Ann: Half Yearly Report and Accounts , page-24

thanks stefanis for pointing out a glaring error in my numbers - a mixup in gross production vs net to cvn. my reserves estimate could support a production rate of 6000 net to cvn (15000 gross) for only 4+ years, not the 10 i stated.

apologies all for any perception of a blatant ramp. it was purely an error on my part.

management's guidance is the best guide we have. the Dec 2009 quarterly states the jv has "set a production target in Thailand of 9,000 barrells of oil per day average gross for the 2010 calendar year (3,600 bopd net)...". production at the end of Jan 2010 was around 6,600 bopd gross (2,640 net). production will need to be well in excess of 9,000 gross (3,600 net) towards the back end of the year to achieve the target average. i think closer towards 15,000 gross (6,000 net) than the target averages is certainly possible (and probably necessary to achieve the target).

i read from this situation that it must be management's expectation that they will successfully appraise any recent exploration successes, effectively bringing more of the 3P and contingent reserves into 1P and 2P. with only 1 rig, they will need to harvest all low-hanging fruit.

my basic thinking is that the jv has oil it can find and produce at low cost. it has a high drilling success rate (though now only 1 rig for the time being). it has had a reasonable exploration effort in recent months. when it has previously focussed on development and production, it has generally delivered on building high peak rates - it just hasn't maintained these rates for any extended period.

production over the past year or so has obviously fallen, but in the context of cvn's long-term success, the jv has more oil in the ground that it can now produce and sell at higher prices than were available last year.

knowledge of the existing producing areas should also have improved.

i am hoping that management have learnt from past experiences and their production targets are reasonable (and met). I am also hoping that my expectations about the upcoming reserves upgrade prove to be overly conservative.

over-delivering will go a long way to restoring confidence. under-performing will keep cvn in the doghouse.