Hi Kfann I have today been messing about on my spreadsheet that...

Hi Kfann

I have today been messing about on my spreadsheet that I use for FAR. I too am running into problems with how to assess PVD's stated "independent" probabilities for each target in the well (which are probably not independent anyway), especially when comparing it with FAR, or PVD Toubkal for that matter which PVD have a 30% POS for the whole well.

Notwithstanding that, if I use values of POS 18% for MZ1 overall (as per Ya) and knock back Toubkal to 25% I get the sheet returning about 48c pre-spud with the current oil price and about 0.75c for US90 which is what I think the market would have been if the oil price had not dropped away.

One of the main problems I have with these "POS" (possibility of success) indicated by the oil companies is that, from my wiki research this is a geological estimate only - it does not take into account size or likely quality, only the chance of the various source and trapping mechanisms and Oil (or hydrocarbons) being present.

Thus the POS does not seem to me to be an estimate of the chance of the total potential resource ascribed to the well being present at all, but rather the chance of "at least some oil" being present. Then if present, COD assesses chance of development. For example if MZ-1 Jurassic Fan 2 alone came up with oil the well would, I guess, be a geological success but the chance of the ascribed potential 79m barrels (alone) being commercial would be negligible and the market would react accordingly (duster!).

It is possible that the market has woken up to this POS stuff a little more when after the FAR outcome (which was highly positive) it became clear that although a "brilliant success", it did not match up to the full potential numbers ascribed by FAR pre-spud.

Hope that makes some sense and that I have it more or less right. You (or Ya) may wish to comment. I don't hold these at the moment - had quite a few well in profit for a while but in the end had to opt out for about break even when it became clear to me that with the fall in the oil price my beautiful gap filling target of 75c pre-spud was not going to happen.

pj