Ann: Operations Update, page-115

Domum, a massive difference between your clearly articulated and substantiated optimism and Laratts blatant ramping. That said, while we are on the brink of the much awaited 2V flow tests, my mind has also been dwelling on the risks. Perhaps in compensation for spending so much of the preceding months perhaps disproportionately focused on the upside. In the update of 6th June, DW clearly outlined the remaining uncertainties were around whether complex artificial fracture systems can be created by stimulation in the HRZ; and the GOR.

You have thoroughly covered the factors related to the first of these - the 'fracability'. The second issue, however, is the one that confuses me. I am intrigued as to why DW has informed us of this uncertainty at this time, and wonder if it is related to the observation of higher pore pressure. I wonder whether that has created uncertainty as to whether the GOR may be higher than first thought (at this site) and hence be more G and less O. Of course, we do have the sweetspot locked up within our extended acreage, so I am not concerned about us having a Great Bear experience. However I suspect that the appraisal journey would be more challenging if the GOR is higher than expected/modeled. The inferred resource levels (of volatile oil and wet condensate) may be adversely rerated on this GOR result, and of course so would the implications of the field development and extraction economics.

In trying to understand the link between GOR and overpressure in the pores, I came across this presentation. I do not have the knowledge to properly understand it, but it appears to indicate that standard onshore basins have a direct relationship between GOR and pressure, whereas the Eagle Ford, which was a system with compaction resulting from uplift exhibited a situation where the highest pressure zones corresponded its the sweetspot. I believe that the HRZ also encountered this type of compaction, which would be a positive and counter to my initial concerns. Here is the link (slow load) http://www.searchanddiscovery.com/documents/2013/41093cander/ndx_cander.pdf

This is way beyond my lay knowledge. I would value your take on it and that of anyone else.

From what I understand of the issue, it does not affect my confidence to hold. However, it does highlight the complexity of the awaited results beyond just the 'flow rate', and to the multitude of factors that we have to get right. It perhaps provides a timely partial insight into why the play risks are still regarded by management as being 50%. For the next few weeks at least.