elephant country?, page-51

haasko,

It depends if you are talking about the risked or unrisked mean. The mean OIP stated by CTP is unrisked (in this case 35MMbbls) and is not altered by the COS if the COS eventuates. I said that above.

However, the unrisked mean is modified by the COS to reflect the fact that if you drilled 100 of these wells, only 22 of them would have oil.

It does not affect the total oil in the deposit, but it covers you a bit by accounting for the fact that only about 1 in 4 wells will have oil.

To look at it mathematically, imagine we're conducting a drilling program of 4 wells, each with COS 25%, mean OIP 35MMbbls each. Only 1 of those wells is likely to be a success, so after they are all drilled and 3 are dusters, the mean of the entire 4 well program is 35MMbbls of oil. So for each well in the program, 35/4 = 8.75MMbbls per well.

Now look at the case for just one well (like we have with JW-1). For just the first well of that program, take the unrisked mean (35MMbbls) and multiple by the COS (25%). 35 x 25% = 8.75MMbbls.

So the risked mean is a way to cover yourself for the fact that 3 out of 4 wells will be dusters and only 1 a success. You have to 'pay' for the dusters with a share of the success.

It doesn't literally mean that there is going to be less oil in the deposit.

If I understood what you're saying correctly, you are saying that the 35MMbbls figure is a fully risked mean, ie it has the COS built into it. My understanding is that it does not (confirmed by the fact CTP says it is unrisked, and that the fully risked mean is 8MMbbls, which is 22% of 35!).

Thoughts?

Cheers.