HDR hardman resources limited

notice out, page-17

  1. 485 Posts.
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    re: check out roc corp file release CEO John Doran
    Absolutely. In a nutshell - production risk has replaced development risk, which is
    usually the case with new deep water fields.
    There’s a lot of information available. That may sound as if it’s a good thing – and
    it is in many ways – but it actually makes reserve recalculations more complex and
    very time consuming. It is certainly frustrating for all parties – market investors and
    participants alike – that there’s no up to date guidance for Chinguetti reserves and a
    market vacuum has been created. The irony is that most observers apparently
    expect a reserve downgrade.
    The Chinguetti Field, which started production in late February 2006, only sustained
    a target production rate in excess of 70,000 BOPD for a short period before
    declining to 40,000 BOPD by mid-May. The decline was due to different factors in
    each of the six producing wells - gas production, early water arrival and/or limited
    productivity depending on the nature of the particular well and the way it was
    completed in the reservoir. On a more positive note, since early June the rate of
    production decline has slowed and the production capacity has been maintained
    generally between 32,000 to 38,000 BOPD.
    While the early decline was significantly faster than predicted and the more recent
    stabilisation of production is encouraging, the overall assessment of the impact on
    recoverable reserves – when completed - is expected to be negative although the inplace
    oil estimate may remain close to original forecasts.
    7
    The Operator, Woodside, is reviewing the performance data in order to explain the
    decline with one of the potential key factors being a less continuous reservoir sand
    system than had been previously assessed. The Operator has advised the Joint
    Venture that it is not in a position to provide updated reserves at this time. ROC
    relies on the Operator's assessment and with a 3.25% equity in the field there isn’t
    much point in ROC undertaking a full independent assessment at this time.
    However, based on the production and reservoir performance to date, ROC would
    not be surprised if Chinguetti’s 123 MMBO 2P reserves were reduced by 25 to
    50%. This view still assumes that Phase Two of the Development Plan - which
    involved the drilling of infill wells and was integral to the original reserve estimate
    and production forecasts - is implemented and is successful.
 
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