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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (47679)	4/29/2012 4:20:25 PM
From: Spekulatius	1 Recommendation Read Replies (1) \| Respond to of 78717

re VOG - always interesting to see these presentations and cross check it with what the competition is saying. First, VOF doesn't operate their wells, which means that they are not in control of their Capex (the operator determines when and how the well is drilled). They have option typically not to pay for their share but then they lose the well and the right to land around it. Only 25% of their land right now is held by production, which means that many more wells need to be drilled and VOG has to pay a share of their Capex. My opinion is that VOG has to raise more money in debt and equity. Second, their wells yield 600brl/day, which is less than the 900brl/day that HES is reporting. I take it that HES has better acreage. FWIW, VOG reported 9M in well costs (including completion) while HES reported around 10M$, which seems to be in the same ballpark. The table in P8 shows the land acquisition cost for several companies operating in Bakken and it is clear for example that HES with 4200$/acre cost and some of the highest well flow rates got a great deal.