Ann: Dorado Project Update, page-199

Appraisal drilling of Pavo is a no brainer.

It’s appraisal and nearby exploration drilling is our greatest protection against any chance (unlikely imho) of Dorado being stranded. One of the greatest bang for buck opportunities available in this game.

Drilling hasn’t been our problem, we’ve drilled few dusters, our oil discovered per dollar spent has to rank very highly. Our problem is the market doesn’t want to value it for now, probably not until we’ve been through the FID/financing gate. Well I have no problem if we spend a bit more, hopefully adding substantial more oil or gas, before we go through that door.

An interesting thing KG said about the early integrated gas development was about it being better for both parties. I couldn’t quite reconcile that as capex is the hurdle for CVN and an integrated development seemed like much more capex to me. But I might have been wrong.

What if the Dorado JV sold raw gas to STO from the Dorado FPSO, ie the point of sale was at Dorado. The pipeline capex would be excluded (STO only scope), as would gas processing, We would also eliminate a few reinjection wells, and some compress compression (as reinjection here is very high pressure) so all up probably less capex and more reserves to back it with (the gas as well as the oil).

With more sales income from two products (the gas price probably not linked to the oil price) and similiar capex the integrated project should be much more bankable.

The more I think about it the more I believe the delay is likely in CVNs interests (as well as STOs).

Remember that STO has shown no obvious evidence of trying to screw CVN, and CVNs management have always suggesting a good relationship. Furthermore I struggle to see how STO benefits from screwing CVN, it’s not like they want more than 80%.

If some time in the next couple of years we take 40 mm barrels (possibly 50 or 60) of liquids plus a load of gas into FID there is no way our EV will be circa A$200mm. I am for blaming the market, not AC.

EL