Most certainly Rob (otherwise Exxon would have astronomical G&A costs). What you're talking about is simply Lifting Costs and then the Field Level Operating Netbacks (so just LOE (inc transportation and SWD) and production taxes). Maybe that's why when companies acquire ASSETS they look closely at this number because they are not acquiring that company's G&A costs nor their finance related costs.
Investors though need to understand the bigger picture. Too many ASX microcap have G&A costs way out of line with what the company produces in revenue (and get further out of line when that revenue is declining).
Their will be increased G&A costs for the OAS acquisition ... and those costs cannot rise in proportion to production .... I've taken that into account (as you've noted). G&A is a broad category. Seismic while specific to a project would fall into G&A (and also into the full cycle F&D). Marketing could be simple or complex for a given project(s). But while "field level" it is considered corporate.
I've yet to come across any investment in E&P that separates G&A on a project costing basis. My background in tech companies however, that was the norm (and subsequently the ongoing Product/Portfolio mgmt).
So yes NS probably made money on a field level operating basis. But on that basis, all the interest paid on the debt is all attributed to NS. Take your pick on what percent of G&A costs to be accounted. Then ask as a shareholder when the activity at NS generated a cash return (let alone a return on the capital invested). Harsh I know.
BTW if you want to see a Qtrly where Field Level economics are broken out, have a read of LNR where they illustrate the revenues/costs of the various projects (finance and G&A though at corporate level).
Also in LNR Qtrly is a very clear warning of the impairment coming up soon (after Reserves report). They are a SE accounting company like SSN. There are going to be a tidal wave of these.
GFTA
SSN Price at posting:
0.4¢ Sentiment: None Disclosure: Not Held
