Ann: Commercial Oil Production commences in Colorado, page-41

Understood (I was using the IOG example which was take exactly from their presentation)

Do it the way its done in the accounts. I'll use your 40,000 Bbls oil for round number sake.

Production after 1,000 days = 40,000 Bbls oil
Net Production to AKK after Royalty = 30,000 Bbl oil (what AKK can sell)

Revenue per Bbl oil = $32 (possibly WTI of $40 less the discount - which is what AKK can sell it for)
Less LOE Expense of $11
Less production taxes (~3% - 4%) = ~$1

Operating Netback = $20 (if that makes you happier) ** I was using the $11 as noted by IOG earlier **
Operating Cash Flow = $20 * 30,000 Bbls = $600,000K

Less G&A expenses ....???
assume what ever number you want, but lets just say all wells are approximately the same ... but just for grins and giggles the expected 90 day production it 7,312 Bbls x 3 wells = so call it 22,000Bbls and what G&A (full) cost shall we go for ... $400K? That's $18/Bbl

Ouch ... Corporate "Profit" now down to $2/BblIs this unfair? Probably as AKK will add more wells and will certainly need to do so to stay ahead of the decline curve. However expect the numerator to increase also.

and we haven't even added in the Capex cost which is at least $7.50 if you believe these wells actually "cost" $500K (I understand they may be capitalized as $500K) because they were D&C with staff as opposed to paying a driller - how does that work at "scale".

Wont matter how you slice and dice the onion - still going to make you cry.

I also understand how they get to the IRR ... like all their brethren it is based off of single well economics, an (arbitrary) index price and not realized price and usually the price is escalated and costs are fixed.

That's it from me on this calculation. Use what you are comfortable with. Been through the exercise in detail before.

Good luck