No doubt Oil price effect on margins is a challenge for producing companies and also the effect on sentiment is possibly a bigger challenge to non producers that are undercapitalised. I guess these concerns will continue to dominate for some time until and if some confidence returns to the sector.
Another thing I am trying to get a handle on is the production plan and understanding the key drivers to the results other than just sales price. Usually the focus is published daily production rates and IP's but imo these can be misleading due to availability. The mix of wells, oil/gas cut and gas flared rate also has an effect on what we can expect and it takes time to understand the detail.
Below is some more numbers taken from the ND monthly reports showing the actual reported days of production for the current wells. I left out Harstad as it was P&A'd also Ironbank 8 as there are no figures in the report.
From the above we can see improvement in availability which is good. If producing days can be maintained at a level higher than 2015 this availability can be effective in mitigating some of the eventual decline. Where boed x days = production. So if one decreases we need the other to increase for same result.
In the July Ops report we were told "..additional line pressure required a number of wells within the field to be restricted such that gas flaring was within acceptable regulatory allowances." so I think because the wells produced for most of the days in the month the restriction wasn't done by turning individual wells of but through flow rates. In time (probably by December) we should see from the production reports a pattern and be able independently get a good idea of the options available. Company also gives very good technical updates imo and these should also add to a better understanding of the operations. It takes time but interesting just the same.
Managing the flaring is important as if it can be controlled or sold then flows can be increased and also the gas can be sold which would help in the long term.
Just some Sunday rambling which is my opinion but based on the numbers from the reports.
Cheers
SSN Price at posting:
0.5¢ Sentiment: Hold Disclosure: Held
