pel/pela map nvg, lnc, ede, page-46

TwinTurboCelica,

I understand the speculative nature of LNC and NVG. Personally, I have not studied NVG, so I'm not commenting on the company specifically, but looking into the potential of the Arckaringa basin as a whole.

"Lets not forget this is based on 2 independent reports, not some make believe."

It indeed is make believe.

In the report it says, "The unrisked prospective resource estimates for the likely size of the unconventional resources, if present, are summarized in Table 1."

The key is "if present" which means let us assume they are present, or let us make believe resources are present.

The reports also says: "Source rock chance factors ranged from 0.3 to 0.6 with lower values indicating less thermal maturity and organic richness. Migration chance factors ranged from 0.4 to 0.6, with lower values indicating less thermal maturity and therefore less expulsion of hydrocarbons into better reservoir-quality intervals that can produce hydrocarbons"

Here they are saying, let us make believe that there are a range of factors that will influence the concentration of resources, if any, within the set area; let us then make believe that each factor could change the final estimate by 30% to 60%. It also works on the premise that the area has reached maturity. We know the field hasn't reached maturity based on prior Government studies and from Linc's own admission in the Sep 2011 report, so the true chance factor that should be applied is 0.0 or perhaps 0.1 in portions of the set area where there is low maturity.

So essentially, what D&M and Gustavson have done for their reports is to work out the Volume of the Boorthanna, Stuart and the Pre-Permian formations and multiplied it with a series of chance factors to come up a low estimate (when low probability is factored for each chance event); a best estimate (mean probability); and a high estimate (high probability is factored for each chance event).

What Blindy Bondy (as I affectionately know him) and the media has done is to then take the high estimate and plug it for all its worth, without commenting on the methodology of which the prospective resource estimate was derived. But as I am arguing that the source rocks are immature, then the true estimate for the prospective resource is ZERO, since when you apply the chance factor of maturity the multiplication will be by 0.0. Gustavson and D&M have both worked on the starting assumption that there is a resource and they clearly state in their reports that it is an assumption.

And in regards to the independence of the report, D&M says:
"In the preparation of this report we have relied, WITHOUT independent verification, upon information by or on behalf of Linc..."

And in regards to the estimates for the Boorthana and Pre-Permian intervals, D&M says: "Given the relative relative lack of information available for these two formations, the petrophysical parameters determined for the Stuart Range were primarily used to estimate parameters for these"

I think it is also rich to play the LNC nearology card, because the above formations prospective for the shale deposit DO NOT extend into the NVG licences. So there should be no premium applied to NVG. But speculators will be speculators just as science will be science.

Cheers,