DEREK RESOURCES (DRS,V) - HUGE PROVEN OIL RESOURCE Message Board

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Gold/Mining/Energy : DEREK RESOURCES (DRS,V) - HUGE PROVEN OIL RESOURCE

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To: Davey Stuart who wrote (90)	9/20/1999 3:21:00 PM
From: Charles Kalb	Read Replies (1) of 114

Hi Davey and rdww.........well, at least there are three of us posting in the month of September so far, we can keep each other updated. To say the least, looks like it will be an uphill battle for awhile getting the word out on Derek. I talked to Derek IR last week. They are also perplexed by the relative apparent lack of response to the Natural Resource Investor (NRI) report (see a few posts back). I was told that report would reach last week 40,000 NRI subscribers and 42,000 Canada Stockwatch subscribers. The only explanation Derek could come up with is the extreme negativity directed at virtually all VSE issues, perhaps especially resource stocks. So, we have to wait a bit longer for value to be recognized. Derek IR thought the stock might trade in a range of 0.80 to 1.20 thru the end of the month and that there might be another news release about then pertaining to Bateman getting the ball rolling. One possibility is that a 3rd party might become involved in locating a cogeneration plant right on the LAK Ranch property. A cogen plant produces steam as a byproduct. The SAGD process needs steam, so such a deal might further improve the longer-term recovery economics for full-field development. As I understand it, essentially Bateman bought 5% of Derek's interest in return for a guarantee of about $5 million to finance the pilot plant for the first well-pair. IMO this means that Bateman is putting a buy-in value of at least $100 million on the entire project, and this would be a discounted buy-in price as Bateman is essentially now a JV partner of sorts with Derek. These numbers are just for general discussion purposes to attempt to reflect the value in the property. IMO, a company like Bateman would not get involved in this project if they didn't have a high confidence in its ultimate success. I also think they want to get experience in SAGD for future projects. Derek is looking at some other projects which would be suitable for SAGD (very similar geology and oil characteristics to LAK Ranch), but I was told these would likely not be brought forward until success is demonstrated at LAK. This is not to say they have any doubts of success at LAK, just that this is the prudent approach to take in the current market environment. Charles

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