Replies to post #21718 on CoreStream Energy, Inc. (fka ZLUS)

[patchman]

Well lets start with ONE well and work it from there.

ZLUS has one well. It is not yet producing and the shareholders haven't a clue as to what percentage of that well is even owned by them. there are agreements and investors that continue to minimize ownership.

With no revenues and no cash on hand, how can 3000 BPD assuming 60 wells @ 50 BPD each be used to valuate THIS company. They have to sign agreements to drill and set the next 59 theoretical wells. We already know that with Well one - even if it were to produce 50 BPD - would not be going into valuing this stock. they own a fraction and shareholders do not know what that fraction is. It could be any amount.

BTW, what exactly is the time frame to the theoretical 60 wells as that too factors into present day PPS. You are valuating them as if they were all producing now and to be used with present O/S. Will O/S dilute with well drilling since the company remains negative profit margin?

[Ace Trader]

Stervc. First of all thank you for your hard work in putting all this together.
I would like to point out a couple of things with your DD work

60 wells:: If 60 wells can not happen and the company can only have 15 to 20 well producing in the next say 1 to 3 years, base on current oil price what are we looking at after setup costs and over heads.

3000 barrels a day:: If we only get 10 to 50 barrels a day for the first 6 months then increases to 120 or 500 or 1000 per day over the next 1 to 3 years, what would we be looking at after company setup costs and over heads.

Whats next for ZLUS:: What is Core Stream planing for the future? They might be planning on expanding into more oil wells in the USA. This might be the start of all mother loads for this company! Who knows, 10 years down the track you might be pulling into a ZLUS gas station. The future is endless.

Basicly the reasons for my questions is I read all posts and see over the last 2 weeks so many posters thinking about BLACK GOLD and the share price go up and up on Pr's today,tomorrow this week. That I feel when the company is ready they will release. The way posters are calling it is ZLUS has hit a oil jack pot and going to produce 1000's of barrels of oil and make us all rich over night. I don't see that happening this year, but that's my 2 cents worth. I'm just keeping it real.

Well thank you again for your hard work and DD.
Nemo out!

[Biochemist2002]

Thanks stervc.

In case some are wondering how CoreStream can pay for these hypothetical 60 wells (in your scenario)...

I assume some of the profit from the initial well(s) could fund further drilling. Although, I would like clarification on what % ownership ZLUS will have in the well that was recently drilled.

It's possible that they will not have to "dilute" to increase the number of wells. Couldn't they utilize debt and other
instruments? Stock is not the only currency at a company's disposal.

You're thoughts?

~Bio

[Ace Trader]

Great post sterling. That explains the 3000 per day. And even that looks like a low ball number.
Qustion# 60 wells is going to cost alot of money and a time line. Interesting what the time frame the company has for drilling for 2011 and 2012.

[andrewjoseph]

Since ZLUS only has working interest in the well, it would be unlikely that they would be given the opportunity to buy in the exact same interest in the next wells targeting the same ground reserves.

The overriding royalty and royalty interest holders usually have more of an option to purchase more interest if they choose. This depends on the situation and particular well. If the area was producing 100 bbpd then ZLUS or the landowners would edge the shareholders out bit by bit.

The odds of drilling 60 wells and hitting them all are astronomical. You also have to pay for each well, this comes out of the existing well proceeds. Average time to pay off a well in that area is 9 months to 18 months. Calling 50 barrels a day a low guess is poor projecting. 100 barrels is just silly for the area. These numbers are way out of line.

I dont feel like you have done any DD at all, since these numbers are purely guesses thrown together at random, with some numbers injected into them. They are misleading to people not knowledgeable in oil operations.

I am excited to see the percentage ZLUS has in the well and what it produces per day. I will gladly apologize for my low projections that it will produce 18-26 bbpd and ZLUS will own less than 60%.

Until the company gives us the numbers then we will just have to argue and guess, which is part of the fun of penny stock speculating. My chart says sell. Look for re-entry at .0028 plus or minus .0002.