Aussie Boy,The OGIP is a ridiculous means to try and measure the...

Aussie Boy,

The OGIP is a ridiculous means to try and measure the companies worth :)

If you combine it with the reserves, then it does give you a slightly better than out of this world chance of putting a vlaue on the company.

It works like this.

OGIP will tell you how much gas you have initially in place. Not how much you can extract. The latter is all we are concerned about. The term EUR is used to describe this. Economic or Estimate Ultimate Recovery. Its a rate, typically in the 25-40% range for a CSG well and describes when the well is truned off because its flow is so low it is no longer economic to operate it without additionol workovers or higher gas prices.

If you have a 30% EUR for your OGIP of 14TCF; then you can expect reserves of about 4.2 TCF.

Heres a point to remember. The P10, P50 and P90 classes of reserves (1P, 2P, and 3P respectively) allow for more and less tolerance of economic conditions that techncially allows you to extract more 'economically'. This means you will typically see 3P with the highest EUR as they have the best economic and technical conditions ascribed, but are least likely to occur.

Hence a number like 6200PJ 3P target from your OGIP of 13.8TCF, turns into an actual EUR of almost 45%, which is pretty good, but maybe a little unrealistic :)

In summary, the value will be what the company can get for it, not a cent more, not a cent less. Trust that Ron, Steve, JDS and the rest all of have our interest at heart, because it is also in their interest moreso to doso.

So the using the GIP itself is ridiculous; however, if you had a plot right next door and you knew your own EUR and their GIP... then perhaps you may be able to use it as a means to value them ;) Not so ridiculou afterall.

SF