Some more thoughts on the Dana Gas.
After reviewing their financials going back to the time they acquired their, 10% position in Block 4
from their Centurian acquisition in 2007. The following clues are available:
1. When they first acquired the property
Addax and not Sinopec was the operator of
Block 4.
2. Their main interest in the property was for their gas interests.
3. They had to explain to their stockholders why they were in the process of spending approx 6 million for their share of Block 4 expenses.
(20 M per well in block 4 @ 10%). Oki East was just on the cusp of 2009 financial reporting.
4. Our interests in the AOG article stating 3 TCF from Kina, Bomu and Lemba was a big plus. For Dana, they were only interested in the possible 1TCF + in Block 4. So for them, they were looking at a non commercial gas find at the time the initial results of Kina became know.
AOG article dated:
" This week the firm started drilling the Oki East well on Block 4 using the Deepwater Pathfinder drillship. Addax recently finished drilling the Malanza 1X well in Block 4 and previously drilled Kina on the same acreage. It also completed Lemba in Block 3 and Sinopec drilled Bomu in Block 2. In total, as previously exclusively revealed by AOG (see 29 October 2009) these first three wells are thought to have uncovered around 3 Tcf of gas, raising speculation of LNG or even floating LNG projects."
5. From an accounting perspective Ernst & Young, based on the timing of their Preliminary 2009 year end report decided to adjust the DG financials by eliminating any anticipated value from Block 4 while showing their share of the cost for drilling 3 wells in the Block. They note that without the two accounting adjustments that they would have had a profitable 2009.
My thought here was in the preliminary 2009 report it was E & Y who made the "Non-Commercial" statement to account for the changes in the financials. There is no problem with them taking a conservative accounting approach.
6. The document Midtieroil produced changed very slightly the fact that all the results were not in but they decided to take any potential Block 4 value off the books.
So from the work done by Tryoty, Baddog and Midtieroil on softening the "Non Commercial" statement, I just offer my research while taking the same position as they have.
You can not take the wording in the report to diminish the potential for all of ERHC's Assets in the JDZ..
7. As of today Dana Gas has not published a detail 2009 Annual report. It should be interesting to see how they treat the reporting of their Block 4 potential now that they have seen furthur results on the potential.
8. As far as Dana being concerned about Sinopec's gag order. They have a completly different profile then ERHC. If you new who was behind the success of Dana you would not be concerned about any retaliation from Sinopec plus the fact that Sinopec needs what Dana Gas represents and has to offer the Chinese.
JMHO
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