Chinook Energy Inc. Common CNKEF

RE:RE:Dirt Cheap - Western Canadian NG "Assets"

[auburn2]

For $34mm they bought a stronger asset base than CKE, so I expect the CKE valuation to come down dramatically.

• Pro forma diluted cash flow per share increases 130 per cent;
• Significant growth potential as the assets provide an extensive, risk-balanced, low-cost oil and gas prospect portfolio that nearly doubles the corporation's present drilling inventory;
• 33.6 million barrels oil equivalent (MMboe) of proved developed producing (PDP) reserve additions (246-per-cent increase);
• Production additions (220-per-cent increase) of 14,300 boe per day (60 per cent operated), from low-decline assets providing sustainable cash flow to exploit the Narraway light oil and other discovered resources;
• Pro forma leverage improves approximately 32 per cent;
• Pro forma licensee liability rating (LLR) of 7.62 (65-per-cent improvement);
• The Central Alberta Foothills assets, representing most of the production included in the acquisition, have an annual decline rate of 8 per cent, resulting in a pro forma annual decline of approximately 11 per cent;
• Significant field operational cost savings have been identified and are expected to be 10 per cent to 30 per cent;
• Ikkuma's technical team has significant experience with the assets, including the Stolberg oil pool;
• The assets include additional lands within Ikkuma's Northern Alberta Foothills light oil pool located at Narraway;
• 398,037 of net developed and undeveloped acres added;
• Adds significant underutilized infrastructure (working interest in 1,327 kilometres of pipelines, five major facilities and 10 minor facilities), which can be utilized to exploit bypassed oil and gas zones;
• Majority of the production will flow to a mid-stream operated plant. Ikkuma has negotiated favourable fees and agreed conditionally to dedicate reserves for a 10-year period;
• The assets include two additional light oil pools, Cordel and Brown Creek, with infill drilling and secondary oil recovery opportunities;
• The assets also include 5,100-kilometre lines of 2-D and 143 square kilometres of 3-D seismic data.