Putsncalls
I don't know where your 8 wells came from - assume these are E/A and Triceratops 1 & 2 - but please note the difference between appraisal wells and exploration wells. All of IOC's wells except for Triceratops were appraisal wells and these have a higher POS than exploration wells. (Even Triceratops might be argued as appraisals of the much earlier Bwata-1, though Bwata may have been shallower and not intersected the carbonate.)
[I just looked at page 19 of the IPAA presentation in Apr 13 - Bwata-1 was the Triceratops discovery well, so T1 and T2 are appraisals. The only true exploration well we've drilled is Elk--1.]
So out of your 8 wells, we've had one exploration well and the rest are appraisal.
If they had drilled Antelope 3 as a stepout (outside of existing wells) instead of infill (between existing wells) we might have got a better up-front deal from Total. As it is, Total (and XOM before) insist on stepout wells to verify the size of E/A.
2D sesimic is simply not that good, and our ability to define structures and image them is reflected in the lower POS for wells drilled in 2D. Will there be variations in the POS? Of course. But to suggest 90% or 100% POS for exploration wells is simply ignoring geologic variability and would NOT be carried by any reasonable geoscientist on an exploration well in PNG.
Stavros
Thanks for the comments.
I hold the shares as I think E/A appraisal may lead to upside, and of course the exploration has a chance to find something. I prediced an 80-90% chance of failure based on worldwide statistics of exploration wells drilled on 2D - the other items don't add much (gravity, seeps, etc I'm sorry to say). Thats not 'negative' at all, but reflects reality based on oil and gas industry norms.
I prefer my investing to be reality based, as I suspect you and others on SHU do.
What are you using for POS? Can you support it with facts? Please give me that info as I am always welcome to new info - good or bad.
As for my 'paralysis,' I can take the loss now but I estimate a reasonable (>50%) chance that the pps will recover. I think it is worth considering some downside insurance for a possible exploration/appraisal well failure (don't you wish you'd had insurance against a less than stellar deal?). I asked that question and as yet no one has provided a reasonable reply.
Sooo, please don't shoot the messenger if I bring-up some inconvenient scenarios - none of us know the POS and its an estimate anyway. If I see Holland I'll ask him what POS they carry - possibly in Singapore in April - though he might be very careful with that info.
note - edited after re-reading Stavros' post. Cheers