Hi Mach, Im well at last after a dose of the flu which knocked me for six.
Re CHP, I have followed for some time now and around 10p would seem fair value be carefull as there is a lot of hype and total boll ox being talked on the bb from time to time as do most bbs (but not here thankfully)CHP face the same obstacles and risks as any other E&P outfit in Colombia so its worth taking a look at GED (Harken), SORL, EEN, LUKOIL, HOCAL, KAPPA etc all long established operators in the region and compare like for like CHP will face the same obstacles as these operators whom after many years still have their fair share of problems in getting the black stuff out of the ground CHPs most prospective area is Primavera targeting the multi layered Mirador formations ie the same formations as EEN's Campo Rico and Vigia fields produce from which we know have had their fair share of water problems. Hitting water is a very common for operators as is finding heavy oil which is difficult to get out of the ground (BLR & Kappa Resources) The Primavera block is smack bang in the middle of the heavy oil belt and to make things just that little more difficult the area is in the middle of the jungle there are no roads no pipes no infrastructure the drilling rigs have to be helicoptered in (very expensive) so how do you get any oil found out to market?. But the thing that puts me off the most with CHP is their estimated recovery rates which the prospective reserve figures are based on from memory I think it was something like a 40 odd % recovery rate how can they figure such a high recovery percentage on something they don't know for sure is there in the first place? Other operators in the region use much lower numbers 15-20% being the norm and from what I have read the proving up of the reserves will require dozens of wells. There is a figure given for the spacing in the Primavera prospectus which is very close together.
Still it could be a good momentum play on the lead up to drilling but I would be selling before the results are known and waiting in the wings with a big short for the down grade in reserves as they fall short and fail to meet such high expectations.
