ERHC Energy Inc (ERHE)

[nordicroots]

I have to agree and would take it one step further as that would seem to be what needs to be added so others understand what you are driving at. When you talk about "commercial" quantities, it may be necessary to spell out the fact that prices are just one of many determining factor that go into what decides whether a discovery is "commercial" or not. MTO has raised the point on more than one occasion calling attention to the manner in which the results of the drilling were presented and contrasted typical language we'd expect to see regarding net pay vs oil shows. That fact alone was pretty telling for many here on this board. The point that I raised before and linked back to the Schlumberger definition was that there are numerous factors that go into determining whether a discovery can be deemed "commercial" or not. If there is no practical way economically extract the oil and bring it to market for sale, it is possible for a field to be too cost prohibitive to develop. Of course that analysis can change if the price of the oil is high enough - so rising commodity prices ARE of interest. And I think this point gets to be a stumbling block for many outside the oil industry to fully understand but only because there they are not fully conversant with the way the industry works. The thing that many of us on this board are frustrated by is the lack of transparency of this management team and the total lack of information that would allow shareholders to make such informed decisions on their own.

Does anyone recall the announcement of that huge discovery in the Permian Basin of Texas this past year? The industry journals and news media trumpeted the Wolfcamp shale discovery as being bigger than the Ghawar field in Eastern Saudi Arabia. And the reporters that tried to characterize the value of the field simply took the barrels estimated in place and multiplied it by the current oil price. The number was a pretty huge number, but the point that they missed was that headline was very misleading and their analysis incomplete. Sure it (their story) went a long way to highlight the notion that the US can be energy independent and snub the Middle East producers but that was more politics and posturing than real economic analysis. The truth in that whole scenario was that they failed to consider what it would cost to produce the resources in Wolfcamp. And if they were to factor that into the equation properly they'd be announcing it would be produced at a loss given current oil prices. The point being, this sort of finanacial analysis gets done on all sorts of oil resources all over the world at any given point in time. When prices went up over a hundred bucks a barrel there were a lot of marginal wells that all of a sudden looked very atractive and producers were willing to spend the money necessary to develop (or recomplete) them but only because they could expect to recoup their development costs and still show a profit.