ARHT Media Inc ARHTQ

RE: RE: RE: RE: RE: RE: Implied barrels

[eventtrader]

G40, thanks for your reply.

"I don't know where you came up with 85mm bbls,  but I assume you mean net to VST"
The market is pricing in 85 million barrels of gross production from QD (not net to VST), based on market cap, net participating interest and selling price of future production.

85 million barrels   = market cap of C$190m divided by 4.5% net participating interest  then divided by $50.  Grossed up by a recovery factor of 16.5%, that's OOIP of 515 million barrels being priced in by the market at 70 cents.

I'm not saying that this is high or low or assigning any probability to it. I'm just trying to objectively determine how many barrels of production are being priced in by the market.  Whether the market is  under/over pricing the asset based on the risks you mentioned is a different issue.

One risk you don't mention is that the resource estimate will increase. Right now the gap between P10 and P90 is very wide due to the low quality of the seismic. But why waste money on more detailed seismic when the company has already decided to drill anyway? The consultants just provided an unbiased estimate based on the data available. Once better data comes in, the estimates could very  increase, just like it did with GKP.

And are you suggesting that the shareholders (KRG, NKO, GSA, VST) have agreed to sharing profit oil in a different proportion than their working interests, ie, VST's net participating interest  is not 4.5%?  Easy enough to cross check with the IRR sensitivity analysis in VST's presentation or to call the company in the morning.