The chances of this have been reduced, for now..

We made a call last week that we were of the opinion that flowing oil from the vertical well might be a bit of a problem. But flowing it from a yet to be drilled horizontal well seems a little easier, for two reasons:

1. They have identified the sweet spot with an 34% porosity increase compared to the oil zone at Antelope1. Since we believe that porosity to be in the 4-5% area, that would give something like 6% porosity in the oilzone at Antelope2.
2. If that is not enough by itself, then lengthening the well through horizontal drilling could do the trick. It gives a much larger well with higher porosity compared to the oil zone in Antelope1, and we think this could be enough to get the oil flowing.

So, basically, what we’re saying is that although it seem that we were right with our call last week that oil will not flow enough from Antelope2 vertically (although readers take note: no conclusive DST result has been published to confirm this yet!). But horizontal drilling could do the trick.

A negative surprise is that the oil leg seems to be thinner than previously thought, now at 160ft, not 257-387ft

How to proceed? Well, we could just proceed as if there is no commercial oil leg, and treat any result from horizontal (or subsequent downdip drilling) as a positive surprise. Morgan Stanley still has a $115 price target (almost twice the current market price) on the stock without any oil factored into that price. S