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Gold/Mining/Energy : ROYL - Royale Energy
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To: Wayne Olive who wrote (89)1/30/1998 11:47:00 PM
From: Mark Adams  Read Replies (1) of 141
 
Thanks for your info & comments.

I know forcasting production is difficult, especially payback. The tax angle is easy in my case- forecasting the amount of gas produced and future prices is much more difficult.

What I was looking to do was come up with a number, based on a discounted rate of return (the net present value of a future stream of income) and my conservative estimate on future gas prices (~$2 vs ~3-$4 that the drillers were promoting last fall) which would justify moving funds into the working interest program with a reputable company.

I figured I'd watch some drilling programs from start to completion which would give me some numbers to work with and some background on the issues.

I like the tax angle, but when you come down to it, what one company said in reality is "give us your money and we'll tell you in 6-8 weeks" (my words->) if there's anything left of it. Thats where you get the 100% tax credit <g>.

I'm still bullish on Gas long term, though I felt in October that gas prices were headed for a fall. I'm ready to start moving back in now that energy prices in general have dropped. And I think your suggestion re equity in the Company is the best idea for someone in my situation, without the background to evaulate the opportunity.

The interest Robo has expressed in having myself as a participant makes me wonder how much of the investments made go into drilling costs and how much ends up as a sales commission.

Talking with various players thus far has been educational, but I appreciate the reality check from someone such as yourself without a vested interest.
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