RE: Price of Oil“The current price of oil is irrelevant for CGX. The only thing that counts is how much they find and what the price will be when they go on production 2 or 3 years from now.”
I agree with the 1st quote.
The oil price swings are only effective on companies that have reserves/production. If you don’t have any oil/gas currently, your only really valued on your potential to find a certain volume of it, based on your prospect inventory and the chance of success (the risk) of successfully finding hydrocarbons on all those prospects before drilling them.
As for the 2-3 years from now timeframe, this is the first time I will disagree with you. It’s way too optimistic IMHO.
An offshore oil platform usually takes close to a couple of years to build and your only going to get the go ahead to build it is after you’ve fully appraised a field b/c the reserves dictate the production profile and that profile dictates what facilities are needed. If a discovery is found on any of CGX’s offshore blocks, it will take years to just appraise the field alone.
Drilling to 6,200 m will take many months. 5-6 months/well, IMHO. These are HT/HP wells. They drill through rock much slower than non HT/HP wells and then again you are going extremely deep at 6.2 km (11.2 CN towers deep). If Eagle becomes a discovery, as you drill more east from the first Eagle well the formations dip deeper so future wells there will take even longer as they will need to go deeper that the first well's 6,200m (from Dec presentation).
Then add in that you are drilling them in water where when there is a storm the rate of drilling usually slows down as well.
If it took say 5 wells to delineate a discovery well that would be 6 wells in total. At 5-6 months/well your looking at 3 years of just constant drilling (testing is extra). And thats if you can drill 6 wells one-after-the-other based on your rig contract and what timeline the operator (farm-in partner) has for appraisal well drilling.
Then if all goes well you need to order the production infrastructure and after it’s built and delivered it will take more time to install it and tweek it to optimize your production as these never function perfectly at the beginning (trial and error).
Offshore always takes a lot more time, patience & $ then onshore. Very deep HT/HP wells just make the wait even longer.