all roads lead to china

We can't be that far away from an announcement of the date for the drilling of the first of two firm wells on the Beibu prosect offshore China. ROC announced on the 9 July that the jv had agreed to two firm and two contingent wells in Q4.

Anyone that wants to have a punt of this drilling program would be well advised to read the Risc report Horizon Oil commissioned mid year and which is available on their website.

The report estimates mean net production to HZN at 8.7 million barrels which translates to 7.25 million barrels to Petsec and 1.45 million barrels to FAR. And this is just from currently discovered oil fields.

One of the two upcoming wells will be an exploration well on prospect 12-7 which as far as I can make out has not been drilled before. We don't yet have target reserves.

The Chinese, who will back in for 50%, have made it difficult for the jv to talk much about Beibu and its prospects. ROC is the operator and Chairman John Doran said at the Good Oil Conference that he wasn't going to talk about China save to say that the 3D seismic they had shot had been terrific investment.

If you read between the lines the jv is very upbeat about the development of this field and the opportunity it is likely to provide to further joint work with CNNOC.

The field will take time to develop, but the economics of the currently discovererd fields using techniques commonly used in the shallow waters of the Gulf of Mexico, are virtually certain. And the prospect of further discoveries adds an excitement factor.

The Beibu fields are now estimated to be worth conservatively a possible 30-50 cents for HZN, at least $1.00 for Petsec, and 6-8 cents for FAR. Further discoveries in this oil producing area would only be icing on the cake.

It would not surpise me to see a further strengthening of the share prices of all participants as the drilling nears.