Jeannie, be happy to refresh your memory. (Hell, I'm just happy to see another poster here at SI. I'd begun to hear an echo . . . eecchhoo . . . eeeccchhhooo.)
Say Ultra has a 60% working-interest in its first NEW Stud Horse Butte well, 10-23, and that well, after a higher initial production figure of 9 MMcf/d, is flowing into a sales line at 4,000,000 cf per day. Divide the 4,000,000 by 1000 to get 4,000. Each 1000 cubic feet of gas is worth $3.90 (using the value Ultra used for arriving at its proven/probable reserves worth). So $3.90 x 4,000 = $15,600 per day. Ultra owns 60% of that or .6 x $15,600 = $9,360 per day or $3,416,400 per year. And that is why Michael Watford expects well payout in 6-8 months! Of course, there is something like a 66% decline over the first few years (or maybe not as the operators learn more and more about fraccing these wells to lessen the decline rate). So you can see how 8-10 of these new STB wells drilled in 2000 can start swelling the bottom line by early next year! Fun to think about!! Hope this helps.
Gerry Atwater |
