RE:RE:RE:Kayrakkum - risk/success factor
Sorry, disagree absolutely. COS is asigneded to probability of hitting hydrocarbons pay, but hitting hydrocarbons doesn´t mean the reservoir is commercial. And that is often substantial difference and many variables here - quality of reservoir - porosity/permeability,oil/gas ratio, H2S content, API of crude - heavier is much worse expoitable, etc. etc. The reason why oilcos - and not only microcaps like MNP close farm-in deals is mitigating of risk. Risk geological, risk in the course of drilling ( especially in these depth 4.500-6.000m). It is not like dry hole in Mongolia 1.000 TD for 1MM CAPEX. Btw. in Tajikistan Russian tyccon Gazprom drilled 6.000m well, started in Dec. 2010 and finished in 2013, testing ongoing another year. With Vagobel financing and rehab project they (MNP) have substantially better position in negotiating with farm-in partners, they can reach very good terms - for example farm out 50% for free carry on 80-90% of the well costs. It is a little difference 2MM:20MM. Luckily mngmt guys know what they should do. And don´t you think they should/could drill at Mahram extension, where are contingent resources assigned already and risk of failure is the smallest? But they are planning 1EW in North licence, 1EW in West and North Mahram, the extension of producing field is planned as the third well. So my logic tell me, they want to farm-out a portion of licences for certain free carry on the first well in both licences... and i´m glad that they do it. I saw too much small/juniors/intermed. destruing their value by drilling wildcats with good GCOS. Look at President energy and their "succesfull" wells from last year.