After my response on that NZ thing I re-read and admit I garnered greater confidence, partiicularly from extract below but also on the facilities start-up and what will flow. The 3 functions of the facility are to be tested and fine-tuned, clearly a complex process, in the first couple of weeks but I see that mmgmt are confident they will be doing this BY March 31st. Clearly the lack of drilling permission on Sidewinder has revealed the depletion of the shallow gas wells is quite significant as they went down by 75% in a little over a year on A1 throu A4 BUT they have now drilled or drilling A5 through 8 and with shallow pockets throughout prospect they intend to bring to 5000boepd on ongoing basis and, in relation to gas, they speak of price contracts over $5!
You can see from extract below how they are planning to produce from Cheal, projecting the Urenui will last for 2 years starting at about 300 to 500bopd and they are middle of making decision whether to drill new shaft into Mt. Messenger and take off at same time OR unplug Mt. Messenger 9which they see similar prodn levels) after Urenui is drained. Yes, I am more confident as my first impression from the Q&A was that they were waffling a lot but it is clearer than I thought. GL.
We have seen a great example of that as Cheal A-11 where we tested the Mt. Messenger zone first, the deeper zone it flowed 350 barrels a day. We plugged that and moved up the Urenui and we tested that and it floated 500 barrels a day. So is it alright just leave the Urenui going, so that Urenui is still going right now, the Mt. Messenger is plugged and sitting below, it’s burning a hole in our pocket basically if we said no, there is another 350 barrels a day and they are ready to go. The question is and what we alluded to in our press release is, we have to make that decision this year, do we economically justify a new well decided.
If Urenui well is on low decline, our declines are variable depending on our pump rates and that sort of thing, but they are quite low on the Mt. Messenger and Urenui’s hand. If it looks like, it’s going to maintain quite a low decline rate then for sure, let’s get after a new well, and go poke one into the Mt. Messenger right between the well and take the Mt. Messenger 350 barrels at the same time, but at Urenui it looks like it’s going to die off in a year or two, then we’ll just drain that off, that would be our GPP practice, get it down to a rate that uneconomic for us and then bring on the underlining Mt. Messenger.