prior post link:
box.net
NNN production down primarily because the 2011 Capex program did not really begin until April 2011. Nimin exit rate was 1,200 BOPD at 6/30 versus 930 BOPD for 2Q11. In addition to this known 1,200 BOPD exit rate, Nimin announced new CA well at 110 BOPD initial production in July.
Assuming the 2011 Capex program (in-fill drilling wells) are successful at WY and CA, BOPD should increase to exit rate of over 1,600 BOPD as of 9/30 and 2,000 BOPD as of 12/31. This exit rate is likely conservative since all analyst reports suggest exit rates above 2,000 BOPD as of 12/31.
A few negatives from the 2Q11 report and conference call:
1) The second CA well completed in late July 2011 came in mcuh below the first CA well initial production of 110 BOPD, but is still economic. (This seems to imply something above 50 BOPD). The first well coming in at 110 BOPD was well above budget and investors were hoping second well would be similar (both these wells IP'ed in July).
2) One old, existing CA well went down (mechanical problems) in 2Q11 and this caused the drop in CA production from 164 BOPD to 150 BOPD. (But with the 2 new CA wells that IP'ed in July with likely 160 BOPD, CA will be up signicantly for 3Q11. Note, the CA wells are receiving realized oil price $10-$12 above WTI crude price so far in 3Q.)
3) Some down time in Willow Draw field as new processing facilities were being built and this caused drop in WY production (along with very little of the 2011 Capex budget being spent in 1Q11). Also, a flood in Lousiana, but I really just ignore all LA gas/condensate production as this is immaterial going forward but it was material for this Qtr, given lower overall production.
Per July 11 news release, Nimin will have 6 remaining wells that will begin production within the next 30 days (this news release stated 7 wells within 60 days, so given the new CA well and 30 days has passed, do the math...). Thus, there will likely be news flow over the next 30 days. Depending on these drill results/well IP, Nimin can move higher in near term based upon the drill bit, assuming Nimin management announces the results. In the past, Nimin has been reticent on timely announcing individual WY well results but this time may be different as they likely want a few more of those C$1.55 warrants to exercise. FWIW, during the CC, the CEO Clancy Cottman downplayed the warrants stating that they were unlikely to be exercised given current stock market conditions/oil price.
Bottom line, the bulk of 2011 Drill program will be completed in 2nd Half of 2011 and are all in WY. Based upon prior, average in-fill drill results in WY, Nimin should have exit rate over 2,000 BOPD as of 12/31/11. |
