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

To: STLMD who wrote (4239)	8/24/1999 9:24:00 AM
From: Ritch D	Read Replies (1) \| Respond to of 15703

..another long period of drilling...oh well?!

To: STLMD who wrote (4239)	8/24/1999 3:15:00 PM
From: Kerm Yerman	Respond to of 15703

Stephen / Risk Comment Another remark I should of made more clear. I didn't mean the well themselves would be at higher risk in drilling - although I'm sure they will still be challenging in terms of technicalities. Higher risk applied to success in drilling results. In case of Bellevue #1-R, risk of success was at a minimum with drilling obstacles the only concern. What was at the drilling target was well known. It was a matter of just how much. Future drilling doesn't provide the same situation with the possible exception of an offsetting well to Bellevue. The chance of successful drilling in the other wells is not close to a sure thing. I am confident that if full testing could of taken place, that shares would of zoomed upon leak and release of the data. That's a perspective from an investor's viewpoint. We have one hell of a situation here and it will prove out over the longer term. From my point of view, it will take more patience to live through more bumps, jumps and grinds as we have experienced thus far. Has anyone considered how much capital would have to be raised by the small players to cover expense of the coming 3-5 wells. What kind of production would be required before their expenses are offset with cash flow. What happens if the next couple of wells are not successful. Can someone do some back of the envelope calculating based upon this scenario: Current well comes on stream at 25 mmcf/d. (select a date) Next couple of wells are not successful. How much equity will the smaller players have to raise and how much share dilution will investors have to absorb. Will financial lines of credit be restrictive. I think people should consider these possibilities. It's nice to think production comes on line after every drilling and cash flow can support expense as we go along --- but that's not reality. Kind of reminds me of a situation I got myself in some time ago. Bought shares of a company at $1.00/share in a company with little cash flow and assets. I bought in because the play had great potential. And it materialized. The problem was that the company was issuing equity continuously and my $1.00/share investment continued with only a minimum of return. As it turned out, the company couldn't support the operations and is today, on the brink of collapse. I'm as gung-ho as anyone is on this activity. I'm just saying that one should not overlook part of the downside, especially when looking at the smaller players.