RE:RE:Drilling Results I personally like the odds of this prospect since it has good amplitude support.
Bottom Line: Exxon would not drill this play, if it did not have a good amplitude anomaly on 3D seismic.
Based on my own Nigerian experience, amplitude works like a charm with shallower light oil targets (30-40API). It allows you to target oil filled sands, and to also identify oil-water contacts based on amplitude shutoffs. The latter was also confirmed by MDT pressure data and was in close agreement. If you don't have amplitude, you either have no sand or wet sand.
Amplitude has also been a key factor in the other Cretaceous turbidite plays in W Africa, as well as the Liza Cretaceous discovery by Exxon in Guyana.
It remains to be seen though on how well they have guesstimated the net/gross for the play pre-drill. A well will help calibrate this and the resulting resource estimate..Reservoir connectivity remains a risk, but pressure data (and seismic) can help resolve any potential compartments as drilling progresses.
If you assume the oil is worth about $10/bbl in situ, even with all the shares, options and warrants outstanding, a discovery could be worth something like $3.34-$4.91-$7.88 per XOP share.(given the uncertainty in the net/gross estimate)
My main concern, contrary to other posters, is how XOP will a) fund any potential drilling/completion cost over-runs and b) fund XOP's 17% share of a second appraisal well to firm up the above numbers. Anyone have any thoughts on this?
I'm guessing we may have some good news in about ~6 weeks from spud.
thomsoni