Malcy's blog
Cairn/Far- The best is yet to come…
Exceptionally good news from Senegal this morning and for one of the bucket list top favourites in Far, there is still significant upside. The SNE-3 well has way exceeded pre-drill expectations, by my reading, flow rates may be twice as good as had been expected. There appears to be excellent reservoir quality and correlation between all three SNE wells. This successful completion of the SNE-3 appraisal well showed two DST’s, a gross 15m zone flowed 5,400 b/d and a stabilised main flow rate of 4,000 b/d. An additional 5.5m zone was added to the first flow and produced at a combined stabilised rate of 4,500 b/d.
The key to this, as reported in my last Far note is that the ‘upper reservoir units have been demonstrated to flow at commercially viable rates’ and making a material contribution to oil volumes. The oil is 32º API and this result is certain to support a further upgrade in the field resources estimates. Indeed these flow rates not only make obsolete the numbers produced by Far only four weeks ago they will de-risk the 2C and 3C resources as published but should increase 1 and “c contingent resources as well. This well further confirms the overall scale and extent of the field’s size, it is clearly a good deal bigger than mapped, even pre the SNE-3 well. I would go as far to suggest that with the deliverability of the upper units any doubts about this being a hugely commercial discovery can be put to bed. The well has been p&a’d and now heads to BEL-1, the Bellatrix prospect on the Buried Hills play.
Whist this has clearly been good news for Cairn, reflected in the near 10% rise in the shares this morning, it is much more meaningful for Far where I will have to upgrade my expectations yet again. Although the shares are up 57% in the year to date they still only trade at 10.5c, my previous target was 30c and that is now embarrassingly low, the risk in Far is not being invested….
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