Stak / Probe Exploration
Glad to see you back.
The evaluation of Probe's reserves was prepared using a base line of
$19.56 for oil and $1.37 for natural gas. (the release says "per GJ &
I haven't seen that before--I'm going to assume per thousand cu. ft..)
The other factors I expressed to concentrate on are more or less what
the vast majority of companies base their reports on.
I believe the prices are fair as used in the estimate. They are based
upon an estimate "average" base price anticipated over the coming
12 month period. For the period forward beyond that time, they use
an escalated price schedule. Also bear in mind that these are $US
benchmarks. Most companies began the year using $18.00 WTI bbl.
This is the number they base their capital budget upon. Companies
have announced increases in their capital budgets for the later half
of 1996 and I haven't seen any numbers beyond $19.56. However,
I believe this price is o-k. Companies just did not foresee prices at
these current levels---which will provide a higher "average" for the
year. So, based upon price history thus far this year and anticipated
firm prices through March of next year, I think most companies will use
a similar number as Prode used in their estimate. Last, one company's
estimate may differ from another based upon the quality or grade of the
oil which leads to the term of "differential". In Probe's case, their oil is
good grade (based upon the report) and therefore there isn't any
differential in price. Had it been heavy oil, there would of been. Just
reread release and noticed 16% of their production is heavy oil. They
are taking steps to reduce that number in terms of percentage.
Before I go further, I did see where life of reserves were 16 years. That
is excellent. Also, reserves realized subsequent to this report is good.
What I have done thus far is put Probe on a level field for comparison
to other companies. "All companies can lay claim that reserves have
"considerable upside using existing price scenarios," at this time, for
they all do. I said forget current prices and use their estimate reserve
numbers for, there will be changes in the coming months. According
to a couple analysts or consultants which made presentations at the
international conference held in Calgary last week, we're going to see
$8.00/bbl not to far down the road. Personally, I don't think so. But I
will say I feel current oil prices will fall somewhat.
In regards to natural gas prices, the estimate may be low. I'm sure they
will have an explanation as to why. It could be for a number of reasons.
The windfall or surplus is another subject and is based upon prices
currently being realized in terms of production versus what was expected.
On a comapny basis, you have seen this effect in their finacial reports
throughout the year.
The "exit" production forecast of 1800 bbl's/d over that at the time of
their report is encouraging.
I believe Richard Saunders is current reviewing Probe. You might also
ask him to comment on the company.
If anyone wants to add or comment on my thoughts, please do so. I
don't proclaim to be an expert and certainly don't mind being corrected.
Hope I've helped you out a little.
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