Meg ONeill: Yes. In many ways it was opportunistic, Nik. As weve been drilling and
updating our seismic modelling we saw what appeared to be a high-quality target in the S500s that was potentially going to be undrained with the initial depletion plan. Whilst we had the rig in the field and a spare subsea tree available, we took
the decision to go ahead and drill it. Its far more cost efficient to do that work now rather than to bring the rig back at a future date. So in many ways, it was opportunistic. We saw a part of the reservoir that was not going to be depleted
and we wanted to place that additional well and give us a little bit more production capacity.
Nik Burns: (Jarden, Analyst) Got it. You may have
partly answered my second question that was just asking about post-startup CapEx excluding any spend on phase 2. Just wondering, should we expect that we have a requirement to bring the rig back at a future stage 2 to drill additional wells on the
S500 sand or should we expect all 2P reserves to be classified as developed after the current drilling program is completed? Thanks.
Meg
ONeill: Okay. Theres a couple of elements to that question so let me go through it sequentially. In terms of the scope of work that we took FID on, the capital investment is nearly complete. We have two wells remaining to complete
the final section of drilling. Both wells are, Ill call it half-drilled. We have to drill out into the reservoir section, run the completion. So, were down to our final two wells and that work should be wrapped up within the next few
months, and that will conclude the bulk of the phase 1 capital spend.
If we see opportunities to drill other wells, we will continue to look at those
opportunities but again, to mobilise a rig from afar has a certain amount of cost associated with it so we want to be looking at a campaign which would potentially be a second phase. The reason I paused, Nik, on your question, because you raised the
term 2P, I think its worth noting for the audience that between the time that we took FID to now, we have moved to reporting our proved reserves and our probable reserves in line with the SECs methodologies [Clarification: proved
reserves are aligned with the SECs methodologies and proved plus probable reserves reporting is aligned with SPE-PRMS.]
An outcome of that is that some of ourthe reserves we expect to capture from water injection has been reclassified as contingent. I wanted to flag that
with you because it is a technical detail, but it is one that is important and as we get water injection online and get confidence in that water injection performance, we will be migrating reserves from contingent to probable and all the way to 1P
in a stepwise manner [Clarification: migrating from contingent to proved and proved + probable reserves in a stepwise manner].
Nik Burns: (Jarden,
Analyst) Right. Thanks for that. Just to clarify, how much 2P reserves was reclassified as a result of excluding water injection impact?
Meg
ONeill: Look, Ill point you to two pieces of data. So when we took FID, we indicated we were targeting about 230 million barrels [Clarification: gross] to be recovered. Its plus or minus still in that ballpark but the 1P
booking has been updated following the merger, and that was in our 2022 year-end report. Sorry, half-year 2022 report.
Nik Burns: (Jarden, Analyst) Got it. Thanks, Meg.
Meg ONeill: Thanks, Nik.
Operator: Thank
you. Your next question comes from Rob Koh from Morgan Stanley. Please go ahead.
Rob Koh: (Morgan Stanley, Analyst) Good morning, and let me join
everyone in congratulating you on getting to first oil. I guess more of a modelling question; Im just looking at slide 5, the tax slide, and I mustnt have had my coffee this morning. Is it possible to just confirm, is the project likely
to be cash taxpaying in its first year and is there a rule of thumb for effective tax rate that we could use to calibrate?
Meg ONeill: Yes.
I said it in the remarks. Corporate income tax is 33%, and I think its on the slide as well, and then theres a branch profit tax. But if you look at how the modelling flows, so revenue comes in so $100, $75 of those dollars goes to the
cost oil pool, $25 goes to profit oil, that gets split between ourselves and the government, and then theres income tax applied to that. Thats notionally how it flows through but if you want to interrogate that in more detail, Marcela or
Sarah, from the Perth team, can give you a call.
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