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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 (2852)	5/29/1999 10:51:00 AM
From: Steelguy	Read Replies (1) \| Respond to of 15703

Bob and all, I recall reading a couple of days ago that there are " new " areas looking to be drilled by " some " of the partners in ELH. If I had read this right....my question is: does anyone know who those " other " partners are and is KOB one of them. I have understood that KOB is pretty much limited to the ELH play but I am not certain as to what their interest entails as far as other or future " wells " on or close to the site. Please enlighten me. sg

To: Bearcatbob who wrote (2852)	5/29/1999 11:54:00 AM
From: grayhairs	Respond to of 15703

Hi Bob, Yes, Chevron retained a 25% royalty interest in the play instead of selling the leases outright. With respect to your questions: 1) The "royalty" is handled in a pseudo fashion in the work of EJ. That is, by discounting the value of the gas in the ground to only $0.50US/mcf they are saying that the residual of the current firm California gas contract price (i.e. currently ~$3.00US/mcf for November 1, 1999 delivery) will pay all well operating costs, all gathering and processing costs, pipeline costs to get the gas to market, royalties and all future development capital). Trust me BOb, they are being very, very conservative. (FYI, I use $1.00US/mcf in my own personal work on this prospect and actually feel that to be slightly conservative, JMHOBWDIK.) 2) All Federal, state and freehold leases have royalty burdens (but sometimes you can "purchase" freehold leases outright and then they would not carry a royalty burden). Not knowing the details of "each" of the Armstrong leases I can not answer this question except with a "Probably, and likely in the range of 15% to 25%". Have a nice weekend. Later, grayhairs