KOB.TO - East Lost Hills & GSJB joint venture Message Board

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Gold/Mining/Energy : KOB.TO - East Lost Hills & GSJB joint venture

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To: grayhairs who wrote (3548)	7/19/1999 11:22:00 AM
From: Check	Read Replies (2) of 15703

Hi GH, <<It is therefore fairly common practice to adopt the interests of the existing well for the computation of "pool share".>> But how do you compute the pool share?? If I read this correctly, ELK, for example, would base it's APO interest on Bellevue #1R which is 6.34375%. But if the reservoir is 3 TCF, covering 6 sections with 1 well per section, and ELK's APO interest is 7% on the remainder, then their average APO would be 6.89%. This would mean about $1.10 per share difference in their NAV. Not insignificant and the difference gets bigger the bigger the pool gets. Similarly, trying to calculate potential net revenues, when dealing with different royalties over different parts of the potential reservoir, I try to come up with some kind of acceptable average, as opposed to using straight 25% which is the case with Chevron on Bell. # 1. These averages will change with every well drilled. It was in this context that I meant to say that: " In this sense, I don't think even the companies involved could come up with a precise and definitive % numbers." Of course they'd bloody well better know what they have where!!! I check on them, not for them.

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