If you don't like down rampers then don't respond to them or like myself put them on ignore...but if you are a holder you need to deal with the facts related to shale drilling and that is decline rates, well performance, royalties , tax and the price we get for our oil and the costs to transport it to refineries to mention a few.
With regards to decline rates and well performance, It will be 12 months before we before we know the resuls of either in every well we drill.
The Companies model on decline rates is 50% in the first year but that will vary considerably between wells and only hindsight will tell us if that 50% decline rate average proves to be correct,
If the current well declines at 50% it will be producing 48Bopd in 12 months time and as the first 6 months will decline faster than the second 6 months its hard to work out what the first years production will be...however at a rough estimate it would be it would be in the region of 20-23,000 Barrels.
Lets make it 21,000 barrels less 25% royalties and 2% tax and we are down to around 15,000 Barrels net to AKK. Now it gets tricky here as I don't know what we are receiving for our oil or the cost to transport it but at $35 Barrel net of transport we are looking at $525,000 for the year or in other words it would have paid for itself and then start contributing to other costs. We also have $3000 month to run each well and admin...this is assuming the well produced for 365 days a year, usually maintenance and other issues means it won't..
Obviously if the well doesn't perform as expected or better than expected, not to mention the oil price then those figure will change for better or worse.
The problem going forward is every well that performs below expectations has to be made up by one that exceeds expectations and starting with one producing 98 BOPD is not great but certainly better than a duster...we needed one that not only paid for itself in 6 months or less but also paid admin.and another well in the first year....
So those highlight some of the issues and how important the next two wells are...fortunately these three wells are paid for with no debt owed so any money recieved can go towards new wells and running the Company so in effect giving us a bit of buffer room, from now on in they need to pay their way..
Cheers Whisky
