Chuditch discovery28 Feb 2023 09:03
Management Commentary
The assignment of Contingent Resources to the Chuditch-1 discovery, built on the extensive technical studies completed by the Company, sets the foundation for the next stage of the project cycle. This phase would typically include an appraisal well, pre-feasibility studies, Environmental Impact Assessment planning, and preliminary work on gas sales arrangements. Management believes that the Chuditch-1 Pmean Contingent Resources, now independently assessed, are likely to be sufficiently large to be economically viable to be developed standalone or in parallel with other developments in the region.
Management's probabilistic estimates of gross gas Prospective Resources for the Chuditch SW, NE, and Quokka prospects, as set out below, differ from ERCE's estimates, mainly through the Company's preferred use of the latest reprocessed seismic data velocity model to define the extent of the prospects. Further technical discussion regarding these differences can be found in Appendix 1 of the CPR.
Management notes that in its previous announcements the Company referred to both Chuditch NE and Quokka informally as "Leads", due to parts falling outside of 3D seismic coverage, whereas ERCE describe them as "Prospects", terminology which the Company has now adopted. This increase in maturity towards being drillable features is accompanied by a more conservative view on the probabilistic Prospective Resources estimation being taken by ERCE. Further, in the Company's announcement of 24 October 2022, the basis for in house estimation was as "Deterministic Best Case", whereas estimates presented in this announcement are "Probabilistic" which introduces ranges of uncertainty on all contributing subsurface and recovery factors, including the degree to which 3D seismic coverage is not currently available on Chuditch NE and Quokka. Deterministic Best Case and Probabilistic estimates are not therefore directly comparable.
· Baron's own Pmean estimates of gross unrisked Prospective Resources aggregate to 2,128 Bscf***:
o Chuditch SW 855 Bscf***, with a low to high estimate range from 420 to 1,284 Bscf*** and a GCOS of 40%;
§ Baron considers that SW represents a relatively low risk follow on to a Chuditch-1 appraisal well;
o Chuditch NE 863 Bscf***, with a low to high estimate range from 311 to 1,401 Bscf*** and a GCOS of 34%; and;
o Quokka 410 Bscf***, with a low to high estimate range from 110 to 733 Bscf*** and a GCOS of 26%.
Aggregate oil equivalent Pmean Prospective Resources net to the Baron working interest, including the condensate yield, are estimated by the Company to be 366 MMboe**, representing a significant follow-on portfolio to be explored. Management estimates of the Geological Chance of Success for the prospects are in reasonable agreement with ERCE's estimates, indicating the relatively low risk nature of the Prospective Resources assessment.
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