The VSP will allow NWE to update their structural interpretation...

The VSP will allow NWE to update their structural interpretation of the Lockyer Deep discovery and IMO it will give the market a better idea of how significant the discovery is. But the VSP alone will not allow you to attribute any economic value to the gas discovery, for that you need the definitive data from a production flow test. At the end of the day you could model a 2TCF gas field but without economic and sustained flow rates, the field will be worth pretty much zero.

So NWE will be testing for:

• Deliverability; and
• Knowledge of the reservoir

Data gleaned from the flow test will help NWE understand the gas composition (how much is CO2 is important for future production processing and associated economics to remove impurities), flow test rates in MMCFD i.e. sustained deliverability, pressure readings to give an indication of field size... all this will help build the reservoir model and allow NWE to lock in LD's initial 2C contingent resource which is essentially a best estimate of recoverable gas. 2P reserves will come after further appraisal wells are drilled next year.

Worth noting that the 2C estimate will be determined using probalistic and statistical volumetric methods, modelled on data about porosity, hydrocarbon saturation (gas & don't forget the oil!), net reservoir thickness / hydrocarbon column size will be determined from the pressure data (could it be 800m+?)... and fluid properties as mentioned re: oil/condensate, methane/carbon dioxide. The determined OGIP or Gas in Place will then have a recoverability factor applied using analogues from the other PB wells and also industry standards. I believe STX/WGO used a 85% recoverable factor for WE.

However, fwiw we are already aware of the following from NWE and it is important to be aware of this...

"Firstly the exceptional quality of the Kingia Sandstone reservoir - some 20 metres of net pay with excellent porosity and permeability - leads us to believe that the forthcoming well production test will confirm a reservoir that is of particularly high deliverability. Secondly reservoir pressure data indicates a very significant gas column, estimated at 600 to 800 metres. This result indicates that the field's bounding faults act as an extremely effective seal, and that the gas within extends over a large area."

So this is why I am personally taking a reasonably educated, risked guess (and therefore investment position) that the LD-1 will flow, and it will flow strongly. IMO, the production test will re-rate the entirety of NWE's permits and the SP should be looking pretty damn good.

GLTA