Woooo Hoooo go CVN :)$$$$$, page-54

Its a long & windy road to First oil. Most aggressive drilling campaign to 'unlock' further potential was undertaken by HESS when they proposed to drill 16 wells in the Shelf as part of the permit award bid. Conoco drilled a few in the Browse. All they did was unlock that part of the basin only to flog it some time later with no production so far, may be one day in the future. Its all dictated by Commercials & the requirements of the company.
I'll just explain this in a nutshell.

Basically once u r awarded an Exploration permit, u have 5 years to undertake studies (ie past 3Dseis, do your own high res 3Dseis & other studies).
U need to allocate budget for that tenure of 5 yrs, i.e, how much u r willing to spend over that tenure. The first 3 yrs r dedicated to seismics & identifying leads, maturing them to drillable prospects, stress testing them with any Chance of Success, economic threshold etc & then deciding to drill them in the later 2yrs. The resource per prospect is called Prospective Resource.

At this point u start a dataroom to bring in a farm-in partner & drop equity for free-carry, recover past costs on seismics studies etc to derisk burning your own Cash in the event of a drill failure, regardless of the CoS etc. All juniors have to do this as they just dont have the relevant funds to go on a solo risk basis.

Once u make a discovery, takes atleast 2-3 or more appraisal wells, depending on the size of the structure. This eliminates any hidden surprises (ie barriers, compartments, water leg etc). So until that point, any Resource discovered is classed Contingent (ie 2C).

That's when u re-apply for an extension to the permit & see if there's any more to find or should u just drop some portion of the Permit (that big block WA-437-P has 60 sub-blocks, out of which Dorado covers 4 of them). If a discovery is made then u apply & u think the prevailing economics r good, then u apply for a Production License. Or else leave it in the bottom drawer by getting a Retention License (plenty of discoveries just waiting to see first oil/gas flow including Scarborough & Barossa both of which got the OK to go ahead from the Regulator).

Once u get to FID, then u move the 2C to 2P reserve category, line up contractors etc (rig, FPSO, subsea gear providers etc etc) and then await production. Takes 7yrs once u discover & chose to go to production.

This timeframe suits the Majors as they r in no rush. Sadly for Juniors, they need to do regular CapRaise to fund their side of drilling expenses, Pre-FEED, FEED studies etc before seeing the first dollar in the till.

So un until then, all the cash spent is your Book Value of that asset. U can opt to wait for first oil or sell out via strategically receiving milestone payments (first 10, 20 50 mmbbls produced). That's how it works.

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The tenure for WA-437 & the 3 nearby blocks expires in early August this year, so it will get renewed & then whatever new leads r there will need to b followed up. Simply put its like a very very long version of Test match.

They cant book 2P for Pavo yet without appraising it at some point in the future. I think CVN r waiting results from Apus to make a combined 2C announcement. Same away they did in the past after discovering Phoenix South, Roc & Dorado.