" I think lots of shareholders will not be happy with ii) and iii) "
Imo this would be a huge mistake Notty and a very near sighted one at that due to the reasoning below.
Apologies for the rehash from the other thread buts imo its appropriate to this discussion.
As they have commented they are hoping for between 100-150bbls/day which should make the play economic at the P50 resource risk. So that will allow the play to cover production costs and have a half decent profit.
The telling thing could be that if they r able to determine that the decline rate is more a hybrid play between unconventional and conventional then that makes the play that much more attractive to any suitors as the higher permeability and pore pressure may well result in a better recovery % of this massive HRZ resource and that could lead to what the company mentioned in the annmnt re a significant resource upgrade and hopefully at a lower risk profile given the potentially proven extractability.
Its actually what one would prefer over a high IP well and I think I posted a while back its not necessarily a blockbuster initial production rate that we're after here. Sure it would be good to be up towards the 150bbl/day but it will also be a great result if they can extract a better % of this resource in the longer term. It also means they don't have to go plugging holes in the HRZ every 5 seconds to keep up their production rate.
We also have the potential of the HUE as well which I don't think is included in the original post Ice 1 numbers. So we have the potential for not only better HRZ recovery but also a possible stacked play !!!
Ultimately its all about making this play as big and juicy a target as the JV possibly can so in effect any potential buyer simply cant say no to a decent deal.
d.
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