actually the glass is half full, page-25

The answers a bit more difficult than just finding the oil water contact as the oil reservoirs that CVN are producing from are quite unusual.

A normal reservoir is either

1, sandstone with matrix porosity and permeability which can ideally be readily modeled on possible production rates etc.

2, a limestone, similar to a sandstone with matrix porosity but due to great lateral variations more difficult to model long term flow rates etc.

Unfortunately CVN reservoir is neither of these, its a volcanic layer containing oil.

Oh thats okay then? Well yes and no. CVN has oil but how is the oil trapped in the volcanic rock?

I believe some of the volcanic reservoirs in the well drilled have some matrix porosity which is great. But the majority have only fracture storage. IE all the oil is found in the fracture neck work in the rock.

Oh thats okay again?

Well again yes and no

Fractures can allow very high flow rate of oil, that great but if you have a strong water acquifer beneath the trapped oil then the water pushes the oil out by the most direct route leaving huge volumes of by passed oil. So the oil well is watered out.

Thats bad news as you can never produce oil again with out huge amount of water, sometimes you can turn of the tap, wait for a few months and turn on again and get another flow of oil before again the well water outs.

So looking at CVN, Ted knows this hence a lot of the wells are producing well below there possible maximum production rate. The rational for this is that the you will extract more oil this way.

So for CVN they have the opportunity to drill lots of wells for a cheap price and get make a profit, it just they will end up chasing there tail to keep a steady oil production rates (say 15,000 gross per day) as earlier wells water out before new one are put on production.

Hopefully they will make enough money to enable them to find a more conventional reservoir target within there Thailand landholdings. Hence the recent wildcat.

CVN should also pay a dividend to all shareholders from the profits, the dividend payment should over time (12 to 18 months) pay back all the funds raised during the last right issue.

I bet CVN don't that!!!

Good luck to all holders, lots more upside but with water risk!

cheers

PC43

PS Final CVN still one of the better junior oilers on the ASX.