D&D sorry for late reply dinner called......
Original post - (FYI It was the percent symbol it didn't like!)
skeane1973, different professional bodies and regulators have differing definitions of what constitutes an oil discovery but the following key points seem pretty clear to me:
1. USOP announced a "discovery" on 8 May, 2013 -- ie before the publication of FGA's CPR on 22 May. No matter whose definitions you subscribe to, USOP didn't have a discovery to announce.
2. The Nevada Division of Minerals would understandably be delighted to announce a new oil discovery as this could lead to a new lease rush and possibly $billions in revenue for the State. And yet, they haven't logged any part of USOP's asset as an oil discovery. This fact alone tells you all you should need to know.
3. In the recent July auction of state leases in the area, all parcels went for the minimum $2 per acre with over 70 percent of the acreage under offer being unsold. This is not indicative of a new oil discovery in Hot Creek Valley.
4. The FGA CPR doesn't use the "discovery" word once. So FGA haven't in their own words verified any discovery per se.
5. The FGA CPR does estimate a contingent resource (updip of Eblana #1, based solely on data provided by USOP and not independently verified) -- but goes on to state clearly: "There is no certainty that any portion of the contingent…resources estimated herein will be discovered".
This can only mean that none of the contingent resource has yet been discovered.
You may point to one professional or regulatory definition of a contingent resource which says that a contingent resource is a discovery but it is obvious from FGA's caveat that they don't think it is a discovery yet. So perhaps they aren't sufficiently confident in their "contingent" classification or perhaps they defer to a different suite of definitions; but whatever the case, they clearly state that none of the resource has been discovered yet -- otherwise they would have said something to the effect that "apart from the discovery at Eblana #1, there is no certainty that any other portion of the resource will be
discovered."
Anyway, I gather that FGA have been written to in order to seek clarification -- and if I hear anything before you do, rest assured that I will post it.
My reply
1) The wording and phrase I would have hoped / thought was agreed with FG&A et al prior to it's use. Without being picky BUT it's your main discussion point the actual phrase used in the 8 May 2013 RNS was
"Accumulation confirmed as 'discovered'"
+
"The hydrocarbon accumulation is therefore confirmed as
'discovered'."
The go on to use the phrase / word "Discovery" but in the context of the above.
FG&A also used that word In their covering letter
http://www.myusoil.co.uk/SiteAssets/USO ... Letter.pdf
"Major Oil states that it intends to proceed with further appraisal drilling, development of the project, and production of any commercially viable discovered hydrocarbons"
2) I take your point but read the full review of NDOM and the BLM in Nevada and it's damning to say the least. The final point is conjuncture not fact (not pointless research as others suggest but hopefully helpful factual research).
3) Again Conjuncture and without looking into every parcel and it's merits (I assume you've not?) versus previous I cannot comment.
4) See my response to 1) your wording is incorrect
5) Read every single legal document and therefore CPR and it will say and have disclaimers. GKP recent one lots (to add emphasis to my point)
http://www.gulfkeystone.com/media/80005/gk.pdf
ERC Equipoise Ltd (“ERC Equipoise” or “ERCE”) has made every effort to ensure that the interpretations, conclusions and recommendations presented herein are accurate and reliable in accordance with good industry practice. ERC Equipoise does not, however, guarantee the correctness of any such interpretations and shall not be liable or responsible for any loss, costs, damages or expenses incurred or sustained by
anyone resulting from any interpretation or recommendation made by any of its officers, agents or employees.
Furthermore
At the effective date of this report, GKP had not yet signed any oil or gas sales agreements. In the estimation of future cash flows, ERCE has relied upon oil prices and contract terms assumed and provided by GKP, which may not reflect future signed contract values. There is no guarantee that actual economic parameters will match the assumed values. Note that the economic values associated with the Reserves calculations contained within this report do not necessarily reflect a fair market value. Values presented in this report have been calculated using the economic interest
method.
The accuracy of estimates of volumes of oil and gas and production forecasts is a function of the quality and quantity of available data and of engineering interpretation and judgment. While estimates of Reserves and production forecasts, Contingent Resources and Prospective Resources presented herein are considered reasonable, these estimates should be accepted with the understanding that reservoir performance subsequent to the date of the estimate may justify revision, either upward or downward.
In the case of Contingent Resources presented in this report, there is no certainty that it will be commercially viable to produce any portion of the volumes of oil and gas. In the case of Prospective Resources presented in this report, there is no certainty that any portion of the volumes of oil and gas will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the volumes of oil and gas.
I would appreciate any info you can gain and I as known will always post mine
Cheers
Simon
Statistics: Posted by skeane1973 — Sat Jul 26, 2014 9:13 pm