RE: Re:Market cap21 Aug 2019 11:32
On the CPR the two things interact; what is under the ground and what the Field Development plan is. If you read the Moyes & Co report on the Mathis asset from five years ago, it stated that there was 400,000 barrels of oil Proved Undeveloped (PUD) for two horizontal drills costing $500k each. I think they can probably be done for £350k/$400k each now. That is without looking at what was behind the pipe at Mathis. At Mathis we have 680 acres, if I remember rightly, we should be able to get more than two horizontals in there. So on Mathis a few issues arise; does the company have to say that it intends to drill the targets for them to be classified as PUD, how many other drills could it do at Mathis, how much is behind the pipe at Mathis, can it do side-tracks at Mathis, the Moyes report concerned the Mississipi Lime not the Prue. We know that Mathis and ZR are now regarded as one field by the company; do with have the Mississipi Lime at ZR and the Prue at Mathis. The company has seismic on at least Mathis and maybe ZR; what does that seismic show is at those two assets?
This is a legal definition of PUD: According to the Oil and Gas laws of United States, Proved Undeveloped Reserves means reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion. Reserves on undrilled acreage are usually limited to those drilling units offsetting productive units that are reasonably certain of production when drilled. Proved reserves for other undrilled units can be claimed only where it can be demonstrated with certainty that there is continuity of production from the existing productive formation. Under no circumstances are estimates for proved undeveloped reserves generally attributed to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual tests in the area and in the same reservoir.
So if Attis, identifies multiple drilling locations on existing producing acreage and commits to drilling them the move up to PUD. If it were me, I would identify them, package them up and put them out to the US Private Investor market.
http://www.realoptions.org/papers2001/McCormackSick.pdf
That would not mean, however, that these undeveloped reserves have zero economic value. If, as is usually the case, the owner of the reserves has years to wait before losing the right to develop them, then these reserves have option value
Fingers crossed.
DYOR
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