re: Ann: Sugarkane Field Reserves Update for ... NSAI made no...

re: Ann: Sugarkane Field Reserves Update for ... NSAI made no changes to the assumptions in their previous valuation report apart from oil & gas prices and number of wells in production. They just extrapolated from that.

In particular, there was no adjustment to the spacings assumption, the yields (particularly taking account of HiWay fraccing) nor, one presumes, was any account taken of the overlaying Austin Chalk. The NPV figures will also be sensitive to the rate of field development and they may not be taking any account of the envisaged ramp-up in drilling.

So, we still have a situation where the brokers are applying their own yield curves ("decline curves" if you like), talking about closer spacing & ramp-up of drilling, and postulating a doubling of whatever is calculated in the model because of the overlying Austin Chalk, which was the original target anyway, whilst the "competent person" is raking in fees for producing valuations based on pretty generic assumptions that are seemingly even more divorced from the reality. That is the problem with prescriptive accounting or listing rules. It's like producing a house valuation on the basis of square footage and national averages of 3 years ago.