When an exploratory well test is conducted, assuming the well penetrates a nice thick pay zone, the objectives are to understand the inflow potential and the size of the reservoir. Variables such as kh (permeability thickness product), skin (near bore impairment) and reservoir radius are things the company wants to know, among others. From this they can develop reserve estimates and production functions from which to size equipment and make economic analyses.
Inflow potential and skin are fairly easy to determine. These combine to arrive at a productivity index which is the amout of flow vs. the pressure drawdown at the completion zone.
Reservoir radius is derived from pressure transient analysis. As a well is flowed at different rates, a change in the inflow pressure response is recorded. Similarly when a well is shut in for a pressure build up. This data can be interpreted to arrive at estimates of the radius of the reservoir. Similarly pressure gauges in nearby wellbores can establish whether the two wells are in pressure communication. So obtaining radius, thickness, porosity and water saturation allows one to determine the void space and the amount of HCs in place.
Here's where the rub is. The longer the flow test and the more gas that is produced, then the better the data become. This is more important when communication with nearby wells is not detected. Flow testing is expensive so operators want to limit this time to as short a period as possible to get the data "they want." But if the radius is really large, then a reservoir boundary may not show up. So it seems Total is incentivized to make A7 short and sweet and pay less for the recertification payment. A longer test which confirms much more gas volume means Total pays more for the test and more in recertification payment. And XOM will have to pay IOC shareholders more if the deal goes through. So in the case where A7 has lots of upside potential, I think there is potential that we get shorted. Of course if there is a large upside, you would think they would evaluate it to the extent of proving up the needed minimum for LNG plant sizing and not too much more. This is not a test to "see how much IOC shareholders can be paid on the sale." It is a test to gather the needed info for the development plan and nothing more. So the test could end up with a conclusion that the radius is "at least as big as X." So the reserves appraisers will need to adjust maps to accomodate X. But how will they do that? Again, I'm not a reservoir engineer, and carbonates are especially problematic to understand. But they can do one of two things. Put the boundary exactly at X distance from the wellbore on their maps OR imply from seismic or simply rules of thumb that the reservoir tapers to nothing some short distance away. The first approach especially under defines the volume. The 2nd approach also likely does that but to a lessor extent.
All of that is the reason why there is a later post production recertification payment in the Total SPA. Too many uncertainties. Unfortunately, we lose that too. But at least they are drilling A7 so there is some hope to add volume and hopefully not lose any.