VIRGINIA HILLS OIL CORP VFGGF

RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:Pinecrest Energy Raised $195,200,000 Issued 91,900,000 PRY Shares @ $2.12 Average Pinecrest Share 2012/2011/2010. Facts!

[ofirme]

Thank you. same to you.
Here are some "facts" for down to earth people (and not dreamers):
1. assumptions:  
     1. $90 US is the oil
     2. it takes two month to flow
     3. no downtime between beginning primary to first waterflooding (perfect world)
     4. waterflooding makes 30% of wells into injectors in a project
     5. opex + royalties = $25
     6. cost of money is 10% per year
     7. waterflooding cost $400,000 per well
     8. the wells in a waterflooding will be offline for two month
2. If you invest $5.4M in a well which peaks at 180 bbl/d and goes down to 70 in a year, here
     is what you do:
     1. at month 24 (beginning of waterflooding) you have $2.6M left to recover to breakeven on
          a particular well.
     2. assuming 6 wells per section, it will take 62 month for the section to pay itself off (at 10%
          per year)... I assume a normal waterflooding at year two.
3. at cost of $3.5M the payback time is 34 month for same assumptions.

The first 52 wells were driled before H2 2012, which is when the cost was about $5,400,000
 per well with future returns being lousy. the next 30 were with the better economics...
Keep in mind that the company has spent over $200M of equity that was issued at share prices
 much higher than today's and that the land was bought with that land plus all the drilling was 
 done by that money plus $128M of debt.
I assume the first 5 projects were done of older wells, so in order to recoup their cost you will
 need 62 month. they are now probably at month 30-36 on average.
The latest 3 projects are probably also from 2012 and I will assume 18 month of flowing.

The company has about 400 drilling locations that should be viable. they used 80. 
That leaves 320. if they will use 40 per year (normalized) and the profit will be $3M per location
 (under my assumptions...) at first 4 years (I finished summing at year 4), 40 projects should 
 yield $960M in 12 years (over time). at 10%/year discount you can assume $480M profit over 
 time from this land (beyond what they earn from what they drilled so far and the return of their
 equity investment).
Anyway, that is the investment rational for my investment in this company. time will prove my 
 right or wrong.
Good luck to us and to the company.