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

To: Ed Pakstas who wrote (904)	9/18/1998 2:53:00 PM
From: grayhairs	Read Replies (3) \| Respond to of 1207

Get a nibble yet, Ed ?? I envy you !! Assuming that you will allow some estimates, as follows, I will illustrate one approach to answering your question: Proven Deep Reserves = 46 BCF x 1 section = 46 BCF. Proven Shallow Reserves = 14 BCF x 1 section = 14 BCF. Probable additional Deep Reserve = 46 BCF x 3 sections = 138 BCF. Probable additional Shallow Reserve = 14 BCF x 3 sections = 42 BCF. Potential additional Reserves = ??????? Value of Gas (in the ground) = $0.75/mcf Probable gas is risked at 50%. Payout Capital Account = $6 MM. TKE Interest BPO = 10, APO = 30 FST Interest BPO = 20, APO = 25 DAL Interest BPO = 15, APO = 7.5 LEY Interest BPO = 10, APO = 5 Then, the Gross value of the Proven & Probable Reserve is $0.75 x 60 plus $0.75 x 0.5 x 180 or $45MM + $67MM = $112MM. If we ignore the value of the royalty interests during the payout period, then the value to the parties is: TKE=.10 x $6MM + .30x($112MM - $6MM) = $32.4MM/11.8MM = $2.75/share FST=.20 x $6MM + .25x($112MM - $6MM) = $27.7MM/26.4MM = $1.05/share DAL=.15 x $6MM + .075x($112MM - $6MM)= $8.85MM/22.6MM = $0.39/share LEY=.10 x $6MM + .05x($112MM - $6MM) = $5.9MM/8.6MM = $0.69/share IMPORTANT FOOTNOTES: -- By virtue of its ~50%(??) ownership of LEY, the Strachan play is worth an additional 0.5 x $5.9 MM or ~$3.0MM to TKE (i.e. an additional $0.25/share). -- The calculations herein ignore the value of all other assets and liabilities. They simply present my estimate of the current value of the Strachan discovery to the parties. As an example, if TKE's Meekwap and other assets are worth $1.25/share, then with this Strachan discovery the shares should be worth $1.25 + $2.75 + $0.25 = $4.25/share. -- Some may argue that the "interests" vary in other lands and they do. But, the interests in the reserves to be produced by the 3-22 (2-22) well are as set out above. Until lands of other interests are developed, the above interests must be used to "carve up" the values. Hope that the above is of some value to you. Another approach to evaluating the worth involves generating production forecasts and then estimating the present value of the net revenue stream. That requires many additional assumptions and takes a lot of "grinding". I do not believe the end result would be any more reliable at this stage of development. Later, grayhairs P.S. -- Should you wish to use other estimates of reserves or gas value etc., crank away !!