Hi hergerrYou have every right to be sceptical when companies...

Hi hergerr
You have every right to be sceptical when companies make predictions of future cashflows.
They are by its very nature always based on assumptions; in this case the variables are obviously the oil price, the fact that they have to drill into the ground and extract something that can’t be seen, the weather to some extent (hurricanes), the timing of the rig’s availability.
With OEL the risks are mitigated by the facts that:

The oil is known to be there as this field has been produced before when the oil price was much lower.

The rig builders are substantial holders in OEL and hence have a vested interest to get the semi submersible delivered on time and on budget etc.

OPEC is determined to keep the oil price up and as long as the world economy is growing apace the consumption will increase. with predictions of an increase for 2007 of 1.55 million bpd over 2006.

The 6.6 million barrels is a conservative figure as there are other figures much higher, hence the hint of a possible 12 million bbo being extracted.

The Santarosa licence seems to be still in the pipeline of the Argentine bureaucracy, it is expected to be awarded though sometime………………….



According to OEL's Matrix, based on 6.6mmbo (4.3mmbo to OEL):

NET CASH FLOW - Starting next Year

US$50 Brent US$ 74 m US$ 48 m


US$60 Brent US$120 m US$ 78 m


US$70 Brent US$167 m US$108 m



If they are able to extract somewhere in the vicinity of 12mmbo you might double these figures.