crucial fact, page-90

I am quite confused by all this discussion about the reserves reports.

A couple of points before my response:
1.) It is entirely appropriate to question a reserves report given the disclaimers attached that such interpretations are subjective, a result of the experience of the examiner and likely to be revised in the advent of new information
2.) Critiquing such reports does not explicitly or implicitly constitute accusing management of lying

I have conducted my own independent decline analysis, looked at the creaming curve which is well established over the last 40years of production and posted the full production history for the leases in which MAD have an interest - results of which are available in my previous posts, which I can repost if anyone requests, I believe nihilism was going to send one to the company for their view but we never heard back, no idea why. The conclusion of my analysis is I find it hard to see Proved reserves of much more than 5MMbbl net to MAD.

The reason why the reserves are questioned:
1.) As I have highlighted before, and pointed out again by Everest2011: their R/P ratio (a leading indicator of reserves changes) is about 10 times higher than any other company and greater than Saudi Arabia. Note, you can only meaningfully calculate this ratio for a company (or field) which has been producing for about 1 year. Can the bulls highlight another listed company that has been producing for a year with a comparable R/P ratio or even half thereof? Any exchange will do don't limit yourselves to the ASX.
2.) The reserves consultant is unknown and not a licensed professional engineer in Texas according to the public records. Not being a licensed engineer doesn't mean he can't evaluate reserves but given we can't point to a track record of him having done this kind of work before it does raise extra questions.
3.) This is a significant piece of information, the ramifications of which need to be considered carefully: http://www.sec.gov/litigation/litreleases/lr16042.txt
4.) There have been a large number of dry development wells. True some of those appear to be outside the area to where proved reserves were assigned or never reached the target depth due to mechanical issues, however it is far from clear that that was the case for the majority of the wells. Whether these were within or outside the proved area would be mere speculation by me or anyone else commenting.

Clearly their is disquiet in the market about their reserves. Even the various analysts in their valuations make reference to the fact the reserves assessor is "unknown to Australian investors" and their reserves seemed to increase incredibly quickly compared to the production. They go further and discount the proved reserves in their valuations - not normal practice. I asked management some time ago if they intend to use a better known reserves consultant for the evaluation, the response was broadly, 'lots of people have asked us that but no'. Given it is clearly an issue raised by several parties why not put the issue to bed by using a recognised party such as Netherland Sewell, Ryder Scott or LaRoche?

I for one will eat a large slab of humble pie and go long MAD if either of those consultants evaluate the reserves and find they are even 50% of what MAD are touting.