So a few weeks ago I believe that I publicised my opinion that the prospectivity (through flow rates) of the Bibblewindi pilot would be announced to market at a prime time during the SPP after they went full ahead on it.
Clearly they have not done this, nor are they going to be able to do this prior to SPP closing to create any effect on its outcome.
So what are you left with?
Is it possible the pilot has fallen over again?
I think it is entirely possible that they are experiencing flow issues with the pilot again. A CSG pilot can be presented with a large number of problems if they were forced to shut it in for several months. Did they ever stop the pilot program?
I guess at the moment I have a lot of questions about the pilot. I would be keen to know if the 'shields' are better producers than the multi-laterals? This would kind of vindicate the above opinion.
Other things like how much draw down have they achieved in the seam are other things they can also be reporting. This might also give some indication that there are not groundwater connectivity issues, or problems with the seam recharging from water reservoirs up dip. An indication of progress ha! The fact that they have placed shield wells creates an expectation that they would in fact be able to achieve the necessary pressure reduction to allow those coals to flow baby flow.
They might also be having problems keeping their pumps on line as they are ramped up at full capacity. There are any number of issues that could be arising.
So if you have read this far, please continue as it is not all negative. If someone (c'mon h) wouldnt mind asking these questions at the AGM, that would be great as this is information that I think we should be interested in as the pilot has certainly been kicking around for a long time.
A long time? Really what is a long time for a pilot. So what are the difficulties in conducting a pilot. Is it reasonable that we should be expecting flow rates in such short spaces of time or immediate success? Pilots are called that just for that reason. I would hazard a guess and say that ESG are just as eager to make sure they are a success.
So what has already been reported? Well right now in lieu of an announcement to market I have been digging up the old reports on the resource and pilot and scratching my head a little. If I get a chance to summarise some of the drill results from yesteryear I will. But from my perspective, it is pretty amazing how good they are. The kind of results that create giant gas companies me thinks.
We know that we have had dewatering rates of 7000bpd. I think in anyones CSG book, that is pretty significant. I dont recall ever seeing any other company on the ASX publishing such high dewater rates. I dont recall seeing a pilot as large as ESGs either. The economy of scale that the company might get out of such a significant lateral pilot, is simply; significant. The dewater rates indicate this.
The initial flow rate of 200mfcd was impressive considering that they had problems with trying to get rid of that dam water. Was that a net flow rate from all the verticals? Were the coals reported to be saturated during the coring program? Important factors when assessing whether the flow rate is indicative of a bigger and commercial resource.
So how long are they going to dewater for? When are they going to be able to publish a peak flow rate? An interim flow rate? Answers to the questions posed above would probably help answer this.
I dont think it is unreasonable to expect that we should have been looking at flow rates considering this was the most significant event immediately prior to the SPP being announced. So if you are still reading, my opinion now is that we might just have to tough it out and place some faith in the gods of Eastern Star. It is entirely and reasonably possible that things might not have jumped back online as planned, but equally possible that given the scale of this project, that simply flows are not able to be acheived within the SPP time frames. To me it just makes sense that they would have given the conditions of the SPP. It does seem a little disrespectful to holders to not underwrite it and then expect us to just ‘trust them’. They did it for the instos, why not joe blow. Now they did state they didn’t need the cash. The market announcement earlier in the week was not insignificant, but it looked rushed in the sense they forgot to explain its significance to holders.
So looking to the future post SPP. I think I mentioned the other day that it was pretty clear that ESG are still focused on delivering their stated reserves by the end of the year. Perhaps this is all a lesson in expectation creation. They have also intimated that they will strike well over net 13002P. So what if there is no multi-lateral pilot being fed into the reserves? The Caseanator stated quite clearly that there are several other inputs going to the reserves, so perhaps focus can be lifted on the pilot as being a do or die kind of affair.
Remember they have said performance is as per the model. Modelling is not an exact science, but the key here in my opinion is that the model is being followed. The model is what your res engineer is going to use to state the reserve. Think about it.
So if my opinion above seems overtly negative, it is their to raise questions to explain our current situation which I think we should be querying at the AGM. For the record I took up my rights quite happily – pending the postman making it their on time (still bitter about Bpay being blankety banked off the beeeep).
PS if you are still reading congratulations, you have finished :)
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