Replies to post #45308 on Hemi Energy Group Inc. (fka HMGP)

[kelseyf]

"Remember too that o/g production from a lease is a wasting asset. If that horizontal well comes in and makes good production numbers, that helps the cash flow in the present. However, each barrel of oil extracted lessens the value of that lease by reducing its reserves and thus its value to an acquiring company. It's the long standing view of the Hemi supporters that the end game and big payoff is in the sale of the company. Just hope they can keep enough assets and oil reserves to make this outcome realized."

If that horizontal well comes in and makes good production numbers, then IMO Gap #4 is created.

Why??

Because it will lead to further Hemi horizontal drilling in SEK allowing Hemi to realize a portion of this oil reserves outcome. Again refer to the Exhibits that KA provided in the 2008 Hemi Shareholder Review on this area of the Silvey Hemi-1 horizontal drilling project site as it relates to the oil.

And remeber too that Hemi has always maintained that it is the gas that sits behind pipe that becomes the driven force of the potential buy out value of Hemi. The oil has ALWAYS been viewed by Hemi as also a means of production revenue stream flow.

IMO this is the primary long standing view of the Hemi supports.......THE BUYOUT BUSINESS CASE IS PRIMARILY ALL ABOUT THE GAS RESERVES BEHIND PIPE.

Regarding the other assets of Hemi outside of the SEK operation, IMO Hemi is only is the second or maybe third inning of these valued lease stories.

Kels

[REAZO]

bdahl - The idea would be to have some good producing horizontal wells for revenue and to prove (if possible) that the oil is indeed recoverable. However, I do not believe that Hemi plans to exploit and remove the oil from all their leases. Most will be left alone for the buyout or future use.