cinguetti reserves, page-7

Hi CV

I agree. I used US$45 in the first year because that is the figure that Hardman stated in the Euroz report. I checked by email to HDR because it seemed so low but they confirmed it was what they were getting for the oil i.e. selling price with no deductions for opex etc.

US$45/bbl also fits in with the $140m contribution to cash earnings in 2006 and with the tax payments starting in 2007. I am sure they will get more than US$45/bbl, if not in the first year then in later years.

618 seems to have used a selling price of US$40/bbl and a contribution of US$9/bbl which I am sure are not correct. The Euroz report gives an "initial opex per barrel approx. $4.50" not $31/bbl. Not only do these figures not fit the $140m in 2006 but it would also mean that HDR would not be paying GoM tax until 2008 or later at that rate.

I am sure that the project economics were based on US$30/bbl and probably a sensitivity analysi using $27/bbl. From memory, these figures were in a Bloomberg report as being the WPL forecast for oil a few years ago at the time that WPL were looking at the economic feasibility of Chinguetti.

If the Chinguettiit project were feasible at US$27 or US$30/bbl then US$40/bbl giving a contribution of US$9/bbl can't be right (US$30/bbl would give a contribution of minus US$1/bbl).

I promised Dynofish some more information which I will send shortly.

regards

Complex