John, Good Evening,
Join the club, there have been a few of us wondering what the attraction is. From my side, I find it very difficult to believe that 18-19,000' wells have any hope of paying out in an acceptable period of time, given their production rates.
Do the numbers - although it's been a while since I've worked in the U.S., a 25,000' rig goes for around $15,000/day, and a 18,000' well would last a minimum of 60 days when going to the Permian (Cotton valley / Hosston). With the spread costs, the well budgets must be in the neighborhood of $3.5 - $4 million, and I would put that on the low low side.
All of that for production rates which are less than 1 MMcfd? Sorry, but I don't buy it. Remember that the minimum IROR that an oil company seeks is about 20%.
Anyway, it may be an attractive stock play for other reasons. I stick to the plays I understand.
By the way (all of you out there). I would welcome your takes on this, if I am way off base in my figuring.
Regards and Good Luck
Aggie |
