wpl and hdr !!!

Howdy

I wrote the following a few weeks ago but hesitated on posting because I wasn't sure. Events yesterday have finally pushed me to release it. Have added a few bits with reference to yesterdays decision.

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In the last few days we have seen Shell come out with a massive profit, but yet again they have downgraded their reserves picture and admitted to actually overstating the reserves picture. Twice in 2 years.

Now WPL I think has been established is populated in senior management almost exclusively by Shell employee's or ex shell employee's. Now one might be concerned with this regarding the reserves picture of WPL, however since WPL was a takeover target of Shell it certainly seems to me that there has been a complete dumbing down of WPL'S real reserves picture and in fact the exact opposite of what Shell was doing with its own reserves. Gee wonder why ?

If ASIC was awake it might question how a company can change its reserves estimate by 7.5 trillion cubic feet of gas without a release to the ASX. This change represents the total size of the Timor Sea area yet did not warrant a release by WPL'S to the ASX. WPL with 50% of the Browse basin deposit equates to 3.75 trillion cubic foot upgrade to its reserves or putting that into equivalent oil it's 625 million barrels of oil discovered. Personally I thought it might be front page news, but nope our watchdogs the ASX and ASIC are asleep yet again. Even at a measly NPV return of AUD $20- per barrel equivalent, this upgraded reserve represents around 10% of the total market capitalization of WPL. See note attached from WPL'S web site !

As for other reserves it certainly appears to me WPL has reserves in the order of 6 billion barrels of oil or more, most of it being gas. Not that you can see it from their own releases.

Now with the virtual green light given to WMR takeover by a foreign company Shell must be rubbing its hands with glee. I am waiting for the WPL'S reserves statement with anticipation since they were proposing development of Browse basin, will they move it from under the carpet in scope for recovery to reserves? Will they finally come clean that its a lot larger than the 20.5 trillion they had been admitting ? I suspect this move by the treasurer will have the opposite effect and the deposit will be kicked back under the carpet ...It was kicked there in 2001 when Shell failed to get the takeover through.

As for the reporting out of Mauritania well does this spell another green light for more rubbish from WPL. Last year they removed everything from their reserves bar Chinguetti. Nothing for Tiof,Banda, Tevet. Well done !

I really cant wait for WPL to release its annual reserves statement.

It's time for a message to be sent to Shell. bugger off ......

Suggest you come clean Mr. WPL .... If we see no movement of Browse from scope for recovery upwards and no change in the recoverable reserves, as you have indicted on your web site in recent months ..... It will only confirm my own suspicions. You can't be talking development yet have it sitting where you kicked it after failing in 2001.

Its not just the Australian assets being hurt by this behavior, HDR and ROC along with WPL owns around 75% of Mauritania.

This game has been played long enough.

As for the ASX supposedly telling oil companies to be sure and double sure about their reserves,
In the wake of the Shell problems of 2004, if WPL was told ..... HA HA HA.






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Have slowly been releasing stuff about WPL.
Read in between the lines.

Shell has tried twice to takeover WPL.

Shell admitted 12 months ago to overstating reserves.

Shell yet again lowered the reserves picture last week.

Shell dominates WPL senior management with 6 out of 7 senior oil managers seconded from shell.

Board basically controlled by Shell with 3 employees and others I might question out of the 10 in total.

WPL, since BHP departed in 1995 has taken an extreme conservative approach in reporting that almost borders on misinformation.

WPL management since 1995 has been replaced by more and more Shell personnel.

WPL consistently uses very low estimates for both oil price and reserves. These I believe border on one extreme if not outside it.

Oil price was $38.62 for 2008 oil they use a number discounting the price by a whopping 72% in their presentations late 2004. They used USD $22-.

Reserves are so conservative, well , Chiguetti estimated by HDR at the time after all the drills was 125 mio bbl recoverable .... what was WPL saying ... less than half that. Eventually of course they have confirmed HDR's call. Both had the same information.

When the takeover failed in 2001, WPL managed to move its single largest deposit from reserves to a downgraded scope for recovery.

When anyone questioned this deposit, Browse basin, Brecknock and Brecnock south post 2001 the comments seemed to be too hard .. too far ect ect.

No drilling has gone on since 2001 for Brecnock. I believed it was much larger than the 20.5 trillion they had admitted and was the REAL reason Shell tried taking it over in 2000.

Now it is planned WPL is to develop this deposit maybe even as early as 2008 following Sunrise/Timor problems.

On WPL'S web site the deposit is listed as 28 trillion up from 20.5 trillion reported for many years. No announcement by Woodside, just add 7.5 trillion cubic feet or 1.25 billion barrels of oil equiv. Nothing to the ASX. My own belief is that Browse is 33 trillion plus maybe even 40 trill.
Woodsides share is 50%.

My point being, if WPL senior management is basically from Shell, Shell admitted in 2004 to grossly overstating reserves, and again now in 2005, how come WPL seems to have taken the exact opposite approach, it seems to grossly understate reserves.

You can work out what I am implying !!
Is just a correct picture being portrayed by WPL as opposed to what Shell has admitted to doing ?
Make up your own mind.

Regarding WPL and HDR in Mauritania.
Biggest porky told recently. ... There are a few.
Last year WPL removed Banda and everything except for Chinguetti from its reserves statement. So they are counted as zero for the rest of Mauritania.
Gee talk about being conservative !!

Second biggest porky, Gas reserves would need to be over 6 trillion cubic feet to be commercially viable ...I am led to believe this is what was said by WPL at the AGM ?? . .. looking at WPL projects I count 5 at under 1 trillion cubic feet they are developing. Putting this into perspective the Timor Gas deposit in total was 7.5 trillion cubic feet and we all know how valuable this is when it is developed. Bit of a contrast there on that one WPL. Please explain ? This was fed to HDR and ROC as well .... British Gas ... Well they couldn't swallow this one ... hahhaha

On going porkies are the tone of the Tiof announcements. WPL didn't even announce tiof 6 when they could had hit 124 meters gross column of oil. If that isn't sensitive ... well I don't know what is. WPL after the Govt. comes in will have roughly 50% of Tiof. Suppose Tiof 6 and WPL'S share only added about 50 mill barrels to the size of the deposit ...

So if they got the senior management from Shell a company who has admitted to overstating things for a very long time, do you see any extreme contrast with the way WPL conducts itself.

Last thing anyone wants is a resource company overstating things, the target you want is for them to come up with somewhere around 90-95% of what they think they will be able to recover and report that as opposed to the full 100%. It is somewhat a black art estimating reserves but when a company is estimating 50% or even 70% ......
so if Brecnock now is called at 28 trillion by Woodside, and now its been developed it has suddenly been upgraded by 33%, and moved from a much lower "scope for recovery" in its annual reserves statement to the "possible" category all without a single hole being drilled. Its just moving it back to where it was in 2000 prior to their failed takeover.

Can't wait to see what other porkies come out with the annual reserves statement this year coming up in the next week.

Will Tevet still be zero ? Probably
Will Tiof still be zero ? Probably
Will WPL have moved its Browse Gas deposit from scope for recovery to "possible reserves" ? Probably not.

In possibly the biggest joke I have heard yet was that after the Shell fiasco of overstating reserves, someone mentioned to me the ASX told all oil companies they had to make doubly sure of the resources when they released a statement. Hahahahahaha what a joke ......

Here is the background

2000 reserves statement

* Scott Reef and Brecknock gas and condensate accumulations - previous 100% estimates of 18.4 Tcf of Dry Gas and 228 MMbbl of condensate at the Probable level have been increased to 20.49 Tcf and 311 MMbbl respectively following the Brecknock South discovery. Woodside's share is 9.65 Tcf and 142 Mmbbl

KICKED UNDER THE CARPET
2001 reserves statement
Under scope for recovery ... it was downgraded !!!!
* Scott Reef and Brecknock gas and condensate accumulations - previous 100% estimates of 20.49 Tcf of Dry Gas and 311 MMbbl of condensate remain unchanged. Woodside's share is 9.65 Tcf and 142 MMbbl.

2002 reserves statement
Under scope for recovery
* Scott Reef and Brecknock gas and Condensate accumulations - previous estimates of 20.49 Tcf of Dry Gas and 311.0 MMbbl of Condensate remain unchanged. Woodside's share is 9.65 Tcf Dry Gas and 142.0 MMbbl Condensate

2003 reserves statement
The same


Now one WPL'S web site ...... The following

In addition to our North West Shelf reserves, Woodside has a world-class Australian gas resource base available for development. These resources - in the Browse Basin off Western Australia's northern coast, and in the Timor Sea between Australia and Timor Leste - have scope for recovery of 28 trillion cubic feet of gas, more than ample to meet customer demand for a safe, secure and reliable energy source

Http://www.woodside.com.au/NR/exeres/AA42447C-2ACF-48DD-9F6B-6D9A6F1B7DF7,frameless.htm



I personally cannot wait for the WPL annual reserves statement. Wonder if their is some serious re writing going on over at WPL ? When will it come out Brecnock and Scott are in fact a lot larger than even the 28 trill you now seem to be sprouting ?

As for the Treasurers decision .... WPL'S was just starting to come clean, seemed to have given up hope of getting WPL'S assets, does this mean we go back to the dark old days ... Anytime one even mentions Browse basin or Brecknock lets hose it down with cold water. Let alone Mauritania.

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Dear Mr. WPL/Shell

I note with amusement your actions after I speculated regarding why the Mauritanian releases seemed to be dumbed down from a few months ago, it just made me dig harder. And look what I found under the stone. Your releases post my little ditty about Mauritania took on even a more defiant up yours attitude. Personally I didn't think that was possible, I was wrong !

When some questioned the ASX recently regarding HDR about the pathetic tiof 6 announcement well you chose not even to release yourself the results of the wire log when available. Maybe you regard yourself bigger than the ASX, and certainly that's probably true, an amusing stance you are taking here.

The treasurer has just given you a good further length of rope and I hope you use it. He yet again stated the reason for not passing the proposed takeover by Shell in 2001 was because he wanted the NWS project to be held in Australian hands and to proceed not as some back burner project of a multinational oil company but as a priority.

Can't wait to see what you do with Browse, is it back under the carpet or not ? Please use the rope, I think you have used enough but WPL is about to enter the front light of the political debate regarding the selling of resource companies and national interest's versus multinational companies own interests. I wonder what he would say if he knew Browse was a deposit somewhere approaching the size of the whole NWS. Would that make his decision to let WMR takeover go ahead look foolish or stupid ? Its hard to both at once but Peter has done well !

I know I am only a pesky shareholder and investor and you could crush me with a single blow, please don't, but on behalf of all WPL, ROC, and HDR shareholders I am asking nicely that you adopt a more open and frank dialogue with announcement to the ASX regarding reserves and discoveries.

From you reserves statement to be released next week I shall take this as your reply and act accordingly.

I believe the facts contained are correct and where possible backed up by the relevant releases or web site posts. You chose before to adopt an even more arrogant stance with releases regarding Mauritania post my pet theory, I found that annoying. Nothing nicer than being underestimated, welcome to a political firestorm ... Please kick Browse back under the carpet,
I always enjoy a good roasting. Keep it up with Mauritania, we all enjoy the downplaying or one line releases.

As to the independent WPL board members and there are a couple left, suggest you start doing some research on your own and not rely on the 6 out of 7 ex shell employee's who provide the information to the board. I was particularly impressed with the CV's of the non Shell plants on the board. Might be time to assert some control before it is too late ! Personally I think either way you go from here it is too late. Forced to kick it back under the carpet, well it makes you look even worse. No upgrade of from scope for recovery to reserves, you can't put the cat back in the box. No upgrade of size as is currently on your web site, well it will take some fancy footwork.

All this when you are now talking about development ... Can't wait for the upcoming reserves masterpiece. Suggest maybe its time to bite the bullet like Shell did !

Somehow I think yet again you might take on your defiant tone as you did with my earlier theory as to why you seem to have had a pattern dumbing down Mauritania. Your actions certainly hurt short term the prices of the minor holders in Mauritania especially HDR. Longer term it doesn't matter if its there, oil, in the ground it will come out in the end.

Welcome to the political firestorm of 2005.
How hot it gets is your choice.
Time to come clean.
Either way its coming out.



Regards

Mark Kahuna