junior oilers 2 february, page-16

So Noall's have worked out a number based on continuing high gas prices (at least US$5.50) and gross reserves equalling recoverable reserves (obviously not the case).

Another poster has suggested a 40% recovery factor. Clearly that's a key question - does anyone have a handle on that being a reasonable number.

Also PSA have stated "Lease operating costs" at US$0.50 per 1000cu ft. Are there no other costs involved?? And is this cost independent of production rate (which is likely to gradually fall away?).

Also poster suggested more wells would need to be drilled to recover said reserves. ?Really. PSA have not said that but that would cost them.

Well, I bought this stock originally for 11.5c (market cap A$12m) when they had A$27m cash and a database. Now they have spent A$23m all up and will potentially make say A$40m - $80m net cashflow from their investment over a couple of years if all goes well, no hiccups etc and depending on reserves and recovery factor. And still have a database.

Market cap is now around A$40m which certainly discounts the future cashflow if recovery factor turns out to be high.

The market always discounts oilers cash even when its already there in the kitty as it has to be reinvested in the risky business of finding more reserves, but likes blue sky potential when in the mood, and who's to say they won't do it again, but I hate think what the price might have been now if these Cameron well's had not come in.

Clearly the key question is likely recoverable reserves versus stated likely gross reserves. Again, anyone have a handle on likely recovery factor for these wells?

Oh well, sold some, hold some.

pj