I'm not talking just about Dingo but about the package deal of...

I'm not talking just about Dingo but about the package deal of PV and Dingo. They are low risk because the geological risk associated with them is zero (both discovered), the market risk is zero (both under contract), and the development risk is essentially zero (multiple wells, no more appraisal needed, upside in pay behind pipe, one is fully operational and the other only needs a short pipeline).

CTP is not going to get an asset like that anywhere else in Central Australia. In fact the only producing asset left outside the Cooper is Mereenie which is probably out of their price range.

Any other target in CTP's acreage is high risk by comparison, because of geological risk - and then you add the development risk on top of that. Given that in order to even make the Surprise discovery CTP had to shoot a lot of seismic, drill two expensive wells (JW and Surprise) and then fund an EPT, the finding costs at Surprise can't be too far short of $20M, which is actually not too far short of the costs of PV/Dingo.

And what are they getting for it? $800k revenue from Surprise vs $500k revenue from PV. Once Dingo is online the revenue from them combined will eclipse Surprise, and if Surprise keeps declining PV will beat it alone in revenue before long. And in terms of project lifetime Reserves revenue, Surprise actually compares unfavourably (1.1MMbbls @ $125 = $140M, 60 PJ @ $5/GJ = $300M and Surprise will need more wells to recover that).

There is certainly upside in PL6 but the point is that it's high risk upside. If they can only recover 100,000 bbls from the Surprise well (as the current decline suggests) then it's effectively uneconomic. Yes, it would be nice if they could farm out the drilling of Surprise East, but they have been trying to do that for months and there has been no action on that front. And even if they could, they would lose 70% or so of the asset if they wanted the partner to fund 100% of the well, because nobody would be stupid enough to fund a high-risk well like that unless it was worth their while financially. If that well also produces 200 bopd, that's 60 bopd net to CTP - doesn't exactly solve CTP's funding problem, does it? Especially considering there's a decent chance Surprise East is a duster.

It's not like Surprise is a no-brainer that RC somehow cannot see. He could see it before, when he was trumpeting Surprise when the EPT suggested it would produce a stable 400 bopd and drain 1 MMbbls, so what - did he suddenly forget what a great deal it is?

Or is the reason Surprise is slowly falling off the front page because the performance of the well is causing CTP to re-assess the entire prospect, including Surprise East?

They say a bird in the hand is worth two in the bush - the gas fields are the bird in the hand, Surprise East is the birds in the bush. I for one fully support the purchase of the gas fields, because I've seen too many junior oilers roll the dice on a risky oil prospect and strike disaster. At least this way, if CTP is forced to drill Surprise East sole-risk, they will have SOME money coming in from the gas.

BTW I am a geo too, but I have a fairly good grounding in Reserves and petroleum economics these days (at least by geo standards!). I used to be more in your situation and only dealing with the rocks and Resources - and when I put my geo hat on, I agree with you that Surprise looks attractive because there is definitely a massive pool of oil there.

But when I put my reservoir engineering hat on it's a different story - and you definitely need both hats. Because the risk in Surprise is recovery risk, and it's look pretty dismal at the moment. I am hopeful it will stabilise at 200 bopd, but RC is dead right IMO to be waiting for it to stabilise before making any rash decisions on the future of that field. Because on a risked EMV basis, any further expenditure on that field is looking shaky IMO.