MAY (ASX) Ann: Alameda-1 Drilling Update

Originally posted by Hateful8: ↑

Hey Gents, just trying to get a handle on migrating (validating) resources (Contingent) to Reserves as per the industry recognised & accepted std.. Pretty Picture excerpt below..

Can someone with knowledge please confirm if I'm reading this right? see pretty pics below.. haha

Cause I was wondering.. How does AP turn those quickly into bankable reserves (1, 2 or 3P)

Seems it's fairly simple and only a matter of weeks away perhaps, pressure, grade & flow data pending as has been stated.. But I'm curious as to the path MAY needs to tread so please forgive & correct if I'm wrong.

I have attached a copy of the superseded version of essentially the idiots guide to O&G resources/reserve classification & categorisation.. And yes I know you should always use the latest revision but the version dated circa 2018 says exactly the same thing just without pretty pictures...

And old 8tey aint got time nor the want to be an official estimator, so this will do as a Rufus Guuts guide.. ..

From an old presso covering all Alameda targets they (MAY & Sonongal) had a 32% chance of success (Discovery & commerciality) when they started.... & a 5% recovery rate estimate from total Oil in Place (OIP) across all P10, P50 & P90 estimates with P50 used as the best guess for estimation purposes with benefit of historical data.

As we know they hit all 3 targets so discovery goes to 100% but sits in the "Discovered, however still sub commercial at this stage" box..

We know we got moveable hydrocarbons, gas, pressure, all the good stuff... Nearly too much in fact...

So my understanding is that on the basis of logging data and the other laymans metric values of Pressure, Grade & Flow then the recovery rate (Set as per Varadero field historical values 13 API @ ?? Press & an assumed 3000bopd Flow) will be challenged by the official Alameda I & N sections pressure, grade and flow values.. Targeted in the next few weeks. Fingers crossed..

Basically we know there appears to be more oil in place than expected (Upper sheet P50 est doubled on logging review)

And we also know that our grade could be higher (was historically 24 API compared to Varadero at 13 API) and might therefore flow easier due to lighter grade and possibly at a higher pressure gradient than at Varadero.

So, discounting the porosity just for now (out of my pay grade) it is possible that the 5% recovery could become 5-??% recovery.. Who knows?? But at 10%, should we jag it, your resources double.. Which means there could be a nice little Plus, Plus, Double, Double, type scenario brewing if the stars align.

Which by a general doubling of the initial best estimate value as was the case in the upper sheet, then even if we leave it as the smallest reservoir as per AP's claim possibly, then you'd have to assume N& I section have 120 ea as a minimum.. With possible room to grow...

360mmbo at 5% starts looking a whole lot different at 6, 7, 8-9 or possibly 19% now don't it?

CVN recorded a net pay result of 132m at Dorado-1 and returned a net estimate across 1, 2 & 3P of 633m barrels..

Now I hate comparo's as much as the next man & appreciate there are too many variables to effectively say who's D*** is bigger..

Using VOGC's assumption for Marti MAY will nail circa 224-236m net pay from the 3 zones, give or take... @VOGC
And big shout to the brother for his tireless and near undecipherable technical work that provides a simple answer..

Best estimate at start was 143m barrels for the whole of Alameda-1

Which using CVN's barrels to metre of net/payzone ratio would mean you'd only need 30m of net payzone to achieve the target, all things being equal..

We got a bit more than that so the tendency straight away was to reverse the equation and everyone leaps off their chair..

However, doing so gives a rather large number that doesn't seem to sit quite right.. So I'm not prepared to place it in the rough calcs as it stands.. Peeps can calculate if they want..

TBH, we have enough clues to tell us it could be between the original high estimate figure established in 2018 and shown below of 279mmbo and say 360mmbo at 5% recovery rate..

3.Prospective Resources Cautionary Statement: The estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Future exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons.Noting the moveable hydrocarbon clause precedent at the time of drafting that underpins the figures and before AP & the crew nailed the following on way to a Globally Significant discovery..

Look who knows what the numbers will be... It doesn't matter now as the point of this exercise was to see are we currently undervalued.. I believe so yes, pending updates..
&
Can we quickly move contingent resources into the reserve category and hence start banking some of the value as NPV in the hope of opening up a little blue sky..

The only oilers with MC values greater than $1B on the ASX are generating revenue.. The smallest of which is Karoon.. So I'm not sure we can eclipse that maxim & if we do it may well come back.. But with sheer weight of numbers the resource might stir the market to push it past the 30c per share fully diluted mark and therefore that's my target. 30c a share fully diluted..

MAY appear to have nearly ticked all the boxes, or are at least well on their way to all the required data validations, permits, approvals & prospective project timelines to classify & categorize the resources as reserves unless I am way off the mark?

And with all the deliverable data & assessment from the logging & flow tests I'd due within 1-2 months I'd say everything would then be made ready from a commercial project sense to justify development at least and therefore support the viability and pave the way for any and all contingent resources to be considered either 1-2 or 3P reserves as per the principle guidelines..

Here's hoping anyway? & GLTAH 8tey....

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They are expecting it to be commercial.

Also, If Marti comes in with over 200m of net pay... watch out above
because this thing re-rated from 5.5c to 21.5c after they announced 100m of net pay form a 500m oil column in the N section 24-02-2022

That might not be far away considering they've been studying the logs for a week.... or maybe they'll wait till they've done the flow test
and release it together?

Upper sheet estimate is also expected to increase over 119milion barrels when they come back to drill a well in that too because: