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Gold/Mining/Energy : Fortune Petroleum (FPX)
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To: TD who wrote (91)9/5/1997 9:44:00 PM
From: Joseph T. Worley   of 275
 
To All,

Spoke with John Collins today (9/5/97). Here are my notes:

1) The 3rd well at Bayou Sorrel is set to spud approximately 9/20/97. Target depth is 13,500 ft. Should take approximately 40-45 days to complete. The plan is to spud a 4th well at this site using the same rig they will use for the 3rd well. Based on the 40-45 day estimate for the 3rd well, they will spud the 4th one sometime in early to mid November. FPX carries a 13 % interest at this site.

2) Interpretation is nearly complete on the 3-D shoot that was done at the LaRosa site. This site is approximately 24 sq. miles. It is my understanding that this was an old Amoco site that was very prolific in it's day. Based on the results of the 3-D technology, it appears there may be some significant opportunities at this site. FPX is planning to spud as many as 4 wells at this site before the end of 1997. FPX carries a 37 « % interest on the original 1500 acres at this site.

3) They are also working to complete the interpretation of a huge 3-D shoot that was done at the Santo Bay site. This shoot covered nearly 135 sq. miles. FPX plans to spud a well at this site before the end of 1997. FPX carries a 12 « % interest at this site.

4) FPX bought a 3-D shoot that was previously done at the South Timbalier site. I got the impression they are in the early stages of interpretation on this shoot. They plan to spud a well at this site but it may not happen until early 1998.

5) Here is my attempt to estimate current cash flow:
South Timbalier is producing approx 2000 BOE p/day
Bayou Sorrel is producing approx 3500 BOE p/day
Other miscellaneous production is approx 500 BOE p/day
Total daily production 6000 BOE p/day
FPX share is approx 10 % or 600 BOE p/day (that is conservative)
600 BOE times $20.00 p/BOE = $12,000.00 p/day
$12,000.00 p/day times 30 days p/month = $360,000. p/month
$360,000.00 p/month times 12 months = $4.32M p/year

6) 14 of the original 19 projects with Zydeco have been farmed out. FPX still carries a 12 « % interest in those projects.

7) John confirmed he has recently purchased more of the stock.

I'm encouraged by a couple of thingswith FPX. First, FPX is in control of the projects at Bayou Sorrel and La Rosa which means there are fewer uncontrollable surprises that may occur that would delay the activity at those sites. Secondly, with activity at 7 different wells over the next 3 or 4 months we won't have the long quiet spells we have experienced in the past in between drilling activity. That means the stock should benefit from constant anticipation for an extended period of time.

The next few months should be interesting . I would appreciate any constructive responses to my comments and the numbers I used in this post. Thanks.

Joe Worley
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