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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 (11977)	9/23/2000 4:23:38 PM
From: Check	Respond to of 15703

Hello jmd, <<why is the guy at Elandjennings who made the impact analysis using this 2,5 $ number?>> First of all, the Eland Jennings number used is US $1.50 or $2.25 Canadian and not "2,5 $". This may seem pretty rich to you but consider that 1)this is pretty rich gas, (i.e. 25 % richer in terms of BTUs than the norm); 2)in a pretty rich NG pricing environment, tfc-charts.w2d.com; 3) in a very energy hungry and rich premium market. (CA NG prices recently traded at a 40% premium to spot.) Now if you go to the same EJ site and read through all the reports there, you'll see a great variety of pricing assumption having been used, by various people at various times. My favourite report, in terms of being well informed and the most comprehensive, is the A.G. Edwards one from Jan. 18th of this year. (It's a good background/refresher read, for any newcomer to this play, BTW.) Anyway, if you go to page 12 of that report, you will see that the authors felt quite comfortable at that time about using US $1.20/Mcf for the valuation of "in-the-ground" reserves. As the chart referenced above quite clearly indicates, NG gas prices have more than doubled since then. Now, I must admit that the US $1.20 per Mcf originally struck me as pretty rich too, compared to our humble Canadian valuations at the time, but then, I'm not a couple of respected analysts at a large U.S. brokerage house, with time on my hands to study local conditions. I wonder what they think premium California reserves are worth now? Would they discount the US $2.70 spot price increase to be worth only $.30 in the ground like the EJ guy? <gg> Check it out