animex announcement, page-16

Asteroider, the spend for 20% of the Nyuni block was 30% of the drilling costs capped at $4.6m, overall forecast spending for the Nyuni block for KEY was forecast at $7.7m for the first two years.

This reserves announcement leaves me seriously wondering at all the superlatives thrown it's way previously. A "significant" discovery, larger than expected, etc. What were KEY expecting, it to be a duster? On the reserves figure, what happened to the condensate? Is the 40 BCF including the condensate or is that just gas?

I presume from these figures that an appraisal well is now off the agenda with the next drilling focusing on the Nyuni prospect. On the plus side, the re-processing of the seismic has improved the prospects of Nyuni (the prospect, not the whole block).

The Nyuni prospect's P50 estimated potential reserves was listed as 131.9 BCF in the prospectus, the reprocessing of the seismic and a review of the Nyuni #1/1A well data has improved this to P50 estimated potential reserves of 971 BCF.

Oh well, looks like a bit of drilling coming up over the next 12 months. Minimum of two wells in the Nyuni block, one well in the WSS block, 7 wells in Suriname and of course the Lidsey #2Hz well.

I've changed my sentiment from buy to hold until I can review the figures more thoroughly but going on memory it is looking extremely likely that further dilution will be required just to fund KEY's costs of the upcoming drilling in Tanzania, even if Lidsey #2Hz is successful.

Also, the two year wait for reserves estimates combined with the lack of meaningful progress on the monetisation of the Kiliwani North field has dented my confidence in the value of KEY.