market cap 26 mil, page-5

Guys/gals,

I have been reading the more recent announcements and presentations by Incremental Petroleum (IPM), 100% owner of the producing Selmo oil field 40kms away from Koyunlu, as suggested by Sandy. One thing I have not yet been able to establish is whether the EKA wells are targeting basically the same formations. EKA talk about Garzan and Mardin formations while IPM refers to Middle Sinan Dolomite (MSD). The Selmo field of IPM seems basically to be in "fractured limestone" and dolomite, which I understand are both basically carbonate structures. I assume that this is synonamous with the "cretaceous age carbonates" description provided by EKA on the Koyunlu field.

It is not clear on my preliminary reading, what grade the oil is at the Selmo field of IPM (assumed heavy oil of similar quality). However, the production rates at Selmo and the profitability of the field are adequate to support a market capitalisation of circa $100+m (fully diluted). The company is also paying dividends. IPM is using innovative horizontal drilling techniques is recent workovers to increase prodution from the original conventional wells. I expect that wells planned from the start as horizontal production wells (at Koyunlu) would be more effective than these Selmo field workover wells, from a productive capacity perspective.

From what I have read, and assuming the testing of the Koyunlu field is moderately successful, I expect that they could get multiple wells to produce at 100+bbls day each. At Selmo field they have got about 15 wells producing a total of around 1500bbls day. The size of the Koyunlu discovery is potentially significantly bigger than what IPM has now in terms of recoverable bbls (Selmo field quoted at 12mbbls P50). That is compensated by the fact that IPM owns 100% whereas EKA can go to 45% of the potentially much larger Koyunlu (P50 = 31mbbls).

I am absolutely certain the value of what EKA is looking at in Turkey is substantially more than their current market cap. That is without even considering the value of Sugarloaf. Plenty of upside in EKA and I am now eagerly awaiting the next report.

regards
DF