RE: Edison update4 Apr 2019 16:02
Recently there was an exchange on CPRs, and their purpose and when the next update would be.
imo it didn't quite draw to a conclusion.
The current CPR for GLA (and the associated NPV) is the opinion of RPS which is very conservative when compared to what the BoD were suggesting. iirc the suggestion was that the recovery rate could be of the order of 40% as that is what they had seen in their experience. In the event, RPS assigned 35% to the 3C case and just 22.5 % to the 2C case, based on "analogue field recovery factors".
So there is a huge potential to change the CPR by merely adopting different recovery rates according to prevailing opinion of the authors.
Furthermore, it is the opinion of Dr T and team that the GWA is one field. But RPS were more reserved and said not yet proven, so 2C for Lincoln and prospective for Warwick; albeit with a GPoS of 77% (Geological Probability of Success) on the well necessary to confirm moveable hydrocarbons and common field.
Enter Spirit Energy, who also believe in the one giant field proposition, and we have an agreed plan for three consecutive wells. One on Lincoln to further appraise and address the recorded uncertainties in the CPR and two on Warwick, one in each of the identified areas, with pressure gauges to assess connectivity.
The first well will be drilled from Lincoln Licence 1368South into Warwick Licence 2294 and is the first deep well, below structural enclosure, so has extra significance. It is the closest to the AM.
FID for tying back one of the two wells will result in an increase in reserves. But only a modest amount to HUR, as shown on the recent presentation (pg10), a far larger amount will come from extending the EPS life to ten years, the WOSP gas pipeline and debottlenecking of the FPSO.
This increase in 2P to over 100boe has target timing of H1 2020, and is the sum of 2P reserves and Potential Reserves. It is congruent with the 2019Q4 Reserves increase (in the timing plan) resulting from Tieback FID. This gives First gas and oil date of end 2020.
To get the EPS to 10 years will require an extension to the OGA approval, as will the gas line and the tie-back. These changes will need to be agreed in principal before FID (if not done already as part of the deal) so a very busy time ahead, not just on the drillbit, and would then be an opportune time to update both CPRs with a Warwick discovery (assumption!) and a major increase in production from the EPS.
But today we can see that Edison do not accept the gasline and debottlenecking production volume in their updated analysis, yet they do include the tieback as additional which had seemed conditional on a gas export solution in the presentations.
Is there some knowledge of an impediment to the published plan...
Sign In
Follow the stocks
