Don't be intellectually lazy concerning the SFD. Don't miss an important point on the SFD. It does not matter if the partners drill 100 dry holes, the SFD still replaces seismic as a structure finding tool. The SFD surveys 150 miles an HOUR. Seismic surveys 5-25 miles a WEEK. The SFD costs $5-$12 a mile. Seismic costs on average $5,000-$15,000 a mile. The SFD has no boundary limitations. Seismic is limited to the ground, access, etc. The SFD interprets in near real time. Seismic takes weeks to months to interpret. Seismic is $3-4 BILLION industry a year. The SFD has a $220 MILLION market cap.
If I told you there was a company that with 4 planes, flying 150 miles and hour, 4 hours a day, 5 days a week, 50 weeks a year. This company would survey 600,000 miles a year. That is the EQUIVILENT of $6 BILLION worth of seismic (600,000 miles X $10,000 a mile average cost of seismic). That is 1.5 times the TOTAL WORLDWIDE SPENDING ON SEISMIC IN 1997. All in one company. And the company's cost to do this... NEAR ZERO. The partners pay for most of the cost. The company gets 8% gross override on all structures found and drilled. That is what you are looking at in Pinnacle over the next year or two. Get it?
That is why I can laugh will all of you saying a black box bites the dust. It is a zero, etc., etc. You have not thought this out at all. They can drill the next 100 prospects and all come up dry and this stock will be huge. You will not find anyone who will say this does not find structure as good as seismic. There were 2 possibilities I always looked for: 1) This finds structure only and therefore obsoletes seismic. Worth a lot. 2) Finds structure and hydrocarbons. Worth a lot more!
So... I don't care if it is possibility one or two. The stock is huge from here.
Anyone read the Calgary Herald on Tuesday???
Here is Peter Cawardine, formerly VP Land, #2 guy at Encal. He said, "It's a technology that has merit for potential applications as a wide-area reconnaissance tool. We're still working with them after two years, if I can leave it at that." Hmmmmm.....
Here is the manager of geophysicist at Renaissance, Garry Bilous in the same article: "It seems to show something, but exactly what it is, we're not sure yet... Our results are interesting... we've found some structures, so we'll keep working with it."
Finally, Dan Topolinsky, formerly #3 guy at Renaissance, now president of Pinnacle, said on Tuesday in the article, "It is too easy to be skeptical."
I repeat, I would have said "intellectually lazy."
-Dilution
** Posted here and in the Canadian oil and gas thread ** |
