nz,What that means is that they remove the risk of oil being...

nz,

What that means is that they remove the risk of oil being there at all and then calculate the volume believed to be in place in the reservoir. Essentially, how big x assumed porosity x reservoir factor (expansion between reservoir temp/pressure and stock tank temp/pressure). I assume that they use 100% net to gross ratio - meaning all the area within the structure is good reservoir.

The POS number comes from a combination of the required factors to have a success - basically source, structure, seal and reservoir. NDO would be quite confident on the structure and seal - the 3D of the reef and the Pagasa shale above put a big tick against these two. Source is not a big risk either - there is a lot of oil around and the structure is right over the presumed source. Reservoir quality is perhaps a bigger risk but NDO claim to see features in the reef which give them clues as to the distribution of higher and lower quality reservoir.

So, work on the P50 number or the mean number as the "average" or most likely oil in place. If you wanted to put a value on it then you would have to "risk it" which accounts for the chance that it might not be there at all - say 600mm bbl x 33% x 40% recovery x 40% POS x $15/bbl = $475 million. Now the market will risk that number again, probably with a factor of 1/10 -> so maybe $47 to $50 million of Nido's market cap is represented by this one well (we are well beyond any science at this point though...) so maybe NDO would drop from present SP by 3.6 cents per share on failure??

p1000