Calm down mate. Dont worry abt the textbook definitions.
We all know that currently they r appraising the extent of Poseidon structure i.e how far it goes, whats the reservoir properties, thickness, net:gross, bgas saturtn, HC content etc etc (the usual spiel).
At a later day, by 2013-2014, when they go to production, depending on how much additional completion is required, the operator could simply tie this well to the subsea array & commence production. During the prodn cycle, some producers esp. those on the fringe, will become injectors, to flush out the HC's towards the crestal part of the structure (in this case P1).
It is a big structure, so there should b more wells planned on Phase-2 drilling later in the year. So yeah, the first well is an exploration well & the second one on the same struc is an appraisal well. e.g. KR-1 will b an expln well & KR-2 will b appraising the Kronos satellite structure.
For now, IMO, its more of a disclaimer by KAR, given that things r still in drilling phase & drilling such technically challenging wells to depths of 5000m+ or 16400' is simply appraising, since there r no production facilities to tie the well into !! So it cant b producer yet, but the well has 2b tested, logged, completed as part of appraising.
Whats more imp. is they get the gas sample frm the sample chamber & analyse that for the heavies. They can sustain a LNG plant with dry gas (eg WPL's Pluto or NXS's LongTom), but any heavies in the gas is additional dollars. Hence, the NPV of A$3.136 billion to KAR or $17.7/sh.
Hopefully we should find out how the B-sands flowed at.
I do expect them to announce some water as well, given that as per Report #16, the base part of the B-sands is slightly dipped into the Gas-water Contact. Exactly how much HC's flowed will b deciphered frm the data gathered frm the separator over a period of time (24-72 hrs). Gas readings r fairly straight-fwd, its the later two (bbls of cond & bbls of water) that r tricky.
Depending on the outcome, they will update the mkt & then decide to set a plug above this depth & proceed with the Montara sands.
As per their qtrly, their exploration budget for Q1 is $69 million (3 wells drilled + global seismics aren't cheap), so cash on hand on 30th March will b $127 million frm current $196.832 mil. Which means, we could see them raise some capital or mayb flog another 10% to COP lateron, to piggy back for future drilling work.
Just my thoughts. Good luck all.
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