The best way to determine the odds for a BHPP farmin to SC55 is to try and look at it from what BHPP's point of view might be, rather than looking at SC55 in isolation.
To set an understanding for how BHPP look at potential projects, here are a few excerpts taken from a transcript of J Michael Yeager's (CE BHPP) briefing to/for investors and analysts in May last year.
"But we're continuing to invest in similar opportunities. I'm going to show you a long list of projects here extended over the next five to eight years that mirror this, that are big; they're high impact. As I mentioned, everywhere we drill is about $100 million. A small project for us now is a billion dollars, and they extend into the multi-billion dollar range, and once we're doing this in multiple countries around the world in a very exceptional way.
So I described to you that over time, over three years, you can see the EBIT per barrel at the top. We have the strongest of any international company, with the exception of Murphy. Sixty per cent of Murphy's corporation is tied up in one field in Malaysia, the Kikeh Field, if any of you follow that. It's a great field that they've brought online to about 125,000 barrels a day, but they are in a more single asset."
Interjection: To bring those unaware up to speed, Murphy's Kikeh Field is offshore Sabah and just Sth West down the fairway from SC59. Murphy was 1st to look at a farmin opportunity in SC59 (next door SC55)...in late 2009 BHPP jumped in for 75% of it after Murphy withdrew.
Continuing: "Since then, as you can see, the cumulative acreage that's been captured now, we've tripled the land since the 86 period, focussing on large, core areas, just like BHP Billiton's hallmark of doing large, long-life things. Everywhere we explore can be a significant business and it can be around for decades. Everything we try to do, predominantly, we operate it and it will have world class size and then, because of the nature of BHP Billiton Corporation, we don't go after the small things. We try to do things that are large and material to BHP Billiton Corporation.
I mentioned the South China Sea to you earlier. This has a look of not only Malaysia but also Vietnam and the Philippines. All that orange area there is one geological province. This is the way we like to do business. We'll take a position there and then try to make sure that it's large and establishable. So we've drilled one well in the Philippines and made one small gas discovery, and we've drilled our first well in Malaysia and it was dry. We'll continue to drill in the second half of the year, but we've got a large dominating acreage position here and some large world-class fields around us, so I do want you to know we continue to pursue these large areas."
The transcript of this briefing is a fairly large document (but only 1MB of data), and the above excerpts and other relevant info are to be found around pages 8 to 17. If you want to read it all, you can find it here... http://www.bhpbilliton.com/bbContentRepository/docs/100524PetroleumInvestorBriefingTranscript.pdf
Yeager refers to some geographical slides in the above excerpts which are not available in the transcript paper. To get a visual on what he is on about, here is a link to a BHPP presentation (September 2010) to the Barclays CEO Energy and Power Conference (about 3.5MB), which gives the same view he refers to above. Open the document and you will find the slide on page 40 (41 in adobe), which is in the section "longer term opportunities - exploration program" at this address... http://www.bhpbilliton.com/bbContentRepository/docs/barclaysCapitalCeoEnergyPowerConference.pdf
Perhaps Sandy, or anyone else with the capacity, could extract that slide and post it direct on this thread for a readily available view/reference...thanks.
The first thing that is apparent to me from viewing that slide is that BHPP have amalgamated SC59 and SC55 under the legend colour of their operatorship. Granted they have not taken up the option to be operator in SC55 yet, but here we are examining the case for them to do so, and that I think adds strength to the argument for a farmin.
You can see from that slide that BHPP are taking a large position in the region/s, and from the transcript mentioned above, it is because all the areas have the same geological rock bed structure, and hence the possibility of some good oil/gas discoveries.
With SC59, they did not (to my knowledge) take a farmin option as with SC55, but just farmed straight in. Perhaps they have some doubts as to how far the Malaysia/Sabah fairway extends to the Nth East, and hence the farmin option with funded 3D seismic over SC55 to validate their expectation.
From my point of view, all this bodes well for a BHPP farmin to SC55 for at least one well, but like anything in this game, only time will tell.
Apologies for not putting direct transferrable links to the briefing transcript and the presentation, but, try as I might, they would not come up as a proper transferrable link.
Appreciate hearing any other researched views on this topic, whether concurring or contrary.
OEL Price at posting:
9.7¢ Sentiment: LT Buy Disclosure: Held
(20min delay)