KAR Technical analysis, page-66

Cujo

At $25 a barrel Brent oil price, you may have had a good point. At $65 I would beg to differ. Peteobras is reporting production costs of $8 per barrel from one of it's larger fields.

Resource vs Reserves can be a fine distinction that is changed solely by farming out to a well funded partner improving the liklihood of economic development. I experienced this situation with my 12 years at InterOil Corp (IOC NYSE) which booked a 1.0 billion boe 6.2 Trillion cu ft of gas) resources in PNG for years and not reserves and then sold the company to Exxon for $2.75 billion USD in 2016. Many analysts said IOC was worthless because it had no reserves. It was sold for $50 USD per share. InterOil had also farmed out 35% to Pacific Rubiales in PNG and the largest shareholder of PRE was the main funder of IOC. I believe PRE went broke because their assets in Columbia were nationalized. So I am aware of the PRE buy back.

PRE spent a considerable sum, $200 million from memory, funding 35% of KAR's Discoveries. The fact that KAR bought that back for a fraction of the cost is not indicative of the value of the oil but the fact that it was a great deal for KAR and PRE was a distressed seller.

Whenever you have an explorartion company that can drill 3 winners out of 6, it is a keeper. The average success rate on exploration wells is 10% not 50%.

Buy low when everyone is depressed and volumes are negligible. Sell when it quintuples.