RE:Does the seismic give them an idea of the size of the oil
The house broker finncap used the following language in a company report yesterday " oil in place thought to be at least 100 mmbbls, and potential significantly larger". Presumably, they have spoken to the company and this is a reflection of the internal Touchstone assessment. Touchstone also released a new presentation today which provides more insight.
Lets look at the seismic first. The seismic which is used is 2D and not 3D and is not closely spaced. New 2D seismic acquisition over the Royston area started in July and its not clear if newly processed seismic data was (or is) available. Irrespective, Touchstone have included seimic surface maps in the presentation released today. They show that the current discovery is in the lower thrust sheet and that the well penetrated the package down dip of a closed structure. So presumably the thrust is sealing. There is no reported water so its not clear where the spill point is. So far so good. However, the seismic is not of sufficient density to laterally map the sand packages with a high degree of confidence as the seismic is quite widely spaced. This provides uncertainty for volumetric estimates.
Let's look at the well data. Touchstone also state that the reservoir in the tested section is not considered to be great. On the limited data in the presentation is looks like the sands are thinner and not like the turbidite sands in the upper thrust sheets which are going to be tested next. Despite high bottom-hole pressures and high shut-in surface pressures the well only flowed with 230 psi flowing pressure which is considered to be low. One interpretation is that the sands have lower connectivity or permeability. You would need to see the pressure build up data to determine that. Of course we don't know what the porosity is as Touchstone hasn't released it. The oil quality looks to be good and in the lower ranges of light oil at 34.5 API (for reference Brent is around 38 API and WTI 40 API). There is no mention on the gas/oil ratio but given the low oil flow rates perhaps the associated gas is low otherwise the flow rates may benefit from a little bit of gas lift. All in all I would say a guestimate of a recovery range of 15% to 25% of oil in place might be a reasonable back-of-the-envelope estimate as there was not a prolific flow rate. The drive mechanism is also not yet know which will also have an effect on recovery rates, Due to the reservoir quality more closely-spaced development wells might be needed to get to these recovery rates. Touchstone say that, in the event of gas tested in the upper section, that both can be developed at the same time. That may mean that more technical complex dual completion wells can be used or that the oil and gas can be developed at the same time just with different wells. There is a lot of water to go under the bridge on this one.
Just remember that this is an exploration well and that all the data is new. In particular, there does not appear to have been any rock core (conventional or side-wall) that would help in reservoir characterization.
In summary, a very encouraging result - it will look even better if the government approve the extension of the license to allow the deeper prospects to be drilled, Touchstone are actively presenting these deeper prospect for drilling in 2022 although it's not clear how much these will cost and where the money will come from. Perhaps that's why Paul Baay is in London visiting brokers at the moment.
One last point, when watching the Paul Baay interview yesterday I was struck by how effusive he was about the discovery "I haven't see an opportunity like this is the 30 to 35 years I have been in the business"..I just retired after 41 years in the E&P business, including running an Independent E&P Company for 14 years, and not once in interview, conference or on TV did I ever use the bullish language that he used. I am a born optimist but It is dangerous ground when you do that publically and only time will tell if his confidence is well-founded.
Last but not least this is not investment advice and please DYOR