Ann: Drilling Update Sugarloaf Shale Gas Project,, page-8

re: Ann: Drilling Update Sugarloaf Shale Gas ... Cheers pisces

Using current reserves upgrade from AUT and translating to EKA which hasn't released an official reserves report yet, it shows just how over looked EKA currently is.

AUT announced - "these figures represent a 150% increase in the 1P reserves and a 40% increase to the 2P reserves since the last reserves update as at 31 August 2011 (the “Prior
Report”)"

So taking these numbers and assigning them to EKA gives you the current BASELINE reserves -

1P - 5,500,000 mmboe
NPV(10) - $140,134,500
SP - 0.59C

2P - 9,380,000 mmboe
NPV(10) - $149,761,080
SP - 0.63C

I don't know if any of you recall, but last time AUT did a reserves upgrade and EKA released there's about a month later, EKA shares jumped substantially, even though any astute investor would have already known - same case here.

One thing i have noticed is that the most recent model used to value AUT's reserves gives the following value per boe -

1P - $13.30 per BOE
2P - $13.04 per BOE

Where as the most recent model for EKA values each boe at -

1P - $28.31 per BOE
2P - $17.74 per BOE

IMO its the excelsior wells are being factored into AUT's model which have lower NPV's, while EKA's land is all prime acreage which will command a premium to NPV and in turn per acre prices, which some analysts have said could be as high as $75,000 per acre.

AUT's previous reserves calculation models came out with per boe 1 & 2 P figures of ~$22 a boe, supporting my claim. Note : this was before the drilling of the excelsior AMI which was most of the drilling activity 2H of 2011, meaning AUT could be in for some substantial NPV upgrades this year as they start drilling more prospective acreage.

All in all i am expecting massive reserves upgrades this year in all categories but especially 3P reserves as pilot drilling and higher EUR's start to get factored in. Not to mention the chalk. Production, revenue and increased MC will follow.