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Ann: Southern Cooper Basin Operations Update, page-59

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mir911

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15/01/15

17:26

Post #: 14590309
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Originally posted by psi81 ↑

Well, maybe... but they wouldn't be modelling NPV from production as a straight line over 15 years. They would be modelling it from their type curves which will be heavily weighted towards the first 5 years or so.

So the NPV of their well should be much higher than yours using a simple constant average production rate. They may be including the connection costs we were talking about earlier in addition to the CO2 content. Indeed if they are doing it properly, their breakeven cost should include all surface capex associated with the well - after all, if you only pay off the D&C cost but not the rest of your costs you're not truly "breaking even."

But yes, certainly if the saturation is 80-90% they would be looking at much more than breakeven EURs.

Regarding drawdown I know they are managing it gently but there is some uncertainty over whether this actually helps at this depth. You still get the rebound effect where the coal expands as pressure is released in the reservoir. It just happens more gradually instead of dropping the pressure in the coal immediately surrounding the wellbore almost to abandonment pressure. They won't hurt their chances by drawing down slowly anyway. It just doesn't make the problem go away entirely.

mir911,

Well I have the Forge 1 WCR too, which was a Strike well drilled not too far from Klebb and Chiffre which also cored the Epsilon coals. In fact that was the target of those coals, and they were almost empty of gas too.

Klebb and Chiffre are not going to be available for about 18 months so I will likely not see the logs til then. But there certainly is not much evidence of gas in the Toolachee and Epsilon coals from anywhere around them. I seem to recall the Tinga Tingana well didn't show elevated gas there either.

I will have to have a look through the drilling reports in Klebb and Chiffre released to the ASX at the time and see if there is any indication there. Maybe tomorrow I will get around to that.

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psi
• Klebb 1 highlights: o Over 145m of net coal encountered with strong gas shows while drilling o Target coals encountered at Klebb 1 are 35% thicker than at Le Chiffre 1 and confirm the presence of a substantial, continuous gas resource directly under the Moomba to Adelaide gas pipeline

EWC Price at posting: 32.0¢ Sentiment: None Disclosure: Not Held

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3 Upvote

0 Great analysis

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Ann: Southern Cooper Basin Operations Update, page-59

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