Good to see most posters are not losing their heads. Anshof 2 is a disappointing result, but it was an appraisal well and didn't quite pay-off. I think we can kiss goodbye to the 5mmb plus reserves, but there was some upside there if you consider the proven reserves will increase and it looks like reservoir quality and thickness could give some good rates updip a little. If they can prove 1-2mmbbls and with decent rates that could still underwrite a large chunk of the market cap.
Don’t be too hard onthe geologists, so often the follow-up well to a successful discovery findswater (lockyer deep 2 for example). I’m not alleging this happened at ADX orMIN, but here’s the scenario that can play out after a successful crestaldiscovery well (like Anshof 3). It's perfectly natural, nothing disingenuous,just the way it can go. My parody below.........
Management toGeologist: What a discovery! You and the team are brilliant, well done, (and in his head…..I’mbrilliant for hiring you). Let’s think big - how bigcould this thing be?
Geologist toManager: Oh thanks boss, you know, there’s always a bit of luck involved. Wehaven’t proved much yet, its just the one well.
Manager toGeologist: You’re too modest, don’t sell yourself short, now I’m serious, howbig could this thing be? the market needs to know.
Geologist goes awayand draws some maps, as good as the seismic might be, one well penetration intoa complex subsurface with thin reservoirs makes it difficult. The geologistcomes back with a wide range.
Geologist toManager: Well boss, we’ve proven reserves down to here via the discovery well(1P reserves, in Anshof’s case 0.5mmb). Now, you asked how big could this thingbe. Well, if this structure I’ve got here closes up against that fault , its >300m relief, it's a decent structure. Then, if that’s filled to spill withoil….. well ……it could be really big sir
Manager toGeologist: You little beauty, potential company maker, the market is going tolove this. How big, how many barrels…..?
Geologist toManager: Maybe 25mmb, there’s a lot we don’t know that far away from our wellthough (3P reserves, in Anshof’s case 25mmb), you have to think prettyoptimistically to get to 25mmb.
Manager toGeologist: Yeah ok, ok, so that's our 3P, sounds great, I reckon we've got itin the bag, but understand you've got to be conservative, so what's your 2P?
Geologist toManager: Well, if we assumed there was an oil water contact halfway down thestructure, and knowing it's a bit thinner up top, we get about 5mmb. (2Preserves - proved, plus probable)
Manager toGeologist: Right, well let's put in a well to prove it. And I want it farenough downflank to prove some of the upside. (Anshof 2 would be an example ofthis kind of well). Also, let's get the reserve auditors in.
Like I said at thestart, I'm not suggesting anything wrong with this. Manager's tend to be moreaggressive and optimistic than geologists and that's why they're managers,they've taken risks and had success - and the good ones will continue to do so. The result at Anshof2 does not surprise me too much, it was a 50/50. The 34% oil saturation in highquality reservoir is quite low, its residual oil and they'll have to go updip.They clearly know more than me, I don't know what given them confidence theyare only just below the oil water contact, for me it could be anywhere betweenthe bottom of the Anshof 3 penetration and the top of the Anshof 2 penetration - which you can see from my cartoons below is about 80m of TVD (true vertical depth).I agree that itlooks like Anshof 2 side track will replace Anshof 1 for now, I wonder if XSTcan come back in on the side track? Side tracking could be a good strategy tokeep them out. Sharing my cartoon's below to help others map out the situation,obviously indicative only, but just to spell out where I think we're at. Sorryif they're too small.
Pre-drill
Post Drill
Side Track
ADX Price at posting:
9.3¢ Sentiment: Buy Disclosure: Held
(20min delay)