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Gold/Mining/Energy : Tusk Energy (TKE) -- Ignore unavailable to you. Want to Upgrade?

To: kingfisher who wrote (522)	6/2/1998 12:29:00 AM
From: grayhairs	Read Replies (3) \| Respond to of 1207

Hi Richard, When I indicated a xxxx Bcf potential reserve in the Swan Hills, I meant an "unknown" or "undefined" potential. I did not intend that the xxxx be interpreted as a 4 digit reserve value!! Very sorry that I have apparently misled you, Richard. Look at it this way. Before the well was drilled the geologists would have "mapped" their interpretation of the Swan Hills target reservoir and the entire mapped reserve at that time would have been a "potential" reserve. After the first well, and on the basis of the well data alone [Eg. porosity logs, resistivity logs, samples (ie. cuttings), mud log, drilling times, etc.] a reservoir engineer could (but may not) assign a proven reserve to the Swan Hills zone. This would involve a volumetric calculation of recoverable gas and normally would assume a 640 acre drainage area for the well. In order to assign proven reserves the engineer MUST have a very high degree of confidence that the reserve is recoverable. He may draw upon his "experience" in making that assessment and he does NOT require a flow test on this specific well to assign proven reserves. In my example, I'm saying that an engineer "might" assign 30 to 50 Bcf of proven reserves. Now, the engineer may feel that there is also a very good probability that the well will be capable of draining more than 1 section, or that additional wells can be successfully drilled to drain additional contiguous lands mapped to be gas bearing. If such is the case, the engineer may (but need not) assign additional probable reserves to the Swan Hills. In my example, I'm saying that an engineer "might" assign another 100-150 Bcf of probable reserves. At this point, the mapped reserves which are neither proven nor probable would remain as "potential" reserves. In my example, I'm saying this amount is xxxx Bcf. (i.e. an unknown because I don't know the details of the mapping). Maybe 1 Tcf, or more. Maybe less. The time required to evaluate a 1 Tcf Swan Hills potential is dependent upon so many different factors (commodity prices, corporate capital budgets, offset land "dealings", well productivities, well drainage areas, number of rigs under contract, etc.) that I can't give you any reliable "help". But, IMHO, you need AT LEAST 4 more wells, each with very extensive production testing before you can safely think in terms of reserves of that magnitude here. The Swan Hills play is a much more complex play than is a Leduc reef play. (A 1 Tcf reserve in a Leduc reef might on the other hand be safely delineated with only 2 wells and some good seismic). But, do keep in mind that the first Strachan well may still generate cash flow as early as Nov - Dec, this year. There is no need to defer first production until the entire "pool" is defined. I've not projected TKE share prices as a function of time. Quite an interesting exercise given the many potential scenarios possible with both Strachan and Meekwap!!! I will however say that it will be quite a while yet before I'll risk being caught without a sizeable TKE holding. Tusk could probably already debt finance some $ based on first Strachan well results (Remember Holton quote from SEPAC meeting!) But, how much do they need and over what time period?? What do they have on hand now?? How much can they finance?? And, is that enough?? I can not answer these questions for you. I do very much doubt that any bank would finance based upon "probable" Strachan reserves. I actually do expect that TKE will do a near term financing to raise say $1.5 - $2.0 million. (Remember their ambitious Meekwap program requires $, too!) Later, grayhairs P.S.-- Even though equipment is now on site, they won't even get the Swan Hills perforated till Fri-Sat this week. So, any news that "leaks" before then is not news, it's pure and complete B.S.!!