Game changing ann in every sense of the word. There are 2...

Game changing ann in every sense of the word.

There are 2 separate bullish sides to this:

Oil Production
The Niobrara Formation has been intersected (at depth) for the first time to my knowledge & has demonstrated significant oil production which is currently flowing at 50bbls / day

This is significant when put in to context that the average well production per day across all 25 producing wells is c. 3.6 bbls/day.

So this one well is equivalent to 14 existing well production & at 50 bbls/day will add c. 50% to the monthly production number which in May was 3811 bbls of oil.

It would be rather easy for the company now to drill deeper in the existing wells to reach the Niobrara formation and vastly increase the production profile of each well from the existing c. 3.6bbls/day to c. 50bbls/day

A truly transformational leap in the production profile & the exponential growth which will excite punters.

Gas Flows
This first hole in to the Niobrara formation also showed excellent gas flows being 1.6 million cubic feet of gas per day (mmcf).

This is a commercial level of gas flows & will open up the formation to enable the value creation that has been independently assessed as 220 BCF as a P90 Contingent Resource (P90 is 90% probability... convention is to use P50).

This is huge & the fact that they are exploring additional ways to monetise the gas (apart from the conversations with primary gas users) is bullish as it will ensure that any primary users that have begun / stalled talks for offtake agreements may get a wriggle on as the company is now happy to feed the gas in to the Kinder Morgan pipeline should local industry continue to drag their feet.

Compare the resource (220 BCF P90) & more importantly the flow rate FROM ONE WELL (1.6mmcf/day) against some of the other domestic O&G companies & their market caps... you'll quickly find that many of them are valued at well over 50m-100m mkt cap on our market.

As with most things, it takes time for the information to be digested & spread in the market.

I was very bullish on the story before today. After reading these impressive figures from the Niobrara Formation I can hardly contain my excitement.