DGO are definitely drilling a sidetrack, it's not a simple...

DGO are definitely drilling a sidetrack, it's not a simple re-entry. They recognise that COE drilled so overbalanced that they have effectively buggered the reservoir near to the wellbore, so they need to drill fresh reservoir.

$35M would ordinarily seem a bit excessive for a single sidetrack, I would have thought max $25M. But in this case I think they are factoring in the drilling problems encountered last time. Some of them may be resolved by better drilling practices but it will always be a difficult reservoir to put a lateral through.

Of course that figure includes a full testing program too.


Any petroleum geologist would question doing anything with hw3 throwing good money after more bad you could say.

Guess DGO don't have any petroleum geologists working for them then. ;)

It's purely a risk/reward equation. For $35M, a 20% COS would blitz the EMV calculation. Hell, even 10% COS would.

That's what oil exploration economics are all about. You chase low probability chances if the upside is big enough, as long as you can afford failure, which DGO can.

So on the contrary - any petroleum geologist (and I am one) would understand it's worth pursuing, at least for DGO. Whether JKA can afford failure here is another story.