RE:RE:RE:RE:RE:RE:RE:RE:RE:SpudGood morning DIrk,
Just catching up with the posts on the board after some absence. I had a Senior Drillign Engineer friend check well costs in the area on Rushmore* and it was not extremely precise because there used to be not so many wells in the basin (many are tight and have very limited information) and furthermore the wells were drilled in the last 10 days which saw a lot of volatility in the cost of operations. However, it was quite helpful, this gentleman's analysis is that the Kawa well should be in the 65-85 MMUSD range and the Demerara block well, due mainly to much lower TD (increased water depth does not add much cost at the drilling stage given that the water depth there is still quite moderate by today's standards), should be in the range of 45-60 MMUSD.
These numbers come from a degree-educated drilling engineer who knows how to extrapolate the nulbers related to other wells in the area and who knows how to put together an aFE so I trust them.
Regarding the oil being worth 2USD/bbl in the ground, I agree it is low, unreasonably low. 2 USD/bbl is about 3% based on the current oil price, and whatever economical concepts someone may throw at it (EBIDTA, tax, royalties etc), concepts that I have no clue about, one thing I know is that the impact of operational and geological mishaps on your costs is well beyond 3% in a deepwater setting, so logically I conclude that not a single deepwater operator would be taking the risks for only 3% margin.
*Rushmore is the World's biggest well database where most major operators participate.