A production estimate is a probability distribution, not a number — and the part of it a lender cares about is not the part usually quoted.
TransGlobe Power
Production
What P50 and P90 mean
A production estimate expresses a range of outcomes with associated probabilities. P50 is the level expected to be exceeded in half of years. P90 is the level expected to be exceeded in nine years out of ten. Quoting one without the other says little.
P50 — central expectation, exceeded in about half of years
P90 — conservative case, exceeded in about nine years out of ten
The gap between them is a measure of uncertainty, not pessimism
Debt is typically sized against the conservative case
What drives the gap
The spread between P50 and P90 comes from accumulated uncertainty: how well the resource was measured, how well short-term measurement was tied to long-term climate, and how well equipment behaviour is understood.
Measurement campaign length, quality and instrument accuracy
Long-term reference correlation and the reference record’s own quality
Inter-annual resource variability at the site
Model uncertainty in converting resource to output
Loss assumptions — soiling, shading, availability, degradation, curtailment
Where estimates go wrong
Most disappointing performance is not a single dramatic error. It is optimistic loss assumptions compounding, or a curtailment risk that was known and not modelled.
Availability assumed higher than the O&M regime can deliver
Soiling losses understated for the actual site conditions
Degradation curve taken from a datasheet rather than the warranty
Curtailment excluded because it is hard to forecast
Short measurement campaigns correlated against a weak reference
How to read someone else’s estimate
When reviewing an estimate prepared by another party, the assumptions matter more than the headline. The questions below usually reveal whether it will survive diligence.
What measurement data underpins it, and over what period?
What long-term reference was used, and how good is that record?
What loss assumptions were applied, and on what basis?
Was curtailment modelled, and against what scenario?
Who prepared it, and would a lender accept them as an independent engineer (IE)?
Why this matters commercially
Financing structures are built on the conservative case, so an optimistic P50 does not increase debt capacity — it only increases the chance of missing it. Realistic estimates are worth more than favourable ones.
Debt sizing follows the conservative case, not the headline
Offtake obligations should be tested against the same case
An estimate that fails diligence costs time at the worst moment
FAQ
Common questions
Detail
Questions this raises.
Which number should be quoted to investors?+
Both, with the assumptions. A P50 quoted alone invites the first diligence question and answers none.
How long should a measurement campaign run?+
Long enough to capture a full seasonal cycle and be credibly correlated to a long-term reference. Shorter campaigns raise uncertainty, which widens the P50–P90 gap and reduces debt capacity.
Should curtailment be modelled?+
Yes, even approximately. Excluding a known risk because it is hard to quantify does not remove it from the project, only from the model.
Who should prepare the estimate?+
Someone a lender will accept. If the estimate has to be redone by an independent engineer (IE) at financing, the earlier version bought nothing.
