Yes Tony Perhaps I can help you with where some of us are coming...

Yes Tony

Perhaps I can help you with where some of us are coming from. The market likes reserves, it makes it feel comfortable. It’s all very well to have stupendous flow rates and of course it’s no good having reserves that won’t flow economically (in which case they wouldn’t be reserves) but its no good either if the flow soon dries up.

So its not good enough to say “we’ve got oil” or even “plenty of it” and the shares are “cheap”. The share price (or more relevantly the market cap) is a quantity and so are the oil reserves/resources a quantity and the market (amongst other things) values the resource quantity to arrive at the share price.

The concern is that the market has already built in expectations of the appraisal program proving up a certain quantity of reserves/resources which may be considerably higher than the stated current 2C resource and whether, because of the limited information we have been given so far about the structure modelling, net pay and zones actually present in the SNE2 well, this expectation is going to be met (or exceeded as most would be hoping). Basically CNE say it's encouraging but more work needs to be be done before resources can be restated.

Hope that helps

pj