Superhard
the drill another well immediately or shoot 3D first, understand then drill is not perfectionist vs pragmatist.
Its risk management!!
Let me walk you through the numbers.
Todays presentation suggests that the most likely in place oil is ~8million barrels.
Likely recovery factor in fractured reservoir say 15%. That means you should produce over the lifetime of the field ~ 1.2 million bbls.
How much do you get for 1 Bbl -- current WTI is ~ $90/bbl.
Out of this you have operating costs - of which trucking will be the most significant. From memory trucking costs in the north Perth Basin were ~$6/bbl. Given Surprises location this could easily reach $20/bbl. With other costs (it isn't cheap to work in an isolated area) you may end up netting say $60/Bbl.
Sales from 1.2million barrels may net you $72Million. But you are going to need to drill several wells to produce that oil - possibly 4 or more! Cost ~$48million plus surface facilities say ~$2-4 million.
So if all goes well there may be $24m million profit (assuming discovery costs are sunk) over the life of the field!
You get the field development plan wrong, put just one development well in the wrong place and the profitability of the project starts to get marginal.
There are many case histories where profitability/project value has been destroyed due to poor understanding of a field, poor development planning and an unfocussed rush to get something into production.
So if you were the manager (or the Board) would you be prepared to risk destroying value just to get some posters on Hotcopper off your back or get the data, optimise the development and optimise longer term returns?
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