ARHT Media Inc V.ART.H

Provident Energy P2 Reserve Value

[Baxter4]

Provident Energy today announced the sale of of its' upstream operations. This is from the News Release:

"The $460 million value of this transaction reflects metrics of $43,810 per flowing barrel of oil equivalent per day (boed) of production, $13.69 per barrel of oil equivalent (boe) of total proved reserves and $8.27 per boe of total proved plus probable reserves. These transaction metrics are based on Provident's December 31, 2009 NI 51-101 reserve report as prepared by independent evaluators and adjusted for dispositions in the first quarter of 2010. Once this transaction is complete, Provident will have realized over $1 billion in value from the disposition of its Canadian Upstream business in several transactions over the past year."

So the value of P2 reserves was $8.27/BOE however Provident was 60% natural gas, which is worth much less than oil, in fact only a third the value per BOE. For arguements sake, I'll use 12:1 instead of the standard 6:1 or actual 18:1 for conversion, which translates to $13.27/bbl of oil in this sale. Nowhere near Goofy's $4/bbl number but the truth has never stopped him in telling his false tales. My favourite is he implies future dilution will be at 75 cent per share after the oil is found. Ya, right, stock is trading at $7 and they are going to offer shares at 1/10 the value.

How much P2 reserves does Vast have. None of course, hard pressed to even say it has any P3 reserves. However, once this well is drilled and the oil is proven, Vast will then have huge amounts of P1, P2 and P3 reserves. The standard method for calculating reserve sales values is P1 + P2 but P3 must be considered. Recent sales in the Pembina area of Alberta have been well over $30/BOE per P2 reserve based on the P3 potential of the Cardium formation.

All we have to do now is wait for the drill bit to prove what so many believe is under the Black Mountain and this stock will fly.