If the exploration well finds new resources within PRL 15 but outside Elk/Antelope, IOC will receive a bonus payment of $100 million per T, as proven by the one well.

What if the exploration well is at Big Horn for example, and proves that Big Horn is part of Antelope?

Apparently the 2 or 3 certification wells will be drilled before the exploration well.  The re-certification may be completed by the time the exploration well is drilled.

As I read the PSA it looks like IOC will have to wait for the "wildcard" recertifcation to get paid for any additional Elk/Antelope resources proven up by the exploration well.  The window for IOC to ask for the second recertification is from first cargo leaving the LNG plant to 25% production of the first certified resource.

Am I reading this right?

(12-15-2013, 05:20 AM)Thylacine-2 Wrote: In the most recent presentation, the road show presentation, they say that seismic is being acquired at Big Horn. In a post a few years back Pet listed Big Horn as a reef prospect. In the PSA, the location of the first certification well is approximately 1200 meters to the SSE of Antelope-2, in the general direction of Big Horn. Tantalizing clues.... Pet...Where are you?

The truth is I do not know.

I refer you to http://www.interoil.com/iocfiles/documents/investorrelations/presentationanddocuments/2013/2013-12-09%20Total%20Transaction%20Final.pdf chart 12 (magnify)

There are faults to the west of Antelope where the limestone blocks are lower on the west side of the faults. This will make Raptor much deeper than Antelope. If Raptor Contains gas it will not be in communication with Antelope.

The PSA talks about pressure communication, petroleum composition and gas/water contacts. I think to be in pressure communication they will also have the same gas/water contact. GLJ says the Elk and Antelope Fields are separate. They give them a slightly different gas/water contacts, different pressure and different petroleum composition. The PSA says we get credit for any extension that is in communication with Elk or
Antelope and inside PRL 15. The first GLJ report showed a small amount of reserves for Mule Deer and showed that the gas/water contact was expected to be the same as Elk. So it appeared at the time they thought Mule Deer was in communication with Elk. On the next report they dropped Mule Deer because no well has ever been drilled at Mule Deer. You will note on the map that Mule Deer extends some distance into PPL 237 but a part of it is in PRL 15. It is possible that Mule Deer could have some reefal porosity but we will not know if is reef or fractured limestone until we drill. IOC may have a picture of what they think it looks like from the available seismic. Phil thought Mule Deer was an important prospect.

So they have mentioned the following words in either the conference call or the presentations: Elephant, Antelope Deep and Big Horn. As far as I know they have not mentioned Grizzly or Raptor/Duckbill.

I think the one exploration well to be carried by Total will truly be an exploration well so I do not expect anything they find with the exploration well to be in communication with Antelope or Elk, so I don’t expect to be able to count anything we discover with the exploration well as an extension to Antelope or Elk. The extensions need to be found with the two or three appraisal wells. On the map the only prospect that looks like an Elephant might be Raptor/Duck bill but I expect it to be quite a bit deeper than Antelope so it will not be in communication with Antelope. As I have stated elsewhere I think the name “Antelope Deep” sounds like a prospect that will be deeper and possibly below the Antelope Field. If it is below the Antelope Field is might be the Pale/Subu sandstones. Or it could be one of the adjoining fault blocks to the West such as Deer that they may think could contain gas with a different and deeper gas/water contact.  The Pale/Subu sandstones, if found, will not be in pressure communication with Antelope or Elk. The deeper fault blocks to the west (other than Mule Deer)would probably not be in communication with Antelope. If you look at the shape of the prospects on the map it looks like the faults run from the northwest to the southeast. So, with the information available one might come to the conclusion that the Big Horn prospect and possibly the Grizzly prospect could be on the same side of the fault as Antelope. The weakness of this theory is also shown on Chart 12 of the most recent presentation (mentioned above) under EXPLORATION UPSIDE IN PRL 15 it mentions Big Horn/Antelope Deep Prospect. I think Big Horn and Antelope Deep are one and the same and it is an exploration prospect and I would think not be in communication with Antelope.

I think we will have to depend on the appraisal wells to come up with any extensions to the Antelope or Elk Fields.

Of course all of the above is just a few things that run through an old man’s mind and we will have to wait for the Company and/or drilling to get the facts.

Have a good day.

'Thylacine-2' pid='34370' datel Wrote:

If the exploration well finds new resources within PRL 15 but outside Elk/Antelope, IOC will receive a bonus payment of $100 million per T, as proven by the one well.

What if the exploration well is at Big Horn for example, and proves that Big Horn is part of Antelope?

Apparently the 2 or 3 certification wells will be drilled before the exploration well.  The re-certification may be completed by the time the exploration well is drilled.

As I read the PSA it looks like IOC will have to wait for the "wildcard" recertifcation to get paid for any additional Elk/Antelope resources proven up by the exploration well.  The window for IOC to ask for the second recertification is from first cargo leaving the LNG plant to 25% production of the first certified resource.

Am I reading this right?

Good comments and questions, Thylacine.

You say, "bonus payment of $100 million per T, as proven by the one well."  A concern I had about this is illustrated by the discovery confirmed by the Triceratops 2 well.  It is thought to be a major discovery, possibly even as big as E/A, but based on the "one well" the resource engineer was only able to certify a relatively modest amount so far.  More wells are needed to certify more.  It is my understanding that one important clarification to come out of the various investor meetings this past week is that, while Total will carry the cost of only one "Carried Exploration Well" in PRL 15, in the case of a discovery IOC will be able to drill additional appraisal wells to collect adequate data for full accurate estimation and certification, either as a separate resource for the Discovery Bonus or as an extension of E/A subject to payment at $1.29 per mcf, whichever may be the case.  I think this is extremely important to understand.

The PSA does say drill this carried well "commencing in 2015", but also that the "parties shall seek to agree the objective, location, and timing" and do so "prior to 31 July 2014".  I think that is probably in anticipation per the Agreement that at least the next two E/A appraisal wells will be drilled first, probably sequentially by the same rig.  Section 8.1 of the SPA provides that, "The drilling of the first appraisal well is expected to commence in the first quarter of 2014.  Also that, "The parties, acting reasonably and taking into account the results of the first two wells ....shall consider drilling one or more additional appraisal wells ... and commencing no earlier than 2015, provided that such additional well(s) shall not adversely affect the parties' objective to reach FID in the shortest practicable timeframe or the parties' ability to drill the Carried Exploration Well."  Section 8.3 refers to nominating "the objective and location of the second well in the Appraisal Work Program within 60 days after the date of this Agreement", and says "Each party shall take all necessary action under this Agreement and the PRL 15 JOA and vote in favour of and implement the drilling of any well that has been designated in accordance with this clause 8.3."  I think those latter references to the parties' timeframe objectives are important.  Another recent clarification heard is about a possibility of moving a rig upon the completion of one of the earliest PPL exploration wells to drilling the second appraisal well concurrently to advance those timeframe objectives.  I get the impression IOC plans to be very aggressive with advancing all drilling.  For the first time ever, they have the money and the rigs, and time is big money.  It may even be that by 2015 they will be drilling appraisal wells simultaneously at E/A and Big Horn/Antelope Deep, with work proceeding toward FID!