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

To: SPRINGS who wrote (3886)	8/10/1999 12:26:00 AM
From: grayhairs	Respond to of 15703

Hi SPRINGS, With all due respect to the very fine people at Berkley, they haven't a clue what their net pay is except that it is somewhere in the range between 17 feet and 2,000 feet. Obviously somebody (likely a broker type) has misquoted, or has quoted out of context, a statement made by BKP personnel. You're seeing hype generated with some very simple mathematics !!! The original well was cased at\near the top of the Temblor at ~17,600 feet whereas the replacement well has been cased at\near the top of the Temblor at ~17,100 feet. The difference is 500 feet. So, if the old pay estimate was 400 feet then just adding that additional 500 feet of structure gives a "potential" pay thickness of 900 feet. That of course would be tremendous for all of us ELH shareholders as the resulting reserves per section would indeed be phenomenal. But, in reality, we only know that a very prolific gas bearing sand blew wild for a long time after being penetrated by the drill bit for some 17 feet. So, if that sand happens to be only 17 feet thick (an obviously pessimistic assumption) then the previous estimate of 400 feet would necessarily be revised downward to just 17 feet !! And, needless to say, the 900 foot current estimate would also have to be revised downward to just 17 feet (No, NOT 500+17=517 feet!!). The fact of the matter remains that they still do not have ANY measurements of net pay thickness. The operator, is just now ready to start drilling into the Temblor (No, contrary to earlier rumors, they did not resume drilling operations Saturday. They were just completing the pressure testing of the casing, BOP's, etc. today.). So, until they get drilled completely through the Temblor and have finished logging operations, all pay numbers you hear quoted will be nothing more than "speculative potential pay". Even after they have completed logging operations there will probably be some "questionable pay" that can only be resolved through completion and testing operations. Anyone oil person with a bit of experience and blessed with common sense can tell you that the ELH gas reserve is necessarily large. But, NO ONE (not even personnel within the JV) can yet tell you how large it is !! That is still impossible. Exploration estimates have pinned the potential of ELH at somewhere between 1 TCF and 15 TCF. That's probably the best type of estimate that anyone can give at this point. In the worst case, it's really big. And, in the optimistic case, it's absolutely HUGE !! JMHOBWDIK. Have a pleasant evening. Later, grayhairs