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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Ed Ajootian who wrote (159483)	11/8/2011 6:57:05 PM
From: Amark$p	2 Recommendations Respond to of 206100

Thanks for your comments, Ed. Sheep Point and Hunt have been thought to be lower IP fields than Ferguson Ranch. Ferguson has per my understanding had wells come in with IP of 70 to 100 BOPD. These are the first new wells at Sheep Point and Hunt. There is an ANNUAL decline of 32% for the first year. Thus, appears your assumption dropping from 68 BOPD to 60 BOPD for 1 or 1.5 months production seems a bit unrealistic (60/68=12% decline for 1 month). I would think that Annual decline of 32% would be at most 12% for a full first quarter of production, and at most 7% for the first month of production. Also, from July 11 press release, appears the wells were being completed a bit earlier than your 1 month of production. "Two wells at Sheep Point have a combined initial productive rate of 125 BOPD and the third well is awaiting completion. The first two wells at Hunt are awaiting fracture stimulation, which is scheduled for late July, and the third will be completed in August, along with both wells at Willow Draw." We shall see in regard to completion/fracing, since we both know NNN has a history of completing their wells very late in the quarter. It appears that even with some time slippage, that 1.5 months of production seems reasonable. Unless there were operational/facility issues or dry holes, I find it difficult to model anything under 800 BOPD at WY for 3Q11. About the only way I see for WY to come in at your 750 BOPD, is for those new Hunt wells or the remaining Sheep Point well or the 2 Willow Draw wells to average under a 55 BOPD IP each or for NNN to have drilled a dry hole or two. Nonetheless, the NNN share price certainly supports your call for 750 BOPD at WY. edit: FWIW, found my reference for decline curve, here is link to May 2010 Ferguson Ranch decline curve in NNN presentation: box.net Appears around 10% decline for 1Q of production and at most 4% for first month. I also see an error in my model's base decline rate... Should be 6% rather than 3%. That revises my estimate from 830 BOPD to 810 BOPD. That revises my estimate from difficult to model anything under 800 to anything under 775.