HW3 is a risky well and im tipping it to fail. A COS of roughly...

HW3 is a risky well and im tipping it to fail.

A COS of roughly 50% is not a risky well in oilfield terms. They don't come much less risky than that, in fact. Certainly not offshore!

It could still fail, definitely. But the upside is much more than the downside so on a fully risked basis it's still worth a punt.

Holders just need to be aware they've got a roughly 50-50 chance of losing...

In EMV terms, the well should cost about $30M and should be worth around $10/bbl if it comes in (as previously discussed). The P50 recoverable is 111 MMbbls. Should really use the mean and not the P50 but I don't know the mean - let's say it's 130 MMbbls, assuming a lognormal kind of recovery distribution.

So the success is worth $1.3B, while the failure case is only going to cost $30M. And it's a 50-50 chance. Absolute no-brainer in EMV terms.

Just wish I knew which side of the coin was going to land, heads or tails...