Units to describe gas and oil reserves take a little getting...

Units to describe gas and oil reserves take a little getting used to ... I wasted a few hrs trying to come to grips with them ... an example of what I mean is the American term MMcf which means 1000x1000 cubic feet not a million million cubic feet lol.

The most useful terms I have found are Peta Joules (PJ), Mcf (1000cf) and Bcf (billion cf). One PJ = a Bcf which is a bloody lot of gas. An equivalency that I have found useful is 1000PJ = 167,000,000 barrels of oil equivalent (boe) or 167 million boe (Mboe).

So GiP for the current 15% of the Lorraine Permit is abt 980PJ of which management say abt 50% is likely to be recoverable reserves which translates to the following revenue (ie sales) at US$60/barrel >>> 980/2000 x 167,000,000 x $60 = $4.9 Billion ... at US$7/Mcf of gas this would be $7,000,000/PJ or $3.4 Billion ... anyway it seems like big bikkies. US companies with similar reserves appear to have net annual earnings of abt US$200 Million which are projected to increase to $300 to 400 Million over the next 2 yrs

In answer to Novac's query, Enron previously estimated the total Lorraine permit area to contain 6900PJ of methane which is a uselessly large number for a company like EPG to deal with at the moment, let alone what total reserves may be in the balance of the Lorraine permit, the proposed Lorraine permit extension area, other permits in France and the new permits in Italy.

I am guessing that the 15% area of current focus at Lorraine has several if not all of the following attributes ... favourable structural geology, proximity to existing pipeline and distribution infrastructure, accessible land for drilling wells and access to suitable process water discharge options. Its way more relevant for EPG management to deliver a profitable 15% of one permit than to run around estimating incomprehensibly large volumes of gas in all their permit areas.

Imo, EPG management has related party access to American well installation and completion technologiesand wellfield operations and has access to numerous attractive finance options including debt funding from our very own MBL.

There are few doubts in my mind.

Cheers
poyndexter