketchy at best. For clarity I labelled this zone NXX, and from what has been released it is below the known targets.
All of the targets are in the Nanushuk formation, between 3400 and 5100 feet deep

Putting it all together zone by zone
N20
This zone was the prime and shallowest target pre drill, proven as a hydrocarbon bearing and commercial petroleum system, by the Willow discovery to the north.
Piecing the post drill reports together, although some shows, and other supportive data were reported, the samples taken are mostly water. So despite having reservoir rock potential, it is water laden, it has not trapped sufficient oil to be useful.
This zone I expect to be written off.

N18
As second shallowest, it was seismically identified, but had no direct analogue to support it. As such its probability of success was lower. Results from this zone are very similar to N20, again yielding mostly water.
This zone I expect to be written off.

N14
Originally flagged as the deepest target, on the same shelf break as Harpoon, and potentially on trend with Harrier.
This also presented with oil shows, lower resistivity, and some associated gas readings. I am cautious on the gas readings as they have not been quantified, high gas readings and persistent oil shows, would indicate an oil column. Reading between the lines the oil shows sounded intermittent.
By deduction this zone is the most likely to have had the gas shows similar to Willow. Deduction is based on, of the three known targets reported the first two are fails, leaving N14
88e did get LWD and initial wireline data, so should have a reasonable basis on which to assess the prospects.
Failure to obtain samples, leaves the key question, what is the make up of the zone unanswered.
Oily Water, Watery oil, gas. Success depends on this, good reservoir rock is only one part of the equation.
Analysis of the data they have obtained will decide this zones future. Still high risk but not a write off yet.

NXX
Into the unknown, seismic data did not identify this target. Seismic was reinterpreted vintage data so was always going to be unreliable, but a complete miss is a surprise.
Results were similar to N14, apart from lower gas readings, so risks are higher, also with the size of the target an unknown added to this risk.
Still very high risk but not a write off yet.

What can now be concluded is of the 3 known zones, only one has any prospect of success, with that, the prize also shrinks. Without knowing the numbers for each of the zones, dividing the best estimates by three (270/3 = 90) is the best investors can do, leaving 90m barrels is the best guess in a success case. 88E share is 50% of this, at 45m barrels.

Calculating NXX volume at this stage would be without any rational basis, this can only come from further analysis by 88e. Could be extensive leaves it very open, I could win Lotto.

88e wording has been quite bullish about these two prospects, very encouraging, some uncertainty remaining, Merlin 1 has delivered by far the best outcome of any of the 5 wells drilled by 88e.
This is then tempered by The well may be re entered if warranted. Meaning they are not sure if it will be warranted.
And given the results from the first 4 wells have been poor, it was not a high bar to clear.

I do look forward to more updates as the analysis advances. Bearing in mind 88e needs a large discovery here to be viable at all. With only half of that going to 88e, it needs to be very large to make a material difference to 12.5 billion shares on issue.