I hope so @alacrity as this low oil price environment is keeping a lid on capital gains
Interesting to see the Whiting sold off their EOR project in TX. It was a core property and it was producing over 8,600 boepd (just shy of $35K per boepd) but the terms were interesting ... $300M cash + up to $100M in contingency payments paid out as $100,000 for every $0.01/Bbl that WTI futures are above $50/Bbl on June 28, 2018 for the period between August of 2018 and July of 2021.
That up to $100M contingency either paid as cash or WLL receives a note from the buyer in that amount with an annual interest rate of 8% that is slated to mature on July 29th of 2022.
Is that a bet by the buyer that WTI will stay depressed for a long time? Don't know anything about the property but just using round numbers that $0.01/Bbl per month, if every month was only $0.01 above that's 36 months and $0.36/Bbl x $100K or $36K.
To collect $100M, if the above is correct, WLL needs $100M/36mths ~2,778 lots of $0.01. That could be 500 in yr 1, 1,000 in yr 2 and 1,500 in yr 3 meaning
WTI avg of $55 Aug'18-Jul'19,
WTI avg of $60 Aug'19-Jul'20,
WTI avg of $65 Aug'20-Jul'21.
Gosh I hope not!! Would have hoped for WTI at $65 by Aug 18.
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