Financial Overview

In a down economy, Oil and Gas is always a solid investment...


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Corporate Earnings and Value

The primary value of any company is its cash flows and earnings, which is dependent upon the quantity and quality of the product or service that it provides, and the sales price. Production is derived from reserves and the inventory of our capital assets, production equipment, infrastructure, and acreage. Reserves are the pockets of crude oil that lie below the surface and have not yet been produced but are economically and technically viable to extract.

Any member of society with enough money can buy shares of a public company, but a private company has only a few owners whose shares are not offered to the public. To estimate the value of a public company, there are four basic valuation techniques commonly employed – book value of assets, discounted cash flow, price earnings multiple, and market value – which can vary considerably depending on the assumptions used. For a private company market comparisons are frequently utilized.


Proved Reserves

The primary assets of J1S Energy are our assets, lease holdings, and entitlements to future production from our reserves;

Proved reserves are defined as the estimated remaining quantities of oil and gas anticipated to be economically producible, as of a given date, by application of development projects to known accumulations under existing economic and operating conditions. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and gas to market, and all permits and financing required to implement the project. Proved reserves estimates must be made with "reasonable certainty" and are defined conservatively in the sense that the reserves estimates are met. Engineering and geological data are needed to make the estimates, and generally speaking, the knowledge offered by greater amounts of engineering and geological data will improve the quality of the estimation.

Proved reserves may be developed or undeveloped and are classified into Proved Developing Producing (PDP), Proved Developed NonProducing (PDNP), and Proved Undeveloped (PUD) categories. PDP reserves are expected to be recovered from completion intervals that are open and producing. PDNP reserves are expected to be recovered from completion intervals that are open at the time of the estimate but are not producing (shut-in) or completion intervals that are not yet open but behind existing wells (behind-pipe). PUD reserves are expected to be recovered from new wells on undrilled acreage or existing wells in new formations. Reserves that are undeveloped require significant capital expenditures to convert into producing fields and cash flow generating assets.

Production

Production is the causal result of reserves and is an important measure of performance since it determines gross revenue, and when combined with costs, the cash flow and profitability of a property. Operators control production and generally produce at rates to maximize return on investment, but differences arise in how oil and gas is produced depending on location and level of production and market conditions. Companies may shut-in or curtail gas production to protect wellbore stability or because of low prices, while oil wells are almost always operated at full capacity. At the field level, production and reserves are not strongly correlated because production depends on the life cycle stage of the asset. At a corporate level, however, production and reserves are expected to be more closely related because fields of many different sizes, types and ages are aggregated, which smooth out the production and life cycle variations of development.