Cmon, re the hedging you are correct the $373k is recognized in the P&L however only $20k was physically received in the bank so I think the difference $352k is backed out for EBITDA calc and possibly also the realized price amount. If I'm correct this amount would be received and reflected in Dec qtr. There is some added info this qtr included on page 11.
Wrt production cost this is a separate exercise for analysis to break the elements up. In our case the realized boe price for the qtr was around $34.69/boe and the loe & taxes $22.55/boe which means the core production & sale of O&G generated $12.14/boe. This calc could assist in valuation as someone looking purely at the well value doesn't care about the overheads or the other costs as they are at the company level. This doesn't mean we don't look and focus at the total also but doing both broadens the options as to what can be done to meet the business needs. I'm still working on this but it helps with breakeven analysis & modelling.
The G&A and interest are then not jumbled in the primary analysis. If the bottom line is in deficit then these these lines can be better viewed separately imo. As both are largely fixed the production required or cost reduction required to protect cash can be estimated but imo coming at it from a reported cost/boe will have bias. The bank covenant limits the annual G&A so volume will change the c/boe rate but not the actual cash. I mainly only care about the cash (my bias) and the drivers.
Hedging is similar and the future value can be estimated based on price assumptions however the hedges can be realised and appear independent to production. Hedging therefore distorts the numbers, whilst I agree that the hedge position is not large it appears to protect price to a level sufficient to meet the fixed cost and interest which is essentially the purpose.
Buc, on SOA2 the report (p15) says "During October 2015, the well underwent a swabbing operation to remove a full column of fluid from the wellbore to allow the well to flow freely. Subsequent to this operation, the well failed to produce economic quantities of hydrocarbons and no further work is planned with respect to this well bore."
All above is my opinion only, please all doublecheck if interested and I welcome any corrections or amendments if not correct.
Cheers
