LGX Oil + Gas Inc ROAOF

RE: Icewolf

[Bigbadoil]

I agree they will be producing water. However reservoirs with aquifer drive produce higher ultimate recoverable reserves than other types (e.g gas drive or internal drive mechanisms. The latter two types usually require secondary and tertiary recovery schems to get all the oil out. Oilexco have stated 35000bbl/d is the maximum rate. You use haywood's report but why dont you use Mr Schater's instead. He uses a more conservative 20,000bbl/d. So maybe they will be producing 35000bopd FLUID. The key is this will be a very profitable project. Along as they have water injection wells, they will have no problem handling the water. I take issue with Haywoods analysis. Oilexco have mentioned a 22% decline rate for the Brenda pool. So if you take the maximum production rate, divide by the 4 wells and decline it at 22%. You get an ultimate recovery of 37 mmstb over 9 years. Now thats not far off the numbers that have been floated about. I think production is the key. If the wells are producing 20-25000bopd steady for a couple of years, then there is more oil here. RML did not take into account any "possible" reserves, I think there are lots in that category. Once you have facilities in place, those unaccounted reserves become viable. They will be drilling more wells in the future to get these reserves out. The first 4 are designed to get the bulk of the recoverable oil out. So why pick Haywood over Schacter?? Everybody is being consevative here and this is added on to the very conservative Engineering RR. Oilexco has to show them the money- production will tell. I dont think Oilexco have plans to run down Brenda on its own. They plan to keep it pumping. Nicol, 15-25c, Sheryl etc will all contribute to extending that 9 year life I talked about. The key is the first two years, if oil production is 20,000 bopd free oil, then I believe the field is paid out in that time. At $50/bbl the revenue stream is $350 mm/ year. If you half that amount Cf will be $175mm. Now they mention $180mm to develop, but some of that is for Nicol. Also you would have to expense all the pre-existing drilling to delinate the field. Thats quite a task, has anyone tried?? What ever way you dice it- its a wall of cash. Also Oilexco will leap into the top quartile of N.Sea producers. An interesting statistic dont you think?? Bigbadun'