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Gold/Mining/Energy : KOB.TO - East Lost Hills & GSJB joint venture -- Ignore unavailable to you. Want to Upgrade?

To: Check who wrote (3564)	7/19/1999 11:59:00 AM
From: okey	Respond to of 15703

Check....As we have discussed, you are absolutely correct about numerous percentage figures not only on different prospects but sections within a prospect. Be sure that each company knows exactly what they have, but if you ask them, I'm not sure you're going to get the long answer.

To: Check who wrote (3564)	7/19/1999 3:21:00 PM
From: grayhairs	Respond to of 15703

Hi Check, <<But how do you compute the pool share??>> Check, I have made a simplifying assumption that all Canadian participants plus PYRX plus Armstrong comprise a joint venture. I assume that this JV has a deal on the current drilling location with "others" because the sum of the JV APO interests is not 100%. I assume further that the JV agreement provides that participant interests in all JV lands is held in the same proportions. So, in essence, I have simply assumed that if ELK's interest increases in offsetting lands then the interest of all other JV participants will also increase prorata (i.e the reduction of interest in those lands would be incurred by "others" involved in the first well, not by any of the JV participants). My assumptions may very well be wrong. I recognize that (but it sure makes the number crunching easier). <gg> <<Similarly, trying to calculate potential net revenues, when dealing with different royalties over different parts of the potential reservoir, I try to come up with some kind of acceptable average,...>> Check, I make no assumption as to current or future gas prices nor revenue share per se. I assume only that each JV participant has identical APO treatment and that working interest gas in the ground at ELH is worth $x/mcf (net of all required development capital, well operating costs, gas gathering and processing costs, transportation charges, state and other royalties, etc.). <<In this sense, I don't think even the companies involved could come up with a precise and definitive % numbers.>> I believe that the participants must be bound by and subject to a typical industry joint venture agreement, and therefore respectfully choose to disagree with this statement. Have a great day. Later, grayhairs