vagabondo wrote: "Re 3d or plough straight into another drill. I am no expert in these matters, however it appears it may be prudent (even best practise) to carry out 3D first? Why is this decision of a failure on the part of the board (on the assumption it was their decision)? Agreed it needs to be in a timely manner."
There are several issues around this.
Firstly, the chance of a 2nd well being dug immediately succeeding is high. Sure, it would be higher with 3D.
Secondly, the company had a rig. Now it's been released, and we don't know how long it might take to book another which can do the job. Last time we waited most of a year.
Thirdly, the company needs money. One producing well will be good, but 2 might have been enough to cover all admin costs. I am worried that the company won't have enough cash to drill another well after the 3D is completely. This would mean they have to find another source of financing for it. If they drilled immediately, and had success, then the risk would have been significantly reduced. (I accept that a 2nd well is also a risk which might have failed).
The board chose to take the conservative side, but means the company still has a big admin costs, let alone the cost of the seismic itself.
Obviously, all in all, there are good and bad reasons for each decision. But I think releasing the rig they had was a mistake.
- Karl
CTP Price at posting:
40.5¢ Sentiment: LT Buy Disclosure: Held
