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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: WWS who wrote (47745)	7/11/1999 2:12:00 AM
From: Douglas V. Fant	Read Replies (1) \| Respond to of 95453

Bill, Great article! Sounds like WestCoast is in control of the Fort Liard area. My guess is that it would cost about $5mm US dollars to extend the WestCoast Transmission Line 20 additional miles into the Fort Liard area to be available for connections. The Chevron K-29 well is an unbelievable well- 70 mmcf/day! Let's figure the financials: basically any well proposal must pay out net of royalties theoretically in six months to be considered by your management team. OK 70mmcf/day x $3.00 US mcf=$210,000/day cash flow. Knock off a 1/8th royalty or 12.5% or roughly $25,000 US/day That makes net cash flow $195,000 US/day. OK wells cost $10mm to $30mm US to drill ( price will drop as infrastructure is built out). $195,000/day net cash flow x 180 days (six months)= roughly $35,500,000. Yup- the well pays out properly if the well cost $30mm US. If the well was cheaper, then the well paid out way before the six month rule of thumb... Sounds like they have a "winner" in the Fort Liard area.... Interesting the talk about pipeline capacity heading south into the US- I was under the impression that current pipeline capacity was full, but apparently not....