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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 (4334)	8/29/1999 9:41:00 PM
From: Bearcatbob	Respond to of 15703

Amen - I think that is about what I tried to say. Bob

To: STLMD who wrote (4334)	8/29/1999 11:09:00 PM
From: grayhairs	Read Replies (1) \| Respond to of 15703

Hi Doc, <<I have considered Cal Canal as just a wildcat possibility in my figuring so any commercial find in that area will certainly be positive, although may be met negatively in the short term by wild eyed investors and brokers. I give it less than a 10% chance.>> Interesting. Personally I believe the odds are much, much higher (I put them around 65% in fact !!!). I think there is little risk that there will be a trap with closure. And, "signs" so far are very encouraging that hydrocarbons will be present. The biggest risk, IMHOBWDIK, is that any sands penetrated in the Temblor formation on this structure may lack the requisite permeability to yield commercial production rates. Success at CC #1 will mean certainly mean another "spike" for the participants. And, a D&A will mean a further selloff. In the later case, I won't be a seller as I expect it will be very quick and I'll probably be on the golf course anyway !! So, I'll just dig up a few more cans because with the completion and tie-in of ELH #1 pending, that could very well be the last good opportunity to add to current holdings at "undervalued pricing". <<Could you or Salt&Peppa give us any structural reasons why BKP#1 could be D & A?>> How about a sealed cross fault that runs across the structure between the two well locations. The south end is filled with gas. North of the cross fault the structure is filled with water. How about a loss of sand quality (porosity and permeability) due to high clay content and a complete lack of fracturing. How about "no upper sands" even present at this location. Maybe the large upper reservoirs extend only south of Bellevue #1, not north. How about the BKP #1 well doesn't even "hit" the structure (i.e. just like the original Bellevue #1 well which had to be plugged back and whipstocked about 800 feet to effect the discovery and result in the "blowout"). I personally ascribe only about an 80% chance of success to BKP #1. Not really all that much higher than those of CC #1. <<I don't believe the JV and BKP would invest in that deep Nabors rig if they felt they were dealing with wildcat percentages....>> That Nabors rig really has precious little to do with the exploration and development targets of the joint venture. That rig is on site only because of its capabilities, its availability, and its cost to the JV relative to all of their other rig options. I think this thread overstates the importance and significance of "THE RIG". There's nothing "small" about any of the rigs working for the JV. Do you not believe that the rigs being used at Cal Canal #1 and at Bellevue #1R are capable of doing their intended jobs ?? The fact that Bellevue #1R did not attain the target TD has NOTHING to do with the rig working on that site. It has to do only with the "design" of the drilling\casing program. Once the JV penetrated the Temblor it was the "design", and not the rig, that precluded them from taking the steps required to get to TD. If it was only a question of the rig that was on site, they could surely have temporarily suspended drilling operations and moved that big Nabors mother on and gotten after it !! Doc, the JV drilled Bellevue #1 working with only "wildcat percentages". They did so because their risked reward far exceeded their projected cost of failure. And, similarly, wildcat percentages applied to Cal Canal, Lucky Dog and Pyramid Power are sufficient to justify their immediate drilling because the "potential prize" is so HUGE !!! The cost of failure (Say, a $10MM well) is quite minor compared to the risked reward of a 4 TCF reservoir (Say 10% success rate of 4 TCF at $1.25/mcf in the ground = $500 MM !!). Canadian oil and gas companies love projects with this kind of risk\reward. Have a very pleasant evening. Later, grayhairs