From phone calls I had made back then, the pay zone has a sweet spot. The bit struggled to stay within the range of the sweet spot. So it may of remained in the pay zone.
I don't think that had anything to do with sub-standard drilling or equipment - it's just that permeability tends to occur in streaks and you can't really tell it from LWD logs - in fact you often can't even pick it in a full suite of wireline logs because it's due to subtle changes in pore throat mineralisation etc. You need to look at the cuttings under an electron microscope to really see it.
The best thing to do is roam about a bit within the reservoir and hope you cut across one or more of the perm streaks, which they obviously did here.
Also I don't think the reservoir is particular sensitive to drilling fluids, it's just tight so can be damaged by drilling overbalanced - but since the lateral was drilled underbalanced it was okay.
I for one was absolutely gobsmacked when they got 400 bopd out of it after flowing nothing vertically. It was a lesson in how the North Americans are light years ahead of us Aussies in terms of drilling techniques in tight reservoirs.
But I don't think they'll get that much more out of Surprise. It's still a tight reservoir. But who cares? 400 bopd is ample.
speculator,
I don't share your concerns over the gas deal. At least not to the extent you do. Knowing RC and having been involved in a lot of these evaluations in my time I have no doubt that RC saw a compelling business case for the purchase including a good NPV and IRR (19% is a very good IRR on a project with a life of 20+ years). CTP is exposed to debt and dilution, but let's be realistic - QGC type deals come along once in a generation, and most business development opportunities of existing assets involve finance risk and sub-optimal business conditions, because the seller wants to extract maximum value from their asset.
So anybody expecting the gas deal to be some cash cow is kidding themselves IMO. There is going to be hard work, risk and modest returns. The only way you make cash cow returns is if you gamble on blue sky assets and strike it lucky - which CTP and many, many other companies have tried in the recent past, and with overwhelming frequency it ends up with tears all around for shareholders.
So you always take on risk - if it's not financial risk, it's exploration/geological risk in a wildcat well.
To me, it seems likely RC has bigger plans than just these gas fields. We know there is a lot of gas in the Amadeus and it's well located not too far from Moomba, which will shortly be looking to take any gas it can get. Looking at this from behind RC's desk, I see plans to create a major gas production hub in the Amadeus, with CTP in the driver's seat. But CTP doesn't have the money to drive that sort of exploration with the associated risks (as JH repeatedly found out) so they have to start small.
As to your comment about the funding commitments for the unconventional exploration program - that is a much bigger worry to me. None of these assets, oil or gas, can generate anywhere near the cash required to fund it. Chances for a further farm-down or divestment seem unlikely to me, so there could be some pretty significant dilution ahead. You are dead right about the risks there IMO.
CTP Price at posting:
43.5¢ Sentiment: None Disclosure: Held
