3P CPR17 Mar 2022 08:14
GYHAS: “…This is exactly my point of contention, there is no place in the Canadian reserve report due with annual filings to discuss the estimated OIP of the new find, they don't address 3P reserves in that report..”
Not quite factually correct. In Canada, companies have to report proved (1P) and proved plus probable (2P) reserves under NI-51-101 regulations, but 3P will only be reported if the company chooses to do so, as there is no legal obligation.
“..Secondly there is zero evidence to suggest that COPL has commissioned a second, separate CPR from RS to confirm the new find, likely because they don't have the data to have it included in reserves..”
Again, not quite factually correct. There is sufficient enough data that AM was then able to produce a reservoir simulation model ie. his proclaimed ‘3 wells per square mile’ which although does not meet the standard criteria for reservoir analysis, it does give an insight into a perceived ‘probable’ analysis. Tiburn’s assessment ‘that if they confirm OIP estimate scale then thats good enough at this early stage’ is very apt, specifically so on investment modelling!
“…1, 2 or 3P, even though 1P and 2P are the only reserves that add value to a company..”
Again, not factually correct. Evaluate Energy and CanOils both use 3P assessments.
‘More companies are beginning to report 3P reserves, especially from the junior end of the company spectrum. Junior companies will typically buy into prospective fields, spend their first few years in existence trying to prove commerciality, and then either get acquired by or merge with a bigger player, or are joined in their commercially viable oil or gas project by a bigger player who typically takes on most of the operating costs – known as a farm-in partner.
In the junior companies’ early days of evaluating an asset, there isn’t a lot of money going around to pay for extensive exploration work. So typically, only a high level overview is possible, which results in little or no proved or probable reserves being booked, but maybe a high amount of possible reserves. 3P reserves are therefore a great barometer, despite their 10% certainty rating, to assess the potential of certain assets or entire companies if they are at these early stages of development’.
Hopefully the above gives some perspective on when & why a 10% probability may be utilised.
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