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

To: RIK who wrote (4290)	8/25/1999 2:30:00 PM
From: Salt'n'Peppa	Read Replies (2) \| Respond to of 15703

This research report is from oil analyst Kim Page at RBC Dominion Securities dated August 25, 1999 and has all the usual disclaimers. EAST LOST HILLS UPDATE Results from the initial suite of well logs run from bottom hole of the East Lost Hills discovery have been interpreted favorably by various partners and independent well log specialists. As reported yesterday, the election to move directly to completing the well was made following these results. Production and pressure testing will follow pending receipt of required flare/flow permit approvals, and will help to quantify the reserve potential of what appears to be a significant new discovery. THE LOGS: The logging process was atypical in that the operator was restricted to running "cased hole" logs only. Initially, a full suite of open-hole wireline tools were lowered to record the physical parameters of the prospective Temblor Sandstone formation, however, extensive filter cake build within the zone was so thick that the tools were not able to effectively pass through to the bottom of the well. As a result, the logs were run within the inside of the drill pipe itself, thereby restricting the tools to produce gamma ray and neutron logs only. Interpretation of these logs combined with previously recorded drilling logs have provided sufficient information to suggest the well will likely be capable of high flow rates, thereby solidifying the decision to move directly to completion operations. Confirmation of an extensive filter cake build is indicative of extremely good permeability within the reservoir, which was not entirely unexpected given the high volume flow rates experienced with the blow-out well. However, without a full suite of logs, other important reservoir parameters such as porosity and water saturation were not confirmed. COMPLETION: While specific completion details have not been finalized, the well will be cased as a potential gas well. Further completion operations may be initiated by the drilling rig, or deferred until a service rig is brought on site, potentially corresponding to completion operations at Cal Canal. Production testing will be deferred for at least three weeks pending receipt of a flare permit under normal State of California approval processes. CONCLUSION Each step in the process continues to remain very positive. However, it appears as though properly engineered reserve estimates are still at least four to six weeks away. In the interim, a two mile step-out along the strike of the East Lost Hills structure will spud this week, and the Cal Canal prospect which is currently drilling at the 13,000 foot level, should reach intermediate casing point at the 15,000 foot level within the next week or two. The Greater San Joaquin Basin JV partners maintain a high degree of conviction that they have potentially discovered a major productive horizon, at deeper levels than conventionally explored in this highly prolific basin. This will not be the first time for some of them. Their conviction is emphasized by their willingness, in certain cases, to effectively double or triple their interests on a go forward basis in at least three additional high impact plays (Cal Canal, Pyramid Hills, Lucky Dog). We support their level enthusiasm based on our confidence in the talents of various companies involved, and continue to recommend exposure to the play. The following tables highlight our recommendations on three of the companies involved in the play: Charts and production forecasts on three stocks followed by RBC Dominion analyst Berkley rated: Industry 2 (Outperform) Stock 2 (Outperform) 12 month target $20.00 Paramount Stock 2 (Outperform) 12 month target $30.00 Elk Point Stock 2 (Outperform) 12 month target $10.00 (Thanks to Jaybird on Stockhouse for posting this)