Bauna Bid Value

Sorry to quote you @Ya but we'll need some of your facts for this discussion.

"I am a bit worried about Bauna as the production till Dec'16 end from 6 prodcn wells was starting to drop down to 40273 bopd.

In 2016, PBR produced 16.22 mmbbls from Bauna.

Total produced from this field till date is apprx 97.22 mmbbls.

So subtract that amount from 196 mmbbls at the Declaration of Commerciality, u get balance reserves of apprx 98.8 mmbbls at Bauna. Factor in a decline of 20% to this & u should get 5-7 years worth of oil b4 the drop in rates at which point the FPSO can b moved to Echidna not far from there."

1. If Karoon could net US$5 per bbl from Bauna then the residue oil is worth $494m
2. Decommission cost for 6 producers and guessing 4 injectors (Ya please confirm) at say $5-10m per well could cost $50-100m
3. Decommission cost for flowlines, I'm assuming it'll be 90% of the installation cost, which is about $10/foot from online metrics. Guessing each well will be within 5km of the FPSO, so 50km of flowlines in total or 165,000 foot. Flowline decommissioning cost of $1.7m
4. Reuse the FPSO, no cost, but has a residue value.
5. Total decommissioning cost approx. $52-102m

Offering $5 a barrel is giving away all profit if oil prices stays low, say <$50/bbl. I would thing with its declining daily production rate that Bauna operating cost would be less than $40/bbl.

So what do we think Karoon should bid?

I believe a competing bid would only come from someone who also sees value in redeploying the FPSO and just maybe some of the subsea equipment after refurbishment.