Couples of points to think about, while we wait on future...

Couples of points to think about, while we wait on future updates. Sorry for the long winded post :)

Brazil:

The Patriot kicks off the Brazilian 3D this month, so should b exciting times ahead in identifying further leads.

Question is, does the nearby Piracuca with its 550mmboe reserves extend into KAR's acreage & how many stand alone targets can KAR identify? Piracuca is only 5kms to the northeast, so is crucial.

We know that OGX has 15 oil/gas leads in its shallow Santos Basin acreage to the north & plans to drill 9 wells this year, whilst Woodside plans an appraisal Panoramix-2 well in Q2-2010.

WPL's first one Pano-1, flwd 13.7mmcfd gas + 1570 bbls condensate. The operator, REPSOL, believes that it has the potential to flow upto 30mmcfd, since the test tool had some issues at Pano-1. Their second well, Vampira-1 also had HC shows. Can't find the flowrates for this well.

So, worth waiting for the Brazilian farmout, mid year.


Peru:

However for now, its Peru which seems 2b more getting some attention in recent times & could come in as an early bonus for KAR.

The seismic pattern in KAR's block is almost analogous to the nearby Corvina field, with its multi-stacked oil/gas sands each of these sands are flowing commercially & oil is being shipped to the onshore refinery.

Latest certified reserves at Corvina stand at 1P-42.4mmboe, 2P-104.4 mmboe, 3P-128.2 mmboe.

Corvina's 2P gas reserves of 224.1 bcf are valued at US$150.2 miln at US67c/GJ, whilst its 2P oil reserves were initially valued using US$93.86/bbls in 2007 when oil was above US$100/bbl, at US$1.544 biln for 37.8 mmbbls.

However, price of oil has dropped to US$ 72-79/bbls recently, but further drilling at Corvina has increased the fields 2P-reserves to 69.8 mmbbls. So the equation is still balanced out.

As of Dec 31st, the operator BPZ, had a mkt cap of US$1.03b & an EV of US$1.05b, which gives them an , EV/1P of US$ 24.76/boe, EV/2P of US$10.06/boe & EV/3P of US$ 8.19/boe.

So, should KAR find reserves of over 100mmboe, in its block in Peru, given the bright spots on the seismics (refer slide on AGM preso), then the above figures are the benchmark to factor into their shareprice.

2 other things have gone unnoticed at Peru:

* First one being, Woodside, who have had a wake-up call last year & picked up some acreage onshore in Peru recently. Refer their presentation.

* Secondly, the philanthropist George Soros who has been topping up BPZ shares late last year, took his interest to 6.4m or 5.6% of BPZ's 115.08m shares. He's been actively buying Petrobras shares.

This shows that South America is the next frontier, when it comes to major discoveries.

Browse Basin:

As for Browse Basin, the Voyager should b fast-tracking the 3D-seismics, purpose of which is to identify the location for Kronos-2 & the southern extent of Poseidon structure.

IMHO, a decent flow frm P-2 will totally derisk the main Poseidon structure & will allow the JV to focus on its southern extent.

Here's what some of the nearby wells have flowed,

1) Brk#2: 44 mmcfd frm a 14m test interval (151m gross thickness).

2) Nth SR#1: Flwd at sustained rates of 26mmcfd, 35 & 48mmcfd on different choke sizes.

3) SR#1: 10-18 mmcfd frm 3 different sands. Had 169m net out of 600m gross gas column.

Should b a very interesting month for KAR. Rain, hail or a tropical cyclone dont matter in the bigger picture, esp. when u've got a lot more to come.

Keep the faith & hold 'em tight.