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Gold/Mining/Energy : Canadian Oil & Gas Companies
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To: keith massey who wrote (6135)3/5/1999 7:11:00 PM
From: grayhairs  Read Replies (2) of 24892
 
Hi Keith,

For scoping purposes, you'll get "stadium estimates" if you use either of the following:

a) Proven Reserves (in the ground) valued at about $1.30/mcf with Probable Reserves discounted 50%.

b) If you prefer to project the operating income use a residue sales gas value of about $3.30/mcf (assumes 1,000 BTU gas) and deduct your own assumptions for royalties (Crown, freehold, overrides combined of perhaps 25-35% of sales price ????), processing and operating costs (Combined only about $0.25 to $0.30/mcf ????). My guess is that you'll be looking at a wellhead netback of about $2.00/mcf which is damn nice !!!

Infra-structure in Huron county is not a significant concern and the processing and operating costs should be very reasonable for this shallow sweet gas. If decent productivity can be developed, these little wells will "ring the cash register" very nicely.

Good Luck.

Later,
grayhairs

EDIT -- Do you know \ know of the OMAX management team at all ??
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