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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: HotnSpicy who wrote (142038)	11/21/2010 9:39:22 AM
From: Ed Ajootian	Read Replies (1) \| Respond to of 206187

Hot, Far East Energy (FEEC) -- ahh, now we're talkin', finally I get some spirited debate on this. Thanks so much for your "kindness" in only calling my $1.50/mcf call "dubious"! The suspense regarding this issue will essentially be over in about 4 months at the latest (i.e. when FEEC's '10 10K is due), since that is when they will announce year-end '10 proved reserves including the required Standardized Measure of Oil & Gas ("SMOG") disclosures. But rather than just sit back and wait to see what NSAI comes up with, its fun to try to guess what the number will be. My figure, as was evident from my post, was just a very rough guesstimate. But your criticism of my figure made me question its veracity. After doing so I concur that its probably too high, but not by all that much, and in any event, not by a factor of 3 as you imply. Exhibit A in my defense is the SMOG section of the '09 GeoMet (GMET) 10K, see a paste of this at investorvillage.com . GeoMet has mostly CBM gas, all of which is in the US. From this info we can derive that fact that at year-end '09 GeoMet's pre-tax PV10 value of its CBM gas was about 20% of the spot price on that date. I realize that GeoMet is far from a perfect comparable to FEEC for several reasons, but I believe those reasons sorta balance each other out. GeoMet's reserves are much more developed than FEEC's, about 80%, so the added amount of future development costs that would be in FEEC's SMOG calc vs. what was in GMET's calc will surely drag down the PV10 value for FEEC. But in the other direction, FEEC should have much lower future production costs than GMET's $2.03/mcf. Recall that FEEC believes (slide 13) that it will incur lifting costs of just $.73/mcf for its gas, and although I haven't seen any estimate of what they think their other production costs will be (i.e. compression, transportation, etc.) its hard to conceive that these would approach $1.30/mcf on a normalized (i.e. post ramp-up) basis. Regarding your comment about Soros, the fact that you choosing to focus on a single investment he has made in forming an opinion regarding his investing skill raises some serious issues with me regarding your judgement. My thinking is, if your judgement is this poor with respect to this issue, query, WADR, how valuable your judgement might be with respect to others?