Ann: Chairman & CEO AGM Address, page-42

In case anyone actually cares about challenging the assumptions your company is putting out....

AKK has many times referenced DJ-Basin (DJ) and Wattenberg Field (WF) in addition to Florence Field (FF). While hundreds of miles separates WF from FF and the rocks are different (but the same formations) WF is where the capital has been invested.

Oil is such as easily priced commodity - but you have to figure out what price your oil is going to get. Other than looking at spot price by the pipeline operators (since they are ones buying the oil and moving it about unless of course you are lucky enough to have a pipeline (with spare capacity) from your acreage to a Refinery next door), you can simply look to the pure play operators in the same sales region. There are several to choose from for DJ. DYOR

CY'14 avg sales price = $73.82; WTI Avg = $94.99 ==> differential = $21.17; avg/avg = 77.7%
CY'15 avg sales price = $39.80; WTI Avg = $50.28 ==> differential = $10.48; avg/avg = 79.1%
H1'16 avg sales price = $33.41; WTI Avg = $39.13 ==> differential = $5.72; avg/avg = 85.4%


So when I read page 13 of their AGM release and trust but decide perhaps I should verify some things - such as say the pricing assumptions, these 3 questions come up

(a) Why use the WTI index as the oil price in the Net Income model

(b) There is a differential and these differentials exist in each Basin (even the EFS has an index differential). But these differentials are not fixed. As you can see when oil price was high the differential was high. When WTI low, the differential is lower. Capacity constraints also play into price. What differential to model? That's why I'm showing the avg/avg. Probably best to use 80% of WTI as price.

(c) Keeping all other variables and assumptions the same, what is Net Income projection now (no prize for saying lower).

And that's just the beginning. Plenty more things you ought to trust but decide to verify and determine the impact on the models you are being shown.

This is only relevant because you are being shown a 10 year projection by the company of how much money is going to spewing out of Pathfinder.

Caveat Emptor or Carpe Diem, either way good luck with your investment ... or trade.