Stateside report ........ ........ good mention in Monday's Stateside report -3:36 into the piece talking about Enegi's RNS set against the volatility of the markets but re-emphasising Eneg as one of the Four Horses of the Apocolypse![link] gives a UK BB a good punt - think he means us, i.e. iii. Goes on to talk about Chariot. Good report which to me is a must read for anyone with flagging confidence!20pt4 - well done in interpreting my typo into Sturminster - ended up playing 18 at Wareham which is quite a difficult course for the likes of me but thoroughly enjoyed beating my opponent - my son!LT last-throw

Cost to produce a barrel of Oil? Hi can some one tell me if I am correct in assuming that the cost to produce a barrel of oil is 25% to 30% of a barrel of oil?Thanks kmack kmack46

Wish I was A studious intellectual, I will leave this to the more geological savy, I look forward to your interpretation. [link]%20Weaver%20et%20al%201988.pdf Intoorbit

Re: Status I have run various flow rate discounted values but on 500 bopd and 20m recoverable resource / Net Cashback @ USD70pb for first 7 years thereafter USD50pb and assuming this was GHS as only operation (thereby allocating all company overheads as cost to GHS) then I get the following nosTotal depletion BEFORE DCF turns cash negative is 8million barrels ie well before 20m (Although still producing positive operational cashflow but not after overheads (inflated at +5% per annum)Factoring in Cap Ex of USD2.5m year 1 and random USD1m for next 22 yearsI get valuation of USD73.3m or GBP45.8mOf course if another project comes on stream you would allocate overheads between the two and the depletion rate increases at GHS before the DCF turns negative. noidea1960

Re: Net Present Value calculations TheDrewster,Of course I meant can't really disagree!It is also surprising how much difference small tweaks can make. Decide to be a bit bullish on the oil price and factor in a bit of a rise, drop your discount rate a bit and all of a sudden the numbers are 3 or 4 times better. They are all fairly reasonable assumptions.It just goes to show that with the available information it would be perfectly possible to justify 20p a share, or a quid. Whether we like it or not the market will tell us what the reality is. And at the moment that's 13.5. SierraBravo

Re: Status So many elements ignored in the analysis and very much worse case in that we only ever have GHS as an asset for ten years. I ask what about GHC, GHN EL1070 lower rights and the GPS development, if all these fail then your analysis is reasonable, but is it reasonable to expect this, plus other projects are under development ABT the Clare Basin etc.Also if we have a minimum of 61 million SPOIIP Say we get 500 bpd out of it in ten years that would only be 1.8 million barrels recoveredSay we get five more wells running thats still only 9 million barrels recovered from a 61 million barrel field = 18% recoveryExpected recovery is 40% but say it is just 20%, you haven't factored in further field development. Saying everything will fail is pretty unrealistic.GHS would not therefore be a 10 year field or the others even with that intitial 61 million figure.Good to look at worst case but I can't see five wells failing, remember Pap1 hit oil first time as an appraisal well the chances of that are very remote. The likelihood is the system is much larger than 61 million and we have not factored in GHC, GHN and 1070.I think I will take my chances on this one that we are considerably over sold even with the limited data we have now. 13p represents a £16 million company, GHS alone should take this well over a hundred million company on a modest flow rate now with these volumes confirmed. Some farm inns confirmed will take this to completely new levels in my view. Good to get in on the bottom run if you have funds though. Will we be here in three months thats the question, who knows now what news could arrive on from SPE and GHS? but the EZ situation is certainly making this an interesting ride. Intoorbit

Re: Net Present Value calculations TheDrewster,I can really disagree with much of that; but there are some points I would make.- Whilst in accounting terms you could charge all costs in year 1 this wouldn't bring forward any tax reliefs on the development costs. These would still need to be capitalised and depreciated over the well life. Any remaining value would be credited at the point the well went out of production/ This wouldn't actually make any difference to the overall profitability.- I think assuming a zero price rise in oil price is maybe a little pessimistic. If inflation runs at 3% this would imply a real terms fall over 10 years of about 35%. i.e. back to 70$ ish. That said in real terms the oil price is strong at the moment.- I think your costs might be a little on the low side. We know the transport was equivalent to $25 from the comment at the AGM by minty jr. Can we operate the well on $5? With fixed costs of around $2 mln p.a. this equates to about $22. However if we flow at 500 (oil only) this will drop to about $11. Also these costs will increase over time. Since these costs are broadly fixed then any increase in barrelage will have a more positive effect since this won't increase the standing costs.- There are also the license costs to consider. I can't remember what these are but it's in the prospectus. Something like $20 per hectare I think.Certainly I think the SP is at the very least well underpinned; however it does assume that GHS will be sucessful. Overall the figures you deduce are broadly in line with those I deduce.The updated CPR when it come will be interesting. That will include current NPV figures for the assets, be interisting to see what they are. SierraBravo

Re: Status SB,Just read through your long post, which makes sense, and it is reasonable enough to stick with the current CPR for argument's sake, and to take the lowest P90 figure 2m barrels recoverable, for arguments sake. Just a couple of queries. You sub subtracted a gas content, but on the table I saw, this was the P90 for oil, and the gas was given a separate P90. You also, quite rightly, factored in inflation - but I was under the impression that oil is fairly inflation proof. In other words, if the worth of a dollar falls to a tenth of its value, then the price of a barrel of oil would then be at about a thousand dollars. Or was this factored in to your generally accepted depreciation of 10%?On the whole, the lowest figures and your analysis paint a pretty bleak picture of this as an investment, so I sincerely hope you are wrong. Actually, given the last RNS, it doesn't look as though Tracs' P90 is going to be anywhere near the true recoverable oil figure for GHS.Also, as regards the markets. At the moment sentiment seems to be sitting on our SP like a dead dinosaur. But can't sentiment get underneath and lift a share higher than the current asset value if it is believed there is a fairly risk free chance of growth in the near future. I would suggest that once things start to move, there will be a kind of geometric progression, with several asset leads opening together and adding value rapidly. At the moment the company is working to get its first toe hold, but many are here in the belief that this first move is the crux of the climb and the rest of it will become easier. The market doesn't see it that way yet, but I believe there will come a time when it does.regardsTedules tedules

Net Present Value calculations SB, I like your discounted cashflow model, though tweaking it can give an enterpricse NPV without too much pain.Yr 1 investment costs should be entered (cash out obtaining and installing kit and infrastructure etc, - which of course could lead to reduced costs)Discount rate of 10%, in the current climate, is probably a tad high, though fairly common in most models300bopd is fine for modelling and provides for some potential (significant we would hope) upsideAdd an arbitrary oil price with your crystal ball gazing skills, but it is hard to imagine this falling in real terms, so perhaps even allow 5-10% rise per year?I prefer to take a %age of profits for investment to hopefully avoid any dilutionThrow it into a nice NPV calculator, then divide the enterprise value you come up with by the c.126m shares in issue.List of assumptions to attempt a Friday afternoon calculation...$10m setup capital costs, all cahrged yr 1No revenues in year 1Costs averaged at $30/blZero price rise for oil across the 10yr view - i.e. a fall in real terms10yr well life£:$ fx of 1.55Assumes business is devoid of any cash resources at the momentand finally, for an extra bleak view, Investment in new opportunities of 30% profits (and Zero new commercial discoveries)(I think these give a fairly safely underpinned valuation)With those conservative figures and assumptions, I get a NPV for the enterprise of £29.2m or 23p per share without any investment in failed new wells, or £15.4m or 12p with 30% of revenues wasted on fruitless exploration each year.Which leads me to conclude that at these levels, we are a pretty strong buy, as I have left out all sorts of nuggets which could provide significant upside. Cheap as chips, but not clever enough to know whether or not we might be cheaper still before a sense of reality finally returns. TheDrewster

Re: High flow pressure I imagine the regulations require the sign? What's high pressure on the surface and what's high pressure underground could well be two very different things. SierraBravo