LGX Oil + Gas Inc ROAOF

RE: Haywood Report

[Bigbadoil]

They are probably talking about waterflood reserves as Buzzard which will be flooded from the get-go. The Engineers do not like to give reserves for waterflooding straight off the mark. They will be giving a primary recovery number. They will wait for actual production perfomance and compare to their primary production model ( conservative!), then the difference will be given to Nexen in terms of a reserves "bump" This will happen after a set time of production performance ( a couple of years??) For the Engineers to give value to the higher waterflood recovery rate, you have to inject water into the formation first..ie. show me ( thats the Engineer talking!)For example if their primary production decline curve starts at 15% for Buzzard and production is flat after 1 year of operations (under waterflood, then a serious reserve upgrade will happen after the first year!) I would also infer that Nexen have a pretty high tech waterflood monitoring system going to map out the advancing flood front in various parts of the pool and timing future drilling and production wells to be able to take advantage of the flood sweep.. how can they do this? - by have tracer elements in the injection water or by 4D Seismic, for example. Bigbadun'