It didn't work before, I don't suspect it will work now until some of the more outrageous speculation is proved incorrect. It's irratating to post something that imparts a certain level of knowledge, then being accused of having an agenda or some sort of short trader. I'll wait for the most important early news release. That will be the selling part of the percentage of this lease in a partnering with a major or quality independent that has cash resources. It won't be for $600 mil either, as there is no data that show the true amount of recoverable oil or equivalent.
Reason I say that, look at Oxy's (Occidental) recent annoucement. They just purchase from the US gov. Elk Hills, a proven producing field that contains 1 bil barrels of oil equivalent (600 + mill barrels of 31 Deg oil and the rest in Nat gas) for $3.5 billion. That is in the US with infrastructuer in place, proven recoverable assets for $3.50 per barrel. The key is they know for a fact this oil exist in the ground in a known quanity. They also study this for 18 month's before purchasing it.
Now think about the differences here for just a moment. US is a cheap place to extract and produce energy, with massive refining capabilities and pipeline infrastucture to move it to the appropriate refinery. Labor cost are cheaper and materials readily available and manufacutred locally. K-Stan is a country that is coming out of 70 years rule by communist, landlock and lacking available infrastucture. Labor cost for expertise has to be imported and at a up lift to the same avaible pay scale to a US worker (20-30% higher), material has to be imported and the cost of living is far higher right now to carry on operations.
Having said all that, the biggest difference; what is the production rate of one well on this lease? Before a price like $600 mil will be realized, proof of commericial production will have to be offered. That can only be done by drilling a well which isn't schedule, as of now, until end of 1st Q 98. They are just starting siesmic operations, which will be done first and process to make a better guess at the highest probable location to drill. |
