realistically, a typical field survey to production would have involved reservoir engineering and decent 3-D seismo before spending on a plant and pipeline tie-in
if they are short of funds, then they may have to go straight to production and suck it and see. The thing is, if you haven't assayed the reservoir properly then you have no idea what you are going to predicably get. This may be the idea behind the build-up, but it's a bit of a 'back of an envelope' way of doing things and has risks.
The lurking problem will be if they sign up on a nominations contract to supply gas. This stipulates that they will supply X amounts of gas of Y quality. If they cannot meet the supply agreement, they get penalised.Penalised in dollars. Often you end up supplying gas at less than what it cost to produce it. There is at least one Junior CSG operator in this country who was until recently in this situation. They sold the whole field and 2 pipelines in the end. (Anglo owned Dawson Seam Gas, sold to Westside)
So if you are guessing on what you have got, and then selling it...you'd want to hope you were right. Especially without proving up the reservoir properly. I don't know if I'd be brave enough to be making that call based on the performance of any of the Paradox wells to date.
GDN Price at posting:
6.0¢ Sentiment: None Disclosure: Not Held
