evidence of jv water cut expectations

In the anncmt to the ASX by NZO on 26/10/07 titled "CEOs Presentation accompanying Address to Shareholders" there is very clear evidence of what the water cut expectations by the JV were for Tui at this time.

Please do not reply to this post without have the decency to review page 8 of this anncmt.

At this point (ie at the same time as the Chairman's speech to the same meeting and his comments about how long the tax losses will last) the estimated reserves of Tui were considered to be 32mb. The table of expected production for NZO's share of Tui at 12.5% amounted to 4mb, which when divided by .125, rebuilds the reserves figure back to 32mb, so I am using the correct numbers assumed at the time.

Using the NZO annual Tui production figures and dividing by .125, you can work out what the JV was predicting for each 30 June financial year as follows:

2008 1.2mb/.125 = 10mb (from 15 Aug to 30 June 08)
2009 .65mb/.125 = 5.2mb (1 July 08 to 30 June 09)
2010 .425mb/.125 = 3.4 mb
2011 etc = 2.8mb
2012 = 2.2mb
2013 = 1.8mb

Therfore as at this date (which was the same date as the Chairman's speech) they expected in the first 10.5 months from 15 Aug 07 to 30 June 08 to produce 10mb.

Now correct me if I am wrong, 10mb/320 days (ie 10.5 mths) = 31,250 barrels a day.

THE JV WAS EXPECTING TO AVERAGE 31250 BARRELS A DAY AT THIS POINT IN TIME for the year ending Jun3 30 2008. THEY WERE EXPECTING SIGNIFICANT WATER CUT IF THESE WERE THEIR FIGURES. (sorry for the shouting). These are the figures controlled by the JV.

Therefore my original statement that the JV expected to produce at 50,000bpd initially from the start and then go into decline within 3 months of commencing production is PROVEN by these figures (unless of course there is someone out there - begging to be put on 'ignore' - who is going to try and tell me that they were expecting 50,000 barrels a day for the first 6 months and then 10,000 barrels per day thereafter - go ahead, make my day).

Now we all know subsequent events has seen an upgrade to reserves to 42mb and the production continue on at close to 50,000 barrels a day trhough December, and this is well past the expectations of NZO Chairman Radford at the AGM, hence his assertion that he expects the tax losses to last another 2 financial years are now not correct, given the changes in production rates and reserves and also oil prices. And my figures from earlier show just how much quicker they will be utilised.

So there is the proof of what the JV's expectations for water cut at Tui was.

Finito.