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

To: Ed Ajootian who wrote (142045)	11/21/2010 7:13:24 PM
From: HotnSpicy	2 Recommendations Read Replies (1) \| Respond to of 206191

Ed, $1.50mcf in the ground value is very high. In my experience, a rule of thumb for international plays is $1mcf for conventional reserves with good economics (ie generating IRR in excess of 20% after tax). Valuations can fall to almost nothing in countries that have low gas prices like much of the ME, South America etc. For capex intensive, low IRR plays like CBM, it has to be lower than conventional. And since FEEC only has data on a tiny fraction of their land holdings, it is hard to ascribe value across a significant portion of their acreage. Placing value on the rest requires some Blue Sky arm waving. Comparing values to US based plays isn't a reasonable method to value an international play. I'd love it if were true, as the vast majority of my portfolio is in international juniors. Sadly, reality is US plays typically carry far higher valuations than international plays - for little more than xenophobic reasons as far as I can tell. You hit the nail on the head wrt to FEEC's lack of disclosure of compression/transportation costs. They have hinted that they will be quite high. A few years ago I recall they disclosed very high pipeline tariffs - something like $1.50mcf per every 100kms or so (from memory). That quickly defeated their lifting cost advantage. I didn't pay close attention as at the time it was a moot point as they had yet to finish dewatering and start producing any gas. I'm a bit surprised with your retort about Soros and "his" investing skill. I suspect Soros has very little knowledge about FEEC other than what his 20 or 30 something MBAs have spoon fed him. His 20-30 Somethings got it dead wrong with BPZ, a play you are short. Who's to say "he's" got it right with FEEC? Regardless, my point was to cast doubt on Soros somehow being an infallible barometer of success for a junior E&P. I am not trying to pick a fight, just giving you my $0.02 worth having followed the sector and the company for a number of years. Use or flush as you wish. Best of luck on FEEC...