The update this week was definitely a mixed bag. It would have been nice for them to acknowledge the production guidance miss, and explain it in detail, rather than leave it implied. I'm going to tune in to the presentation tomorrow and see what they have to say for themselves.
That is a good catch. Lucius is indeed way down in what's normally viewed as Lower Tertiary territory, neighboring Hadrian and not far north of APC's Phobos prospect: www.anadarko.com/SiteC...
Shenandoah, a Wilcox discovery last year, was quite a bit closer to shore than Lucius.
If you pull up APC's 2008 investor day slides, you will see that they cordon off Miocene from Lower Tertiary well north of Lucius. See slide 7 (Lucius not labeled here, but it's south of the 'Turtle Lake' text): www.anadarko.com/SiteC... APC seem to have discontinued this practice, suggesting that the understanding of where the Miocene fairway ends has evolved recently.
Here's a schematic x-section of the deepwater GoM posted by Chevron in 2008 (slide 7): www.mms.gov/homepg/wha... This clarifies for me how Pliocene/Miocene can be hit at only 20k foot total depth way out in southern Keathley Canyon.
I don't know a lot about Hadrian, but APC's results may suggest that XOM drilled too deep. The appraisal in '08 had a planned measured depth of 22,570.
I didn't say low profit margins. BHP will only invest if it can conservatively project an attractive rate of return (i.e. below spot market prices). But yes, profit margins will be lower. That is how capitalism works. This is a good thing for everyone but the incumbents and their shareholders.
Here is a tangible example. BHP may not join Canpotex. This would weaken the oligopoly pricing model that POT, MOS, etc. have enjoyed.
BHP's entry suggests that that long-term outlook here is very good. I just wouldn't base my expectations on the 2008 peak of the market any more than I would the past fiscal quarter, which you suggest I have done.
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That is a good catch. Lucius is indeed way down in what's normally viewed as Lower Tertiary territory, neighboring Hadrian and not far north of APC's Phobos prospect:
www.anadarko.com/SiteC...
Shenandoah, a Wilcox discovery last year, was quite a bit closer to shore than Lucius.
If you pull up APC's 2008 investor day slides, you will see that they cordon off Miocene from Lower Tertiary well north of Lucius. See slide 7 (Lucius not labeled here, but it's south of the 'Turtle Lake' text):
www.anadarko.com/SiteC...
APC seem to have discontinued this practice, suggesting that the understanding of where the Miocene fairway ends has evolved recently.
Here's a schematic x-section of the deepwater GoM posted by Chevron in 2008 (slide 7):
www.mms.gov/homepg/wha...
This clarifies for me how Pliocene/Miocene can be hit at only 20k foot total depth way out in southern Keathley Canyon.
I don't know a lot about Hadrian, but APC's results may suggest that XOM drilled too deep. The appraisal in '08 had a planned measured depth of 22,570.
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I didn't say low profit margins. BHP will only invest if it can conservatively project an attractive rate of return (i.e. below spot market prices). But yes, profit margins will be lower. That is how capitalism works. This is a good thing for everyone but the incumbents and their shareholders.
Here is a tangible example. BHP may not join Canpotex. This would weaken the oligopoly pricing model that POT, MOS, etc. have enjoyed.
BHP's entry suggests that that long-term outlook here is very good. I just wouldn't base my expectations on the 2008 peak of the market any more than I would the past fiscal quarter, which you suggest I have done.
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