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: UPTICK who wrote (3781)	7/31/1999 6:41:00 PM
From: grayhairs	Read Replies (1) of 15703

Hello UPTICK, Yes, most people have "numbers" for the participant interests. But, when you add them up do you get a total of 100% ?? If not, .... WRT the BPO\APO consideration, some participants have paid a "promotion" in each prospect. The prospect originators pay a reduced share of the costs of the first prospect well while all other participants pay a higher share of those costs. In other words, the prospect originators get a "carried ride" on the first well of each prospect. The parties that pay the "promotion" do get a chance to recoup all of their risk capital by maintaining higher BPO interests in the well. When payout of their risk capital is achieved their interests decline slightly to the APO interests and the interests of the prospect originators then rise by a corresponding amount. This is common industry practice. For simplistic evaluations as presented on the EJ site, only APO interests should be used to determine prospect value to each participant. Unfortunately, IMHOO, the EJ site erroneously "exagerates" the interests of some of the ELH players by wrongly including some payout considerations related to the GSJBJV. Notwithstanding the errors in the EJ tabulation for ELH, their "leverage conclusions" are not too far off. IMHOO, they understate the KOB and RLP leverage and overstate most others. On a relative basis, I believe only KOB should be higher, BWDIK. Good luck. Later, grayhairs

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