22tcf, page-2

I am not a expert but here is my current understanding of the lay of the land.

It all comes down to what type of estimate it is and the certainty involved...Prospective(Low-P10,Best-P50,High P-90), Contingent(1C, 2C, 3C) or Reserve (1P, 2P, 3P) etc. For example a P50 prospective ("or Best") estimate is a 50% probability that it could exist whereas a P10 prospective is 10% and P90 is (90%) etc ... The prospective level is basically a guess by the company. Contingent is a confirmed find, and reserves start to be "Commercial viable" at P3. The P2/P1 reserves Level are the ones that hold the real value ie they are "Bankable".


So we know that valuation of Oil/Gas companies increases with certainty. The more drilling/seismic success to confirm a oil/gas field the more certainty. Generally speaking once a company gets to P2 rating on reserves it is re-rated up strongly ... In fact there will be many smaller re-rates upwards on the journey from prospective through contingent to reserves. See these chart below to give a understanding..appols for the poor quality.

I expect the 22TCF estimate is prospective...However, with success of this well there will be a upwards rating of Resource for AJQ. Perhaps to Contingent level initially... But they will need to perform flows tests over each producing zone to determine the amount of gas involved for #2 well. At the end of this drill program there will be 4 wells drilled in the Egilabria Gas Field (Including the 1991 Egilabria #1 well drilled Camelco).

So I think the plan is Frac 1 well and measure the gas quantity you can expect from each well... Then confirm the whole area has the same shale by drilling a further 2 wells (without Frac) hopefully which also intersect the same gas. Thus the certainty and size of the resource will sky rocket. As will EV/Acre valuation and associated farmout value.

All is IMHO DYOR