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

To: johnlag who wrote (2582)	5/19/1999 7:48:00 PM
From: Bearcatbob	Respond to of 15703

John, Lord, I wish I could fast forward this story. If this hits and we have a party one - at least - round is on me. I suspect we could be up all night with the toasts. Gt some more PYR today. I am now in for what I am going to be in. However, I might try a little salt with TRIL or Trimark. bob

To: johnlag who wrote (2582)	5/19/1999 8:50:00 PM
From: grayhairs	Read Replies (1) \| Respond to of 15703

Hi John, Oh, I do understand very clearly what you have done John. But, it is important that everyone else also recognize that you have compared apples to oranges and that by doing so that you are sending a very misleading message. Without getting into a lot of issues, let's just look a little closer at TMK (who has an interest in both ELH and GSJ) and KOB (who has an interest in only ELH). Per your table, you suggest a TMK share impact of $1.01 for a 1 TCF discovery in ELH and $3.03 for a 1 TCF discovery in GSJ. One thus arrives at a share impact of $4.04 for a total combined discovery of 2 TCF. But, you fail to address the fact that there is at this point a much much much much much much much (if you get my drift) greater probability of a 2 TCF discovery in ELH than there is of a 1 TCF discovery in each of ELH and GSJ. So, the most probable impact of a combined 2 TCF discovery to TMK is more like $2.02/share versus the $4.04 which you have suggested !!!! On the other hand, for KOB you compute a share impact of $1.62 for a 1 TCF discovery in ELH and of course no incremental value for a GSJ discovery. But, having regard to probabilities, a 2 TCF combined total discovery is more likely to impact KOB by $3.24/share versus the $1.62 which your table suggests !!!!!!! JMHOBWTHDIK. <<These are all generated by Armstrong with many similar geological traits as ELH.>> Yes, I do recognize that and I do not mean to detract from your enthusiasm for the very exciting GSJ exploration prospects. But one must ask why Armstrong was so eager to "cash in" so quickly and flip these properties to the GSJBJV. And, do recall that Armstrong, the actual generators of all of these prospects (including ELH) settled for a whole lot less than your "computed value" for the prospects. They had the complete and identical information on ELH as their partners. Why did they sell for such a pittance ??? Simple. They recognized the very high exploration risk associated with their GSJ prospects and were willing to accept a "risk adjusted value" for same. That is, they wanted a bird in the hand not seven in the bush !!! When one of the GSJ prospects has produced a large quantity of gas (comparable to the ~3(??) BCF of gas produced from Bellvue #1), that prospect will merit valuation parameters comparable to ELH. Until then, the GSJBJV properties combined are approximately worth the purchase price paid by the JV !! <<Not that it gives the success rates massive credibility, but Berkley is betting heavy on the GSJB plays with their sizeable interest.>> BKP is a very fine and a well managed company. I do own the stock in my RRSP and I am very comfortable with that holding. But, BKP is not perfect. They have drilled many dry holes. It comes with their business. And, they may very well drill 3 consecutive 18,000 foot dry holes on the GSJ plays !!! If we properly understand and manage our risks and potential rewards as well as BKP does theirs, perhaps we'll prosper as investors like they have in the Canadian oil and gas industry. Have a pleasant evening. Later, grayhairs