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Appraisal wells have a much higher chance of success than wildcats well, but they are not risk-free. The risk attached to an appraisal is high dependent on the type of appraisal wells they are looking to drill - whether it looks to delineate the field boundary, to determine optimal reservior quality location, etc. It's not a precise science, but without wanting to state the obvious, the further away an appraisal is from the discovery well, the higher than risk of appraisal failure.

With the duster at Kontiki, much of KAR's share price consists of implied value for Poseidon to contain around 5-7TCF. With Grace now downgraded as a result of Kontiki (similar geological play), the market is likely to apply a much greater risk discount to Poseidon as a failure that to prove up 5-7TCF of gas will see a substantial deterioration in its risked NAV. It simply comes down to what risk discount the market, as a whole, is willing to apply to Poseidon. Trying to pick the bottom of the current weakness is pure pot luck.

I have previously held and sold, and am looking to re-enter at some point. No rush though. With exploration wells, there is a lot of to gain and not much to lose if little expectation had been built into the price. With appraisal drilling, expectations have already been built into the price, so there's more to lose (with a bad result) than gain (with a good result).

As always, time will tell - but some value is returning to this stock (not so much hot money).

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