While A7 is one messed-up well, below are my comments on some widely discussed topics:

1.  A7 is in the wrong place

2.  A7 is PURPOSELY in the wrong place.

3.  A7 is being purposely delayed to run out the clock.

But what is the data?  Those of us with geologic backgrounds know, or should know, what a dog’s breakfast PNG is.  One US study states : “The New Guinea region evolved within the obliquely and rapidly converging Australian and Pacific plate boundary zone. It is arguably one of the most tectonically complex regions of the world”.   People, that’s the world!

With such complexity, and in spite of the fact the seismic has been worked and re-worked using the latest processing gizmos, those of us with geophysical experience know, or should know, you can’t make a silk purse out of a sow’s ear. The seismic is simply not as definitive as we’d like it to be or as some people, who don’t understand what they’re looking at, believe it to be.  Pretty colored lines on a seismic section are an interpretation, not God’s truth.  As A7 has just shown.

Those of us with drilling experience know, or should know, that geologic complexity leads to drilling issues.  Drilling down the face of a steep fault face is bad enough.  Couple that with going in and out of different pressure regimes and you’re got real problems.  As we have seen, over and over!  This is exceptionally tough and expensive drilling.

Reservoir engineers understand that faulting and geologic complexity lead to really major uncertainty in reservoir volume calculations and drive mechanism.  How do you know what’s connected to what and where?  So reserves are subject to a lot of uncertainty and are risked accordingly.

Lastly, people who have worked on  LNG projects know that the key  to LNG profitability is VOLUME.  There is such massive infrastructure:  pipelines, LNG trains, camps that are small cities, port facilities, loading platforms, cryogenic shipping, receiving terminals, etc..  The list goes on.  You’ve got to have the volume to spread the cost, which, in PNG, is billions and billions.

Now, back to the conspiracy theories.

1.  The Peanut Gallery, that is - us,  have limited technical information and we’re working off old maps.  The joint venture partners have all the data available.    They’ve been studied and worked individually and jointly through technical committees.  The A7 location was selected and jointly agreed to by all the partners.  It was approved by the Petroleum Ministry, who, don’t forget, represent the government’s back-in rights, which is a considerable “carried interest”.  Exxon may have even chimed in.  None of these people are dummies.  The location was AFE’d to give the option to test the deep prospect.  It was a full package, which turned out to be wrong, but that’s mother earth and that’s why appraisals are drilled.  They do not automatically “increase reserves”.

2.  Puposely drilling in the wrong place is laughable.   All the partners, one way or the other, want more reserves.  Certification payments, higher CRPs, whatever, are nothing compared to the additional profitability assured by more reserves.  Not to mention: blowing off the well costs($50 million+), agreement by all the partners, connivance by the government , and vows of silence by 100’s of people participating in fraudulent acts.

3.  There is more justification for purposeful delay.  As Kaliboo says, A7 results matter, but I think only at the margin, if at all.  Regardless, drilling info between now and the shareholder meeting complicates matters.    However, on balance, I have difficulty believing Total, the operator, would give a fig and spend millions more, to make it easy on Exxon.  Ditto Oil Search.  Again, this is a joint venture well.  IOC does not control it.  And Exxon certainly does not.  I think they’re muddling along in a very difficult drilling environment.  After all, if they hadn’t lost the well in mid-January, it would have reached the planned TD by now.  No one can tell me they lost the well on purpose.

Conspiracy theories are fun, though.  It’s what people want to believe if reality is not to their liking.

Based on OSH report above, I question whether OSH "agreed" to the well location and objectives.  This depth is well below TOT's most likely top of Kapau of 1983 m.  So it seems they did not agree on tops or maybe even the presence of the zone.  My guess as I said earlier in the A& status chain is that OSH "supported" the well rather than not partiicipate.  The way it looks now, I bet they wish they had not participated.