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

To: Hopsalong who wrote (10107)	4/7/2000 3:12:00 AM
From: grayhairs	Read Replies (1) \| Respond to of 15703

Hi Hops. The prices that Salty and I have been discussing are delivered gas sales prices for the month of May, 2000 only. For reserve evaluations, one must arrive at some sort of similar pricing estimate for the entire reserve life. From these prices you must then deduct pipeline transportation costs to market, processing costs, gathering costs, well operating costs, lessor and other royalty deductions. All costs must be adjusted for inflation and then net sales prices need to be volume weighted and PV'd. Some would argue that additional deductions should also be made for corporate G&A, interest expense, etc. In any event, when all such calculations are completed you can come up with an approximate "in the ground NAV for developed gas reserves". EJ's work pinned this value at roughly $1.00CAN/mcf based upon (I believe) various gas property aquisitions of record at the time they first prepared their tabulations. IMHO, their estimate is only slightly conservative today, perhaps by $0.25-$0.30 CAN/mcf. BWDIK. Have a good one. Later, grayhairs