Do you know or have an inkling into how the farm in with Hillcorp works ? . The announcements from partners are very vague and state that Hillcorp will earn 50% interest progressively over the acreage.
To me eg. It means that Hillcorp will have say
5% - on signing 10% - Workover the first Well - ADI retains 18% payout from this well 15% - Workover the 2nd Well - ADI retains 17% payout from this well 20% - Workover the 3rd Well - ADI retains 16% payout from this well 30% - First new well - ADI retains 14% payout from this well 40% - 2nd new well - ADI retains 12% payout from this well 50% - 3rd new well - ADI retains 10% payout from this and subsequent wells
Of course all these payouts are after initial cost recovery.
I gather that it takes approx $2.0 M for the frac job for each of three existing wells.
Based on your figures of production (for first 4 days and extrapolating with reduced production), Kennedy being the 2nd well, the cost recovery must have been done by now!!
Assuming the cost recovery is on a well by well basis, then ADI should start earning around 17% (and 75% of this) of the production being done out of Kennedy. I think we may have to wait till end April for March quarterly to know if the cost recovery is on a well by well basis or otherwise.
What u think? Is above scenario possible ?
ADI Price at posting:
26.5¢ Sentiment: ST Buy Disclosure: Held
