gas conversion

5hareholder raised a great point the other day in relation to the BOPED conversion and how it is calculated. The biggest concern was that the 90BOPD and 1.5mmcfgd was converted to 150BOPED. We contacted the CEO (myself and 5hareholder) to determine how this figure was arrived at and were told in short it is based on the difference in price. I thought I would then check a couple of companies and determine how they report there BOPED flows and found the following:

SSN - Working from their reports 6:1 as in gas conversion
SEA - Posted on their HC board, no reply so contacted the company direct and they use a 6:1
STX (Strike Energy) - Have a beautifully set up quarterly which clearly indiciates 10:1
GGE - Appear to have used a 25:1 being the price difference.

Now I am not saying these other companies are incorrect as a 6:1 is the gas/oil energy conversion and this appears to be the most common way of reporting. My concern is that when you compare the figures of different companies and the conversion is not stated you are not comparing apples with apples. In GGE case you are comparing 150BOPED to a 6:1 of 340BOPED a big difference. But if I put the BOPED figures for the above companies on a spreadsheet you can see the difference and hence the perception and perception is the reality. The reality is the $ values will not lie but you generally make an investment decision based on the BOPED rather than wait for the quarterly's.

Therefore be careful when using a BOPED from a company and trying to just multiple it by $80 - it will depend on the mix of gas and oil and how this amount is arrived at (I always calculate on the oil and gas figures seperately if I have them ). This will have a big difference on the final actual $ figures. If not in the report then ask the company how they arrive at the figure.

I think all companies should record both or at least clearly state how it was arrived at check STX quarterly. Thanks for the pick up 5hareholder as I have learnt another important lesson in investing in O&G companies.