RE:RE:RE:RE:RE:Pareto Securities ReportYou are spot on Schreibzey,
The risked estimate will stay "relatively low" at SEK 4.0 (although some posters suggest the current price is unrealistically high) until some of the risk factors are adjusted.
Drilling appriasal wells will move the risk factors in one direction or the other.......for example drilling appriasal wells will define the water contact which will then define the size.
For example assuming only 45mmboe from Brulpadda when we have 10% of what the Total CEO descirbes as 1 billion barrels recoverable is conservative.............however assuming 180mmboe from Kloofpadda (when we haven't drilled it yet) is in my opinion overly optimistic.
I would really like to see the group drill appriasal wells before rig departs to better define the size of both Brulpadda and Luiperd and increase the risk factor and increase the sale value to AFE as a consequence.
Here's 3 scenarios to consider...........there will be lots more but as the minor partner we have no influence and are riding the train in whichever direction Total wants:
If Total wants to farm down some of their percantage in the near future (perhaps to help with cash flow) they might see the value in further appriasal as this will increase the value of the acerage.
However it Total wanted to increase their percentage by buying back some from AFE then they may want to depart without appriasal and this keeps the value of AFE on the low side.
If Total want to get the best concession from the South African government (and also get them to finalise the ratification through parliment that I think has dragged on and on and on for years) then they may want to present the asset as only marginally economic and requiring subsidies etc to make it fly........in this scenario the less appraisal drilling the better.
I want to see us Appriase the asset for sale by replacing exploration wellls with extra drills on Brulpadda and Luiperd but that is just my opinion.