RE: What are the realistic risks.13 May 2021 18:49
Risks associated with the exploration and production of natural gas (Helium in our case)
Apart from the obvious health, safety, security and environmental risks, exploratory drilling efforts may be unsuccessful: Exploration drilling for gas involves numerous risks including the risk of dry holes or failure to find commercial quantities of helium. The costs of drilling, completing and operating wells have margins of uncertainty, and drilling operations may be unsuccessful as a result of a variety of factors, including unexpected drilling conditions, pressure or heterogeneities in formations, equipment failures, blowouts and other forms of accidents, and shortages or delays in the delivery of equipment. Poor project execution, inadequate front end engineering, delays in the achievement of critical events and production start up, and differences between scheduled and actual timing, as well as cost overruns may adversely affect the economic returns of our development projects. Failure to successfully deliver major projects could negatively impact results of operations, cash flow and the achievement of short-term targets of production growth.
On the top of it, the governments throughout the world in matters such as the award of exploration and production interests, the imposition of specific drilling and other work obligations, income taxes and taxes on production, environmental protection measures, control over the development and abandonment of fields and installations, and restrictions on production. We could have new regulations and legislation, as well as evolving practices, could increase the cost of compliance and may also require changes to our drilling operations and exploration and development plans and may lead to higher royalties and taxes.
And then we may have uncertainties in estimates of oil and natural gas reserves: Several uncertainties are inherent in estimating quantities of proved reserves and in projecting future rates of production and timing of development expenditures.
The accuracy of proved reserve estimates depends on a number of factors, assumptions and variables, among which the most important are the following:
the quality of available geological, technical and economic data and their interpretation and judgment;
projections regarding future rates of production and costs and timing of development expenditures;
changes in the prevailing tax rules, other government regulations and contractual conditions;
results of drilling, testing and the actual production performance of reservoirs after the date of the estimates which may drive substantial upward or downward revisions;
and changes in helium gas prices
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