They'll need to core the reservoir to establish the nature of the reservoir characteristics esp. for the ratty sands that were intersected at SNE-1 last year. So, easy to factor in a RF for the blockier sands.
These should have consistent poro/perm & hence a better RF then the rattier sands. One can do the modelling by splitting the areal extent for both types of reservoirs ie blocky & ratty sands with variable phi, OS across the guts of the field & extents etc and add the final estimates to get the final figure.
Their 1C is what matters for them to establish Commerciality first up.
2C gives them extra leg room, whilst proving up 3C will take more wells across the entire structure (assuming no disparity in the geology sub-surf, ie pinchouts or faulting or compartments).
So basically, the core of the field is what they should b able to derisk first having actual cores, WL logs, pressure data from SNE-2 & then suss out the lateral extents in SNE-3 to the south & chk for the northern continuity of the Albian sands at B1.
If those sands water-out to the North then they'll reduce their GRV for the model & that will affect the 3C estimates, but the core retrieval is what they need from SNE2 & 3 to lock & bank first. Hence the importance of coring SNE-2 first.
At SNE-1 they had a textbook type deposition sequence (ie coarse at the base with sharp contact with the silts & fine at the tops) & consistent pressure gradient for the 96m gross oil column. So having 2 wells apprx 3.5 kms should give them a good understanding on their MEFS criteria.
From SNE-2 DST's what also one needs (apart frm the core slab) is the gas oil ratio & permeability data to fine tune the model.
There is a lot that goes on with the Volumetrics with or without additional data.
Detailed Core analysis (RCA, SCAL, FMI imaging for joints/frac's to establish secondary poro etc etc) takes time in the lab, esp when there r thin sands present, so that one can get a better handle on K, phi readings from air/brine/Hg injector tests that r useful in establishing future well patterns & thus the overall recovery from the field. So easy to factor in a std estimate for the block sands & a lower RF for the others.
They should plan on drilling 'laterals' for the basal sands going fwd towards production in 5-6 yrs time to get more bang for their bucks. For now its abt the production test results, how much can those sands produce, what's their GOR etc.
Problem for the JV is the future oil prices.
CNRL's Baobab oilfield with 196 mmbbls of 22-23 API oil came online in Aug 2004 when oil was US$54/bb.
Chinguetti in late Feb-Mar'06 began producing at US58-63/bbl, whilst Jubilee taps were turned on in Nov'10 when oil was north of US$90's. Happens 2b their 5th anniversary on the 28th Nov.
I'll b watching Conoco very closely in the nxt 12 months, as I suspect they r taking a leaf out of Apache's books. APA started selling their offshore assets in Oz, GoM & retained Nth Sea & couple of fields in the gulf with focus on asset sales that have helped in reducing their debt levels and focusing primarily on Onshore Egypt & US shale.
Am not happy with FAR's silence policy & their announcements or this 'cone of silence'. As a holder, I want to know 2 things on a weekly or fortnightly basis, ie current depth, & current operations. Every other junior on the ASX provides regular updates on their program. Their IR team should perhaps print out updates from Karoon & let FAR know on how to get the message out to the market, rather then going on about IRR of 10% at current oil price.
Any accounting genius will tell u that Cairn's DCF model assumes a lower Discount rate to get a minimum 10% IRR at variable POO-costs & those highly attractive fiscal terms which we r in the dark. KOSMOS released their Senegalese deeds in their 10K SEC filing last year.
I want them to finish up SNE-2 drilling & testing b4 Xmas, so we can get more out of Cairn's Year end preso & transcripts. Volumetrics & core analysis will take time & can wait.
That's about it, I can't add more as its gotten extremely repetitive. Hope this helps.
FAR Price at posting:
8.0¢ Sentiment: Hold Disclosure: Held
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