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

To: jmd who wrote (11975)	9/23/2000 2:30:49 PM
From: JayBird_606	Read Replies (1) \| Respond to of 15703

jmd, the $2.50 per mcf in the ground is waaaaaaaay too high. It was only recently, as in the last 18 months companies were producing gas and selling it for less than $2.00 per mcf! When you calculate net present value of the gas reserve you need to try and accurately determine the expected time frame needed to produce the reserves, 10yrs? 15yrs? 20yrs? And then discount this future cash flow at a minimum of the risk free rate of return. $2.50 is quite obviously way to high to pay for gas in the ground, even with gas prices where they are now. A more reasonable ball park value is likely in the range of $0.75 to $1.25 per mcf with a lot of variables that could push the value either higher or lower.