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Gold/Mining/Energy : KOB.TO - East Lost Hills & GSJB joint venture -- Ignore unavailable to you. Want to Upgrade?

To: Bearcatbob who wrote (2133)	4/4/1999 11:03:00 PM
From: Check	Respond to of 15703

Hi Bob, and Happy Bearskins Bunnies to you! <<Long ago and far away I read......takeover prices for "rule of thumb" thinking were US $5.00 per bbl of oil and US$.50 for gas.>> Sounds good to me. Kind of reminds me of how not such long time ago, on this thread or nearby, I used the 10:1 ratio for valuing oil & gas reserves and a lot of people yelled at me that the accepted US ratio is 6:1, or the other way around, I should say. Well, in the recent sober climate, I've been using US $4.00 per bbl of oil which divided by 6 comes to exactly $1.00/mcf Canadian. Great! (upside!!) <<How much history is there of getting to the kill point with a relief well and not being able to implement the kill.>> Great question. Remember Prima, the company that dropped out? They had a big blowout last August. Maybe that's what gave them the cold feet. Is it dead yet? <<Also, it is my understanding that there is no more flare and that all gas is going to Aera.>> That would be great. Any numbers on how it's playing out? CIO

To: Bearcatbob who wrote (2133)	4/5/1999 2:14:00 AM
From: grayhairs	Read Replies (1) \| Respond to of 15703

Hi Bob, I probably would use those same numbers for scoping a takeover offer on a mix of properties comprised of varied types of oil and gas reserves in multiple market areas IF I lacked specifics on the actual properties or markets. But, when one has specific knowledge of a reserve location, royalty burden, probable transportation and operating costs, and probable market price it makes very little sense to me to value the gas at anything except one's best guess as to what the gas is actually worth. Why use a general rule of thumb if much more reliable measures are available?? <<It will take a lot of time and investment to get large earnings per share from these guys.>> The reserves in the first well alone will be worth MUCH MORE than the entire cost of the field development !!! And, cash flow from the first development well will be significant to several (i.e. most) of the participants. If the relief well can be salvaged and deepened for production cash flow could start as early as August/99. If not, cash flow will likely be delayed until about October/99. And do remember that all production to date has been from a wellbore which penetrated just 17 feet of Temblor formation. If the well had been drilled to total depth and encountered the projected 650 feet of Temblor pay before blowing wild the well would undoubtedly be capable of producing at an even greater rate. Cash flow\earnings become significant very quickly with monsters like this. <<How much history is there of getting to the kill point with a relief well and not being able to implement the kill.>> I have no statistics on this but I'm sure it must be a very very small percentage (otherwise we'd have many wells around the world still blowing out of control). Have a great week. Later, grayhairs