Ann: Successful Gas Well and PRB Drilling Update, page-43

I'll have another go and try to make sense of today's Ann and market response.

The starting base is this statement from the November Ann in this post: Post #: 36598273 and in particular this comment in that Ann initalics below:

"33% of the sales volume was natural gas (~4,500 Boe) which sold at an average price of US$3.39/Mcf with the remaining 66% being liquids (oil and NGL -9,260 Bbls) with the average oil price of US$69/Bbl.”

The above sales volumes in totality gave the US$660,000 revenue in October (A$929,000) in that Ann

1 Boe equates to 5.8 McF, hence looking at 26,100 McF(refer: https://www.investopedia.com/terms/b/barrelofoilequivalent.asp) natural gas sales in October. This gives a natural gas sales rate per day in October of 842 McF per day.  And the field is also producing the equivalent of 299 Bbls per day of liquids (or for each Mcf getting liquids to sell around 0.35 Bbls). Converting all the data to Mcf equivalent gives 78,300 McF per day in October - i.e. just using this for a comparison purpose and yes really can't do this but a VB, my beer of choice,  is a VB - in other words that is what the well produced in entirety equivalence from the SilverTip field.  (As I generally rule I understand GJ better than McF, 1 Mcf - 1.055 GJ (http://www.atcoenergysense.com/For-Homeowners/Tools-and-Calculators/Energy-Conversion-Table)

So onto today's Ann, in Post #: 36845195, the important statement for this new well for the SilverTip field is:

"Theinitial production (IP) rate of 40 Mcf per day is an indication of skin damage between the well bore and reservoir created from cement when the well was originally drilled. The well will be monitored and tested over the next 60 days to determine if the gas flow can be increased by implementing an acid wash to remove the cement damage.”

Until they sought out the flow issue, it is not currently adding a lot to revenue.  Compared to the natural gas sale of 842 McF per day in October, talking here for the new well at 40 Mcf per day, a fraction of the October production rate for this new well to add to that production level, so not much additional revenue (and likely not much liquids been sold either from this new well noting in October for each 1 Mcf natural gas sales also getting an addition liquids (oil and NGL) of an equivalent 0.35 bbls (so assume here looking at additional liquids of only 14 Bbls per day, again not a lot of revenue). 

Hence the likely market response.  Patience a virtue, but once the flow rates improve all good here.  Hopefully they sought the problem out well before the 60 days are up in the Ann, but the existing well of October is producing good results so the November and December figures IMO will simply be based on that production rate (as this new well will not contribute a lot until its issues are sorted).

Patience is a virtue, especially as you finish a VB.

All IMO