News next week, page-26

Hi Plough,
The size of the choke is not relevant in the case of the Rex well, as it is under pump. The flow is being regulated by the size of the pump and the speed of the pump. I assume it is electric and a vary speed pump. It has to be a variable speed so it can be adjusted to the flow rate.
When they start pumping the well and horizontal is full of frac fluids and some oil (in this case) was the well can be pumped at a high rate. At some point when a maximum oil cut is obtained, the frac fluid will be mostly pumped out and the pump will be adjusted to pump at a rate commensurate with the natural production of oil and gas and fluids being produced from the reservoir.
At this point we can be told how many barrels of oil are being produced.

If you are having a 75% success rate that’s OK as oilers on average probably don’t have a success rate as high as 75 % for wild cat drills.

I Believe in go big go early.
What I mean by that is if you wait too long to see what is going to happen there is little margin left for profit.
I tend to buy a wide range of “Triers” but small amounts. I find if I don’t own some shares in a company I don’t tend to keep up with there news.

WBE is a classic. Very on the nose for spending millions of dollars in Canada and making no money. They bought some new oil rich leases and planned to go drilling.
Raised money and even more on the nose. I didn’t buy any when they were .3 cents.

But then they said they were going drilling. I still ignored them. They announced the rig was onsite. Wow, I got interested. Tried to buy some at .3 cents, but lots of buyers.

They announced oil at the beginning of the drilling of the horizontal. I started selling various shares I liked and was watching and put the money into WBE. At .4 cents they don’t need to find much oil to justify a market capitalisation of $6M. And the cost of doing oil business in Canada is very cheap.
In particular I liked ‘ The well intersected a continuous reservoir section from the casing shoe with predominantly good quality reservoir accompanied by excellent oil shows (fluorescence and cut) with elevated gas readings.”

In plain English they announced they have oil, this is an oil strike and is one of the 25% of successful wildcats. Most of the risk is gone. Still some unknowns.
The worst failure now is a low flow rate but the pump is going gangbusters up to 1500 barrels of something a day.

If you wait to see exactly what is going to happen you have missed all the fun of the oil business.
The last announcement which I found lacked new concrete news did say the “oil cut was increasing “.
If the company had a better track record of success this might have created a bit more of a rally. 25% share price rise and 16,000,000 turnover ( on day two) is pretty glacial price action for confirming oil flowing news.

But that’s cool by me. I want (expect) this to be a real company making event.

A good flow rate in the range of 300/400 barrels of oil a day and after the ten minute wait I think trading will start above one cent. And I think the odds are good.

Enjoy the weekend, next week could be

Hurrah for WBE

Saltbus