KOB.TO - East Lost Hills & GSJB joint venture Message Board

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Gold/Mining/Energy : KOB.TO - East Lost Hills & GSJB joint venture

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To: koan who wrote (13069)	12/5/2000 7:52:20 PM
From: grayhairs	Read Replies (1) of 15703

Hi koan. No respect due, and none taken !! <gg> Yes, hindsight is great isn't it !!! So, is everyone still happy as Hell with those recent hedges at $6-$7(CAN)/mcf ?? <gg> <<... the present value of money is worth much more than future value; and I think companies would produce each well at optimium production (i.e. protection of the well and field, etc)whatever that might be; and not pay much if any attention to trying to figure out what future prices might be and planning production accordingly.>> I completely agree with the above statement. The industry "normally" seeks to maximize present value. And yes, only rarely would a projection of future product prices ever impact a production option\schedule of a well. [One clear example of where one did however was when the US industry abandoned thousands of stripper oil wells just a couple of years ago !!!] But, your statement is NOT equivalent to nostarch's. In my post to nostarch I tried to point out a simple but easily understood "exception" that refuted his broad statement which, to me anyway, implied that faster is better. There are of course many other examples that I could have given to demonstrate the concept that "present value" is not always maximized simply by realizing the earliest possible production at the maximum possible rate !!!! The deepening of BKP#2 is one other example. I will venture to suggest that the PV15% of ELH was substantially increased by deepening that well below the 7" casing, even though that meant deferring first production from the well by say 30 days (even if the well is eventually completed in just the lower zone and that production rate turns out to be less than it would have been from the upper zone !!). But that gets us into another lengthy discussion, so .... Have a good one. Later, grayhairs

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