TSXV:CEN.H - Post by User
Comment by
CalifDreamingon Nov 13, 2008 5:16pm
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Post# 15584749
RE: concerned??
RE: concerned??Did you notice the pull back in the price of oil?
Oil at $60 cramps their style a bit. They had to fork over more $ to get the DD7 rig than they expected after the azzholes at Swiber screwed them with all the delays, so their cash balances are low.
Using a MOPU is a change in plan - they originally planned to set their platform (already built and paid for), but they needed $15MM or so for a heavy lift vessel. Leasing a MOPU is cheaper and requires less upfront cash, even though their opex goes up a bit as a result. But trying to set a platform in the middle of Typhoon season could have been a cluster F - reminds me of Oilexco when they tried to tie in their wells a few years ago - needed 10 days of good weather. Took 8 months to finally hook up the wells due to rough seas.
From my talks with management, they never really expected to use the DD7 beyond the initial 3 months. They didn't need such a large rig (DD7 is a 120m depth rig - Songkhla is only in 40m of water) and they only took it because Swiber f'd em over. Rig rates are falling and I suspect they can save substantial $ with a smaller rig.
I think the plan is to finish drilling, get Songkhla on production and generate cash for a few months. I expect drilling to resume sometime after they procure a new, cheaper rig. Probably late Q1 to resume drilling is my guess.
One thing I have learned is that even at 5000 bpd, A-01 isn't producing at full rates (think 6000+ is possible) - they are constrained by tanker capacity at the moment (due to unexpectedly good production - a nice problem to have). 9000 bpd exit rate is very conservative if A-03 and A-07 come in remotely as good as A-01.
I expect reservoir size to increase - the oil column is nearly 50% greater than originally expected and they still haven't found the oil/water contact, so full size of the reservoir is unknown. Currently book 4.9MM bbls P2. I wouldn't be surprised to learn that the reservior is closer to 10MM bbls once their reservoir engineers take a look.