analyses of announcement

Hey everyone,

I have spoken to a friend of mine who is an experienced Petroleum Engineer. These are his comments regarding the announcement:

1.The first reservoir target (Bed V) in the East Mailisu #1 exploration well was penetrated at a depth of
752m on the morning of October 21. Oil was observed in the drill cuttings and in the drilling mud, and
there was also an increase in a level of gas from a background of around 600ppm to 42,000ppm.

This is good, as to whether this oil is able ot be produced is still dependant on many factors. The key factor would be volumetrics. How much oil is in place seeing as there was no oil shows in the deeper reservoirs?... If anything this brings up more questions rather than answers. The next question is regarding flow. Oil and gas shows in cuttings are a good indication of oil in place but can it be produced? The only way to determine this is through a flow test (given that volumetrics determined from seismic are finacially viable). again this statement is neither good nor bad, information is limited.

2.The carbonate reservoir exhibited common bright yellow fluorescence with a white cut fluorescence over a
3m interval.

3m interval is a thin reservoir! Thin reservoirs can be developed for production but you ar elooking at more expensive drilling (i would go for a horizontal well). also is there underlying water? Risk. Overlying gas would not be a issue cause you can tap into pipelines nearby. fracturing techniques if you have poor reservoir quality could still be viable (Acid wash seeing as iit is a carbonate reservoir). so basically dependent on the reservoir type (Depletion, Gas Drive, water Drive) you may have risks associated with production.

3.No shows were recorded in Bed VII.

Bad news.... Less oil=less $

so in summarising the above brain dump whihc may make little sense consider the following:

Oil in Bed V=Yes
Volumes of oil in Bed V commercial=?
Permeability of Carbonate able to sustain flow rate=? (A flow test should follow if they think that bed V is posiitve which they will release results)e.g. Drill Stem Test to be carried out with rig soon..
Enhanced production methods possible (Thin reservoir issues??)=? (risks here include whats above/underneath reservoir)...