Ann: Operations Update at Triple Crown , page-23

OK lads I can answer that fairly simply.

BHP bought a proven asset - as in Petrohawk had already done the drilling and begun development. It is also the EagleFord Shale oil play. BHP also bought into Fayetteville shale gas (from CHK I believe) - but also a developed acreage.

Statoil buying Brigham - big Bakken play (lots of Oil/NGLs) and BEXP is one of the premier independent drillers and has massive position there (next best is WLL followed by CLR - all US stock codes)

EP is a primarily a pipeline company (I hold them and am sad to see them be acquired - be a nice stock for me - more than 100% capital gain with nice dividend along the way).

CEL will NEVER been in the league of those companies (think I can safely say that).


Now back to CEL.

We have not proven a single thing about the 45,000 acres. All we got is a single hole with pretty interesting info - no idea if commercial. OGIP in numbers are big but what is the EUR going to be.

That is why you run models (and believe me, mine is fairly simplistic but it tells me that the upside is there when compared to its peers AND should the projections from the company (and then obviously mine as I primarily model on their projection) then the stock is worth holding.

Now I am looking at the Risked numbers - meaning I discount by 80% - so that 20cps would in reality be $1 per share IF THE CONCEPT IS PROVEN!

Right now they have "promising dirt" - but this is why you invest in speculative stock. If that risk profile is too high, wait until CEL proves the Ellenburger as a producer, possibly gets 2P Reserve or 3P Resource from that, drill another well to delineate the field further across the acreage.

At that point though, the NPV wont change that much (except we would know flow per well and can model that) but the RISK has reduced greatly - maybe now 60% so valuation goes to 40cps. So in you can pick up CEL for 30cps then you're buying at 33% discount to implied value.

Right now I discount 80% giving me a range, based on 2 different valuations (NPV of field and simple Resource model) that suggest 14-18cps roughly. At current sp of 10cps I think I have bought at a discount based on expectation. It can of course go pear shaped!!!

Make sense? Sorry for the long post.

GLTA.