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von Dutton Associates
"Sky Petroleum, Incorporated
Richard R. Wolfe, CFA
Symbol (OTCBB) SKPI Fiscal Year Ending: December
Industry: Oil, Gas & Energy Year EPS P/E REVS PSR
Recent Price: $1.03 2004 A $0.00 --- $0.05 959.3
52-week Price Range: $0.63 -$3.20 2005 A $-0.20 --- $0.0 --
Target Price (12 Months): $2.35 2006 E $-0.07 --- $0.8 60.0
Avg. Daily Vol. (3 mo.): 103,369 2007 E $0.13 7.9 $21.46 2.2
§2008 E $0.72 1.4 $87.78 0.5
Balance Sheet Data (mil) 06/30/06 Ownership and Valuation (mil) Current Rating History
Cash Equivalent: $6.5 Shares Outstanding: 46.57 Date Assigned: 6/23/2006
Working Capital: $6.5 Inside Ownership: 23.00% Price at Rating: $1.12
Long-Term Liability: $0.0 Institutional Ownership: N/A Original Price Target: $2.70
Shareholder's Equity: $31.5
§Equity Market Value: $48.0 Time Frame: 12 Months
Rating: Strong Speculative Buy
10/18/2006
Sky Petroleum: First Production Receipts In-Line With Estimates
On October 16, 2006, Sky Petroleum announced its first production receipts related to its H-2 well in the Mubarek Field offshore the
United Arab Emirates. Receipts of $0.6 million on sales of 15,873 barrels of oil were in-line with our estimates based on a 75%
production-sharing contract revenue allocation, a 14.5% royalty percentage and an operating cost allocation of $3 per barrel. Gross
production through September 30 of approximately 25,000 barrels over approximately 120 days of operation comes out to a rate of
production of slightly over 200 barrels per day, indicating some improvement over the course of the first four months of operation from
the initially quoted rate of 128 barrels per day. As is more fully described in our previous note dated October 11, 2006, since October
30th, Crescent Petroleum, operator of the Mubarek Field, has succeeded in boosting output of the H-2 well to approximately 460
barrels per day and continues to make adjustments to the gas lift mechanism. Sky's second well is still on schedule for a
mid-November spud date, when the Company's third-party contracted drilling rig is expected to return to the Mubarek Field. "