12-07-2013, 08:27 PM
Another IV poster says this badlybadly
My take on what the 3 appraisal wells will do in E/A
Since Total's total payment to IOC will depend on the resource size of E/A after these 3 new appraisal wells in 2014/2015, here is what might be the outcome imo. The existing contingent resource from GLJ is shown below. I will focus on the gas numbers only, the condensate will be proportional to the gas.
As at 31 December 2012
Case
Elk / Antelope contingent(1)(2)
Low
Best
High
Initial recoverable sales gas (Tcf)
6.83
9.07
10.85
Initial recoverable condensate (MMbbls)
111.5
135.4
156.3
Initial recoverable (MMboe)
1,250.1
1,646.3
1,965.4
I will use round numbers of 7TCF, 9TCF and 11TCF for the Low , Best , High. The payout will be based on the Best case number using an average of the new resource size (IOC chooses their company to do this, Total chooses theirs).
The resource size is a combination of the volume of the structure (how big the reef is, using length - width - height) and how much porosity it has (the hydrocarbons are contained in the pore space, i.e. the void that is not rock). The wireline logs will determine the gas / water vertical contact line so the hydrocarbon volume can be calculated.
In scenario #1, lets assume that the 3 well results are in-line with existing drilled wells, the structure height matches seismic and the porosity is within the currently used average values. Since none of the new wells prove that the areal extent of the E/A field is any bigger and the porosity matches earlier models, the only change should be a tightening of the Low and High towards the Best value. So something like 8T,9T,10T would be the new result. This would not result in any higher payment since the Best case value is unchanged.
In scenario #2, lets assume that one or more wells prove that the size of the field is larger or the porosity found in the well is better, this would shift all the values to a greater number. Perhaps something like 9T,11T, 13T.
Since the final tranche payment will be based on the middle (Best) case average, I would say we have a floor value at this point based on the existing numbers. If one or more of the new wells causes the Scenario #2 option to occur, then final tranche payment will be substantially higher.