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Gold/Mining/Energy : Canadian Oil & Gas Companies -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (17235)	4/20/2011 10:03:16 AM
From: architect*	1 Recommendation Read Replies (1) \| Respond to of 24980

Coastal's share price sold off due to a 70% reduction in the reserves for the Bua Ban oil field from 2009 to 2010. It wasn't a surprise that Bua Ban development drilling was not proceeding in 2010 according to the development plan that Huddleston outlined and projected in their 2009 reserves report a 240 page document, that until yesterday appeared to be a professional projection of expectations. Huddleston loses credibility on this huge miss in their projection for Bua Ban oil reserves. For Bua Ban, Huddleston projected low porosity and low flow rates, which will required lots of wells to drain the oil. For Bua Ban Huddleston used about 600 bopd / well. In 2009 many Bua Ban wells didn't flow 600 bopd, some did. Coastal Energy's reserve revisions 2009 - 2010 Songkhla 19.6 million barrels 2P 10 million barrels 2P Bua Ban 5.2 million barrels 2P 21.8 million barrels 2P 24.75 million 29.7 million includes new discoveries note: these reserve numbers are from Huddleston's 2009,2010 reserve reports from the net values. The 2010 presentations however use 32.9 million barrels 2P and I assume the difference is gross barrels. 32.9 mmbo of 2P oil at $17 / bbl underpins the current valaution and adding in the valuation for the onshore gas shows IMO that Coastal remains undervalued on a 2P NAV 10% basis. The shut-in of Songkhla oil while the oil processing facilities were upgraded resulted in higher oil production, the shut -in / reduction of revenue was not a surprise of unknown. We'll have to wait until Q1 2010 finaces are reported to see the full impact of CEN's production revenue with higher oil prices. CEN's sales price is based on, or close to Brent oil pricing. CEN's cash flow should be great in Q1 and the added cash be used to clean up CEN's balance sheet. A lot of CapEx was expended on Bua Ban in 2010. The most disappointing aspect of the Bua Ban reserves reduction, is that Coastal Energy should have provided some warning of the pending reduction in Bua Ban reserves. Thats a massive year over year downgrade at Bua Ban. Don't know how to take Huddleston serious after that. The Songkhla discoveries made up much of the difference and the recent Miocene finds are not included in any of these numbers.