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Microcap & Penny Stocks : OILEX (OLEX)
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To: SammyW who wrote (1327)8/16/1997 9:31:00 PM
From: Prudent Investor   of 4276
 
From the publicity from the company, one would expect significantly increased revenues from the swabbing operation. This in turn should mean greatly enhanced profits going to the bottom line. Take the Big Foot field, for example. That field has been ready for swabbing operations since the beginning of February. The economics of it should work like this. It has approximately 57 wells. Each well is supposed to produce at least 5 barrels of oil per day through the swabbing method.That's 285 barrels of oil per day. Figure oil at $20 per barrel. 285 barrels times $20 equals $5700 per day gross revenue. As I understand it, oilex pays the royalty owner 20% of the gross revenue. Deducting $1140 for the 20% royalty interest equals $4560. Management has been quoted as saying that it onlly costs $250 per barrel to produce the oil using the swabbing method. 285 barrels times $250 equals $712. Deduct $712 from $4560 and you get $3848 per day net to the company. Multiply by an average of 30 days in a month and you come up with $115,440 per month. This looks like easy money. Why isn't the company showing these resutls? Even if you discount this figure by 50% saying everything that could go wrong did go wrong, you still have over $57,000 per month in gross profit after production expenses being produced by this one field. Why is the company chasing after oil in Australia if they can't even produce it in their own back yard? Could it be that the swabbing method does not really produce oil as easily as we have been led to believe? Does anybody have any answers to this apparent mystery?
From: Prude
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