drilling report, page-16

mick z

the reason behind the 'pump more sooner' approach is that generally this will deliver more money into a company's coffers than a constant flow over time. Why this is so is because a dollar today is worth more than a dollar tommorrow or next year or two years away etc etc. For example, if you earn a dollar today you could put it in the bank and earn whatever the current rate of interest is. Assuming interest rates around 6-7%, then a dollar today is worth 6-7% more than a dollar in a year's time and likewise 12-14% more than a dollar in two year's time etc. This reasoning underlies calculating net present values of future income streams.

Taking this to the extreme, BUR would maximise the value of Marlin if it could suck out all the recoverable gas on day 1 rather than extracting it over years.

Of course, this simple example is complicated by fluctuations in prices - if future prices are expected to rise more than the interest rate (or discount rate in NPV calculations) then it would be better to defer production.

All this is a bit academic though as maximum extraction rates are also influenced by a host of other factors, not the least of which is the maximum rate at which the well can be produced without precipitating formation damage or water coning etc (which could kill the well's production. I am sure the guys in charge of Marlin know what they are doing, and am happy to leave it to the experts to decide how best to stroke this baby,