Surprise, page-15

You have to keep in mind that opex per barrel rises as flow rate decreases because the fixed overheads are spread over fewer barrels. So while it may have been a total cost of around $50/bbl (including transport) in the early days when it was flowing 400 bopd and on free-flow, it dropped under 200 bopd within a couple of months and by the time they shut it in, it was 100 bopd and that needed a pump, which means even higher opex. Salaries, pump fuel costs, maintenance etc don't change but now they are 4 times higher per barrel.

I also don't recall if they stated what the water cut was by the end of production. If water was coming through then even pressure recharge isn't going to help - it's just going to recharge with more water.

I have posted my decline curve analysis of Surprise previously. In the first year it produced about 68 kbbls, which is an average of 186 bbls per day. Even if it recharges back to its original condition that's the most we can expect, and it won't. I reckon if it can do 50 kbbls that would be a good result.

If opex is $60/bbl now, 50 kbbls at A$85/bbl is $1.25M profit. That's the sort of number we're talking about. Then they'd have to shut it in again because the flow rate in the second year only averages about 100 bopd. You'd need a really high oil price to sustain that.

Is there any real wonder why RC was prevaricating over re-drilling Surprise? It's worth starting up again when past drilling costs are sunk but it's pretty hard to justify the cost of a new well. You would need to be very confident of a much better result than the original well before the EMV was positive. Those funds are much better re-directed to the gas business.