projected 2p reserves valued below $1 a barrel, page-9

LOTM,

I certainly agree that there is some risk associated with operating in Kaz. However, it’s perhaps not wise to imply the presence of ‘increasing political risk over time’ when it can equally be argued given the economic climate in Kaz that the opposite will be true (after all, even the succession to Nazarbayev might pass off perfectly smoothly).

A lot of your piece is very helpful – I’m always looking back for details of past wells etc, so having that summary is really handy. You lose me a bit at certain points, though. For example, I’m not sure what you’re getting at when you say: ‘Bearing in mind my earlier comments and the fact that the wells at Akkar South are spaced much further apart, I’m not sure that in the initial new CPR that the 2P number will be as high as it might otherwise be. Especially when you consider that Jupiter themselves originally saw J-55, J-58 & J-59 as being on separate structures.’ At Akkar East, JPR were given 24.2mmbo of 2Ps (PRMS) at the last CPR after drilling just J50 and J52 (which I think from memory are around 4k apart). I’m not aware of any suggestion that JPR any longer considers J55-59 to be on ‘separate structures’, and I’d be fairly confident that the wells have been drilled both to delineate the extent of the structure (length and depth of sands) and also to maximise the possible uplift in 2Ps and hence the asset value at the next CPR. I therefore don’t really get why you think the 2P numbers might be to the low side of expectations? I also think you’re perhaps reading too much into trying to guesstimate the size of the fields and number of development wells by simply comparing surface areas from a couple of maps that look to me like not much more than visual aids in a Powerpoint.

I think your eventual overall 2Ps numbers (115mmbo) could well come off, depending on a range of factors and whether of course there’s anything in the J54 sub-crop and the Akkar East extension. The stuff about co-mingling production, production levels, netbacks and the time to drain the field looks a bit speculative, though there’s nothing wrong with that given the limited information we have. As for whether the CR is achieved through debt, equity or whatever, I guess that’s up in the air also. I don’t think it’s entirely obvious that one option is dramatically better or worse than the other – it really depends on the specifics of the deal. Anyway, if you’re ever proven right about the top-end possible $13 per share TO valuation, we’ll all be laughing all the way to the bank! I certainly have no problem agreeing that JPR is seriously undervalued and represents and exceptional opportunity over the next couple of years.

Cheers.