thailand reserves update, page-19

My own comments on this morning's CVN report, for what they are worth:

The year-on-year reserve additions and the solid production levels, as shown in the graphs, are pretty good by overall industry standards.

The Petchabun project is run by solid operators who win impressive achievements, often in the face of difficult geological and drilling conditions.


However, there are a couple of things that are unclear from CVN's report:

1. The December 2008 2P Reserve was 16.6mmbls. The September 2009 2C Contingent Resource for the LW-44 and Bo Rang A and B discoveries was then 11.3mmbbls, and all of this was expected to be converted to 2P reserves upon granting of the production license.

The new production license was granted in 2009, so the total end of 2009 2P Reserve (before allowing for calendar 2009 production) should then have been 27.9mmbbls.

However it is now reported to have been 24.5mmbbls. So the December 2009 2P Reserve has come in at 3.4mmbbls less than the expected figure.

The reason for this loss of expected reserves is not explained.

It is not due to the 1.1mmbbls 2009 production, as this is accounted for, and it would not seem to be due to the 6.6m negative revision mentioned by Pan Orient for the NSE-F1 area, as that was only ever a Prospective Resource in the September 2009 statement, and so was never expected to be converted to reserves.


2. The statement is made that: 'Pan Orient.. has completed the drilling and testing of two new horizontal wells at the Bo Rang B field'.

But no well numbers are given, so it is not clear which two wells these are, or when they were drilled.

Are these two new, previously-unreported horizontal wells, drilled and tested by the new rig since the announcement of 10th February?

If they are, then this is great performance by the new rig, and adds a previously-unreported 480bpod to CVN's net production in just six weeks. It would answer my earlier question as to whether they have stopped announcing additonal production wells on an individual basis in the affirmative, and would allay my concerns at possible teething problems with the new rig.

However, it is possible that they are simply referring to the initial two Bo Rang horizontal wells BR-3D1 (700bopd gross) and BR-2ST2(866bopd gross) tested at the very end of the December quarter, which brought CVN's December 2009 exit oil sales rate up to 3,460bopd, and that each have since stabilised at about 600bopd gross to JV.

The wording of the release clearly implies the former, but the reporting of CVN's current production rate as 3,000bopd would suggest the latter.

Without well numbers it is impossible to be sure.


If I were still a CVN shareholder I would drop in at their office and ask them, but as I am not at the moment, I don't think it's really fair to take up their time. So I shall wait for the quarterly report instead.