trading halt in pre open, page-53

newregime, given that OBL reckons Backreef is worth $3-$5m BRU aren't going to pay $7m for a third of it, that deal is a hangover from when backreef was thought to be literally 900 times bigger before the initial drill.

Based on Backreef you'd expect the sp to go from 5c to 6c on the oil pool plus a derisking factor. The derisking factor is obviously tricky at the moment given the complete lack of details but if the pool came in as expected - 300k bbls 50bbl/d - you've got to dicount Lead A, B and C as they're all too small to drill. Which is a shame as they're the leads de-risked the most all being structural rollovers like backreef. No one here is going to stump up another $7m to drill for $4m worth of oil with an 80% chance of failure. Backreef would have to come back very differently to expectations or with new information to bother with those leads. Lead D is about 5.3 times bigger than backreef and would be worth $21m based on their backreef valuation and is the most "backreef like", still even that is cutting it fine. Even if it derisked it from 8% to 33% chance of success making it 4 times more likely to come in good, based on $7m cost for backreef at $21m you're only breaking even on the maths.

The best estimate for the backreef area is 17.7mmbbl (ignore the impressive sounding but useless in ground figures) the vast majority of that - 15.3mmbbl - is in 3 leads - E, F and G but they're also the most risky. Currently the 13mmbbl in leads E and F are rated at 4% probability of success being stratigraphic traps and G is the only Nullara target in the whole area. Success at backreef proving an oil pool doesn't neccessarily help a stratigraphic trap actually trap though so even if it makes it twice as likely that's still an 8% probability of success. Still that would double the risked amount of barrels in those targets from 520k to 1mmbbl which should move the price.
Lead G is currently a 6% chance but given it's in the Nullara how much do you derisk it based on an oil pool in the YellowDrum? And how much of the current risked barrels are a proportion of the sp? Very hard to determine.

It could definitely run to 8-9c though, probably mostly on de-risking and the exuberance of a find. I will say though I tend to underestimate exuberance both at the top and at the bottom, this is where the TA guys can help out a bit mostly on intra-day stuff and mostly when they've studied oil drills in relation to TA (ie oil drills essentially have their own patterns) so who knows.

At any rate if it comes in good a drill on Lead F and G (if they overlap in a drillable way) could be interesting with a ~10mmbbl target plus Derby.