WB, Let me say that drilling for oil is a tough tough business. There are basically two types of exploration, wildcatting and brownfields. Wildcatting involves proving not only that there are petroleum generating geology but also that the oil has accumulated in structures as an oil deposit. There are also risks regarding water bearing structures, lack of porosity etc. This means that the risk level in wildcatting is high, typically people talk about 10 to 1 even with the benefits of modern seismic.
Brownfields developments reduce and / or eliminate some of these risks, adjacent wells have shown the geological structures, seals and presence of oil generating source rocks. Balancing against that is the lower cost of near field drilling, usually support crews, facilities etc are near by servicing producing fields and cost efficiency of additional local production makes the operators ameniable to 'having a crack'. COS for Matuku? I really can't say but I don't think there is much downside to OXX's SP. It hasn't moved in the lead up to Matuku, is backed by +$20m in cash plus some investments, 6 completed 3D site surveys waiting for farm out deals to be closed (done at a cost of many millions of $) plus some very valuable exploration leases. On the upside, the 65m bbls is currently worth around $6.5 billion, 17.5% of that even as an in gnd figure will be several $ per share I suggest. Not one for betting sheepstations but an interesting and well run company who at some stage will hit a home run I think. Good luck to holders.
OXX Price at posting:
20.0¢ Sentiment: None Disclosure: Held
