Jake,As well as the $/GJ 3P numbers we really need to give some...

Jake,

As well as the $/GJ 3P numbers we really need to give some extra credit for the high proportion of 2P (but I think your 28c/GJ is wrong, as the latest net reserves are 3700PJ 2P and 5800 3P).

My view is that 2P is worth about twice what 3P is given:
1) The time value, say assuming 2 years from 3P to 2P also implies the revenue a further 2 years (or more out), which on an NPV basis may discount it by say 20%
2) Risk of conversion, maybe another 20% or more for even the best quality 3P.
3) Cost already sunk into converting 3P to 2P.

Perhaps it's a fairer assessment (based on my assumptions) is therefore to suggest Shell are offering about 45c/GJ for the 2P, and 23 c/GJ for the rest of the 3P, and NOTHING for this years, or the next 10 years reserves additions. VERY VERY CHEAP however you swing it.

Go (away) Shell, Go Further Arrow,

EL