260% Increase in Resources ?????Doesn't anyone look at the details of these resource reports?
The initial report from last year had a most likely recoverable of 132 million barrels (Jeribe only at Chia Surkh). The new report has contingent resources in Jeribe and Shiranish (condensate and gas = BOEs) for Chia Surkh and also has prospective resources in 2 new prospects/leads at Barda Sur East/West and also at end of Chia Surkh structure.
Adding all these numbers gives 338.6 million barrels, which is a 260% increase over the 132 number.
Well done management, ..... but not so fast!
At Chia Surkh, the Jeribe has gone from 132 million barrels to 60.2 million barrels. This is the "shallow, economic" zone which tested 4800 bopd "in 1936 which will be 10000 bopd to-day"! What is going on here? Although the best contingent resource estimate for Chia Surkh is 120.8 million barrels (still less than original estimate), this includes condensate and gas in the Shiranish. Without a market for gas in Kurdistan, these BOEs will be in the ground for a long time.
It has been repeated too many times that Chia Surkh is an economic field. Genel Enerji says "well 7 was first well to confirm the presence of commercial quantities of oil and gas". This is a strange way to state this? I think they are only saying that this well has a test at a rate which should be economic? For more serious readers, check the Middle East Economic Survey (MEES Vol LI No 12 March 24 2008), which says the Chia Surkh field is "semi-economic". I would think that 60 million barrels in Kurdistan, burdened with a big royalty is indeed semi-economic.
The new seismic has identified other prospects/leads which have been assigned prospective resources, with best case at 217.8 million barrels. LFD has not included the chance of success for these prospects. Initially, we were talking about billions of barrels and now it is millions for the best case.
So kudos to management for the positive spin on this. I think there are a lot of unanswered questions.