Market down again, but crude oil price appreciate a bit again,...

Market down again, but crude oil price appreciate a bit again, currently at $98.7-99/bbl. (4am 16,Nov).

The GALOC OIL FIELD will be shut down by end of Nov, and reopen at end of Feb(90 days). So we can still expect $8 million cash increased in Q4--OCT and NOV, to total $23 million cash on hand by the end of year.

1, the reason it's $8 million, not 2/3 of $5m is because In Sep Q, production 136,230 bbls net to Nido, but only 80,838 bbls net to Nido sold, so we have extra 55000 bbl as reserve. (cargo 24 lifted on 1 Oct--revenue to Q4)

2, " The installation of the turret is now scheduled to occur after the delivery of offtake cargo 25 at the end of November 2011." Means in Q4, we will sell our 55000bbl reserve together with 86710bbl(2/3 of Q3 production net to NDO) total 13-140000bbls net to NDO must be sold with cargo 25 to clear the oil field.

3, It's not very positive for NDO to keep increase cash on hand for a while, because this upgrade can increase 95% of the operating uptime.

4, So we can still expect another 4 years net cash flow form Galoc oil field, total more than $60 million net cash flow. (see OEL's QR page 5 chart)

If phase II drilling successful, there would be another $60 million net cash flow in next 4 years.

With such healthy net cash flow support( $25-30 million/year) in next 2-6 month, SHs should expcet the good news from:

1) Galoc Phase 2 Development including the acquisition
of additional 3D seismic-- up to 15 Mmbbl extra recoverable oil.

2) SC 63: Operator PNOC Exploration Corporation (PNOC-EC) commenced pre-planning for the SC 63 commitment well.

3) SC 58: The seismic inversion and Amplitude Versus Offset (AVO) project continued during the quarter and is expected to be completed by the end of 2011.

4) 2D seismic at large Pawikan Lead, approximately 28 km south of Gindara-1. Target 2 billion bbls in place =1 FAR =1/2 WHN.


Quote: (see OEL's QR page 5)


"The Galoc joint venture in July 2011 approved an upgrade of the mooring and riser system at the FPSO Rubicon Intrepid. This upgrade is expected to substantially increase the FPSO operating uptime to in excessof 95% due to the enhanced and simplified single point mooring system."