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Gold/Mining/Energy : American International Petroleum Corp -- Ignore unavailable to you. Want to Upgrade?

To: sand wedge who wrote (6740)	1/19/1998 10:11:00 AM
From: qdog	Respond to of 11888

He is right. I was similarly trashed for stating the same thing here over the past many months. It will take large amounts of cash to develope and produce. Here we go again with simple math. If the flow rate of an average well is 10,000 bopd. IF your stated goal is to produce 200,000 bopd, then you need 20 wells at X amount per well. For simple purposes, let say it is $ 5mil per well completion. That's $100 million just to drill the wells. That's not for processing facilities or pipeline construction. Now let turn this into a negative, let say the average well is 1000 bopd, but your stated goal is still 200,000 bopd. Then your wells needed just increased to 200 wells at $5 mil per well completion. That is now $1 billion cost. Now how long will it take to drill each of the two scenarios? Well if the average well takes 60 days per completion, then the math is easy enough to figure. Factor in additioanl rigs. The cost still remains constant on the well completion. There is no discount for the number of wells. A long term contract can be sign that reduces the cost somewhat, but there is also penalties for terminating the contract before the end of it. So, he is right in the time and capital expense, that this could be. Yes the siesmic will be positive and run the stock back up. Then the price will go down as they get closer to drilling a well. Then depending onthe results, the stock will move accordingly. If it's 10,000 bopd, then the stock moves higher, if its 1000 bopd, then the stock won't move as high.