I think one reason for the sell-off Friday was the doubters (whether genuine or not, or whether justified or not) in the size and quality of the EA resource were provided with some wiggle room by the escalating pay scales that Total has to pay, depending on new wells and certification, despite the fact that the escalating pay scale itself (and Hession on CC) exudes confidence and the fact that it's not unreasonable for a party who is to fork over billions to want a 'second opinion' as to what exactly he's buying.
But arguably, this could have been prevented if appraisal of EA had been more complete (insofar as appraisal can ever be complete. I think only actual production gives that), although equally arguable, IOC has been relatively cash strapped, so this would have been a tall order.
We'll receive closure on this fairly soon, possibly already with the next EA well, depending on results. In one way, I'm excited that the prospects (and share price) are now more directly related to the drill bit, considering IOC's track record, and the fact that they'll attack the field with no less than four (possibly five) rigs simultaneously.
But there is a little nagging voice in me that tells me Friday's fiasco would never have happened if EA had been more firmly appraised.
Note: I have no expertise in this field (needless to say), so I don't really have any opinion whether these doubts are justified or even genuine (although I've seen too much criticism of the company that doesn't seem genuine, so I can't exclude the latter by any means). One could argue GLJ is Canada's premier resource evaluator having made three or four assessments already and I'm not aware of other oil and gas companies meeting with these doubts about their resource numbers.
Anyway, the drill bit will have the last say in this.
