news quarterly released, page-29

DJG,

I’ve run my NPV model for Grieve with $85 oil price and 0.90 exchange rate to be consistent with RS and came up with an NPV of $310M vs $305M that RS came up with for CO2.

At $100 oil and 0.90 exchange rate it comes to $391M.

Every way I look at it the economics do look very good in comparison to CO2. I am also surprised why this wasn’t looked at a lot earlier.

Davo,

I’ve run the Ash Creek NPV for a few scenarios:

Oil price Exchange rate Oil reserves NPV
$60 0.65 4.4MBO $67M
$85 0.80 4.4MBO $97M
$85 0.90 5.5MBO $109M
$85 0.90 7.7MBO $155M

The 4.4MBO represents 20% of OOIP, 5.5MBO is 25% and 7.7MBO is 35%. I have used a constant $25 per barrel for operating costs because I think chemical flooding can be done cheaply and if production is at a reasonable rate per unit costs will be low.

I am very optimistic with the upper sands at Ash Creek and Grieve. The workover at Ash creek will hopefully be as soon as approval is given and success can come there very quickly.

I get the impression that Elk will get going with chemical flooding at Grieve early next year, results should happen quickly then some 2P reserves can be proved up.

Monatana gas is a long-term proposition and I am happy with management’s strategy to farm-out and get someone else to pay for costs and hopefully adding some cash to bank account at the same time.