coastal caribbean (cco@) Message Board

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Gold/Mining/Energy : coastal caribbean (cco@)

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To: jbIII who wrote (704)	2/10/1999 10:00:00 PM
From: Henry Volquardsen	Read Replies (2) of 4686

Hi John, There is no question that the fate of CCO rests on the ultimate resolution of the litigation. So yes it is a gamble but I believe an informed gamble based on the strength of their case. If they win there are two possible courses of action. If they decide to drill they do not have the resources to drill on their own. But this is not a big obstacle. All the majors are interested in drilling in the Gulf. It would be easy to arrange a partnership with a major to finance the drilling. The other choice is, as you mention, to sell out to a major. Leases are a valuable asset and a sale would be almost as good as producing. However I believe neither of those outcomes is likely. Offshore drilling is a hot button issue in Florida. Every major politician has come out in opposition. I do not believe any politician will allow offshore drilling. I think that is short sighted but it is the nature of public opinion. What I believe will happen is that it will become clear at some point that CCO is likely to win their case. The politicians can't allow drilling, public opinion is against them. If they allow the case to go to the end and CCO wins and they then sieze the leases they would face a court supervised settlement that could be very expensive. So their best alternative would be a negotiated settlement. Don't get me wrong I would prefer that we get permission to drill. Regardless of wether we actually drill or not there is no question that the leases would have tremendous resale value. But I believe we are headed towards a negotiated settlement, the question is timing. I have looked into DOM. I decided to hold off. I spoke to a friend in the oil business who was looking into DOM as well. He had done some research and thought there was a risk that the resource estimate would be lower this time. So I decided discretion was the better part of valor. Btw I have been looking into TMR and so far it looks interesting. Henry

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