financial model - ndo - investment bank analyz, page-52

Hi kjmantis,

I'd like to see those scenarios as well and in the meantime I offer the following:

If we only look at the reserves there is a clear case to compare.

Reserves
Nido Galoc 2P = 24.6 million barrels
Par15 (Galoc 2P plus Tindalo & Yakal) = 40.5+19.3=59.8
There is a discrepency of 35.2 MMbbl or 140%



Nido reported the reserves at Galoc in a announcement dated 16 September 2008 as follows:

1P (Proved) million barrels
STOIIP 97.7
Recovery Factor 16.3%
Reserves 15.9

2P (Proved + Probable)
STOIIP 124.7
Recovery Factor 19.7%
Reserves 24.6

3P (Proved + Probable + Possible)
STOIIP 222.7
Recovery Factor 25.5%
Reserves 56.8

Nido announced on 3 March 2009 an evaluation of contingent resources at Tindalo of:

"Up to 24.5 million barrels oil in place at Tindalo"
"Up to 10.7 million barrels oil in place at Yakal"

Note that these are not reserves; they are in place figures(STOIIP). Also note that there is no distinction of what the probability of the resource is, only the maximum possible.

If we use the 2P recovery factor from Galoc the Tindalo 3P reserves might look like 24.5 * 19.7% = 4.8 MMbbl, Yakal = 2.1. Using the Galoc figures again the 2P reserves might be half of the 3P or 2.2 MMbbl for Tindalo and 1 MMbbl for Yakal. Quite different from the 19.3 MMbbl used in Par15's model.

I'd like to see the models rerun for comparison but first I'd like to see just where Par15 got these reserves figures from. I think there are some clear errors that are hopefully the result of a misunderstanding of how the strange world of reserves works. The alternative unfortunately does not look so innocent.

Par15's post has been one of the most viewed and highly rated on Hotcopper. Its slick, professional and very convincing on the surface. IMHO, the fundamental input of reserves, the true value of any resource company, does not match the reserves reported by the company and is out by more than double.

Nido are a great company and have been diligently reporting reserves to the market only when they have been evaluated and certifed by third parties. The share price will get to a dollar but not though production of Galoc, Tindalo and Yakal. The true future value of this company lies in its exploration portfolio.

Caveat Emptor