I thought this posting I did in another thread might be helpful in a separate thread:
Someone expressed concern about the
"bonus payment of $100 million per T, as proven by the one well", something I had concerns about as well. My concern 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 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 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!
