I think a very under-discussed benefit of our recent drilling is the fact that HDY has now drilled a well in Guinea.  Even though things did not go as well as hoped, we did blaze the trail and now know what needs to be fixed.  I have helped set up offices and subsidiaries in several foreign countries and the logistics of doing so are enormous.  From warehouse space, to housing, to port facilities, to office space, to hiring the requisite locals, to sending the right expats, to putting in the proper controls and perhaps most importantly, working with local government officials.  All of this is somewhat daunting to any company and especially to a company the size of HDY.  This is a big asset to any potential JV partner, it will add value and its value should not be underestimated.

 

I think another under-discussed benefit is the well control that our first well provides.   Seismic becomes far more accurate as it can be calibrated to wells which have been drilled.  We had only one well in the 70's drilled with somewhat sketchy info using old technology which could be used to tie back to.  We now have a second well with up-to-date information for  another tie-in.  This is also extremely valuable.

 

The third big benefit has been discussed quite a bit.  And that is that oil was found to be present even though it was not in commercial quantities due to the lack of an effective trap.  If there is one reason you could pick for not finding oil, I think the lack of a trapping mechanism is the one you would most likely want to have.

 

So, when I hear people saying and thinking that the value of the concession has been diminished by the drilling of Sabu, I would say they are wrong.   I would say it has been enhanced and I think most oil companies would say the same thing. 

 

I'm sure that anyone looking to farm-in will use the argument that the value of the concession  cannot exceed the value of the company and they will use that to their advantage.  But at the same time, I think that will just be talk and I think they will realize the real value is higher than before.  I just wonder who will be the first willing to pay the fair price.  Let the bidding begin.  Those that snooze may lose.