Substantially Undervalued, O&G Situation in play, page-138

Hi squidd,

I spent the weekend re-modelling my Eagleford/Woodbine well production & valuation spreadsheet.

It now uses the average decline curve of 3 wells from the Double A Wells field, to work out the likely decline profile of these new PANR's wells.

It still has the same flaw as before (ie peak production doesn't occur until month 3 or 4 and the IP numbers reported on various wells differ depending on the criteria the operator at that time used in flow-testing) but should be much more accurate in projecting EUR's once a well has been in production for 5 months.

It is now currently projecting VOBM#1 to have an EUR of just over 1.8mmboe & a valuation to PANR's 50% interest of U$11.45M (after land royalties, state taxes, loe's and capex [using $4 per boe, which should be an over estimation]). I've used constant prices of $2.50 per mcf for gas and $45 per barrel of oil, which when you take into account the higher BTU content of the gas & the NGL that will be extracted as well, make them very conservative numbers.

With 37 wells required at West Double A Wells that could turn into a very nice number if VOBM#1 is an average producer in the field. Given PANR only has 200 Million shares in issue & AXT own 7 Million of them

Now we wait to see what the VOS#1 numbers are going to look like on the new discovery (assuming its commercial) as that prospect pre-drill was expected to require 34 Eagleford/Woodbine wells.

Interesting times for sure.

LOTM