Ann: Transforming New Standard Energy , page-179

Dengp,

In a similar boat also wrt to loss. I'm trying hard to feel the love for "Atascosa" but its hard to see it as suited to NSE strengths and being the "transformation" its touted to be.

I'm also running some models - having to do some assumptive extrapolation upon - and I don't like the results I am seeing - (although the assumptions could be way off). I wait expectantly for NSE to make an announcement wrt to the EUR/IRR success criteria.


This material is a little dated but it is MHR & Gary Evans own words about their EFS acres. Taken from http://www.championgroup.com/news/boom-days-in-the-eagle-ford/

" " are from article and { } is my comment.

"...Well results are enviable. The latest two announced wells, Furrh #2H and Kudu Hunter #1H, in Lavaca County, flowed on 24-hour IP rates of 1,270 and 1,590 barrels per day, respectively. Oryx Hunter #1H, drilled earlier in Lavaca, flowed more than 2,000 barrels per day..."

"...If we have a well come in at under 1,000 barrels a day, we’re very disappointed,” says Evans. “We haven’t had that in the last six or seven wells. We’re seeing better IPs, higher pressure, and initial production is holding up longer, with more frac stages closer together.” But he warns against complacency. “We want 2,000 and 3,000 BOE per day wells...."

"...Economics in the graben are juicy: 95% IRR at $100 oil, with new EUR projections pending..."

{ And thats why PVA was happy to buy it, plus it just so happened to be adjacent to their existing acreage. PVA acquisition preso here if interested
http://www.slideshare.net/PennVirginiaCorp/pva-eagle-ford-acquisition-18109352 }


"...Outside of this core area, Evans acknowledges results on its Atascosa County position—where the play is more shallow and 24-hour IPs range between 250 and 350 barrels—are less exciting than its primary play. It is not running any rigs on its Fayette and Lee county acreage yet, preferring to let offset operators test that position..."

{And thats why PVA didn't buy those acres maybe}



Sure things change but I would not expect NSE to replicate EOG success in Western area. There is no cookie cutter to success and EOG have found theirs through a lot of drilling and experience. Now how much experience will MHR bring to the Atascosa county acres given it is different to the Lavaca and Gonzales acreage where they first invested the efforts.


L7 - that's a total of 400boepd to 100% WI for all 5 wells. 25% belongs to the mineral rights holder - so NSE gets to keep 300 boepd to sell (and pay all costs associated with production - commonly called LOE - Lease Operating Expense). And it declines every day...


Freehold - what's your point? Besides cheerleading, can you explain for us Dummies just how the EFS portion is a good announcement. No BS about 5 producing wells, 50-60 additional locations, very high probability play, "I'll take income over the higher risk/maybe plays any day", Well Done Mgmt accolades etc. Nut it out to some (relevant) numbers.

Nothing comes for free, Freehold and this move into Atascosa county is hardly without risk.



Here's a closing thought - Why hasn't NSE disclosed the EUR and IRR hurdles for success shares? Surely that is known now as its described as "100% at risk". The wells performance is an after the fact measurement - its a plot against the expected EUR type curve. Exceed it and collect the success shares. Come in below it and don't collect.