valuation, page-31

The word "commercial" isnt all its cracked up to be. People are making out that a commercial well equal huge market cap.

Doesnnt GGP already have a few "commercial" wells? What is GGPs market cap? Slow and steady is they way this stock will rise. VILO is risky as the traded price indicates.

1year to pay off the expenditure is about right probably. its not outstanding but will see steady sp gains.

3months to pay off the cost would be refering to paying off only the production costs. ie if its not commercial the $2.5mil drilling/casing costs are writen off.

When determining commerciality, you can forget the initial drill costs and concentrate only on the day to day cost of getting it into production, eg hooking it up to the nearby grid(which is relatively inexpensive). going by that, it is likely to be commercial. but i care more about revenue and profit.

Regarding bank loan or cap raising. cap raising is easier. cap raising always at discount. normally have assosciates lining up to partake in a discounted issue and instant profit.

Bank finance possible? perhaps, but revenue from FP#1 would wnt to be enough to pay it off quick or the banks will say no. If there is any doubt about the oppies being in the money a bank wont lend in the hope of being paid back via exercise monies. so the current and short term sp has a huge determining factor in how future money is raised.

I dont think the reaction/ over-reaction to yest ann was to do with doubt over commerciality or flow rates. the flow rates could improve. It was more to do with the "condensate". sure the good stuff may be higher up, but to the pie in the sky people it surely brought some of there calculations back to earth.

If there is no oil at the lowest interval, do people really think that there is 10mil in the upper intervals?

IF VIL/GGP thought so, they wouldnt waiste time in this interval for $7k/day. they would cement her in and go straight for the oil. Sure they will get to the oil eventually, either using this well or in a subsequent drilling, but the lack of urgency does speak for something.

With how long FP#1 has taken, i wouldnt be confident of FP#2 being spudded before May and then even with a shallower target depth, i doubt actual production would hit the pipes before June.

And even if FP#2 was oil only(not gas), it had better not be condensate. and the flows would want to be >300bopd to payoff a 2nd drill or VILO is dead.

The current sp justifies a commercial well with the boe stated. the commerciality wont in itself cause a re rating. but a likely increase in flow rates will. but i would expect massive rise.

At these levels VIL is a buy. the chance of a non commercial well/interval is very low. the most likely outcome is an improvement in flow rates as testing progress and a coresponding sp rise.