Looks like Sanchez got a gift from Shell with that price. Nowhere near us but still very low price.
Couple of observations Plough - even in the above annoncement take a look and the Opex costs - you have to bite the bullet & go with something like say 25% of AKK G&A (so $500K per year say - and if we produce those 399,000 BOE then its $1.25 for your model's purpose. Likewise with Interest expense (look at some 10Qs of say HK or CWEI - they have interest expense that is around $8/BoE I believe
The math is correct in getting to FCF in year 1 - the concept of how you get there is not so correct. The expenses are occurring before the revenue (and you have at least 60days from Spud to Production I think and then another 30 days at least before cash from sales).
Forget the free carried for a moment, it would be like paying for 10 in the first year but only getting revenue from 7 in the first year (and Yr 1 is the largest production). Catch up in the tail but that's later.
Doesn't matter though if the exercise has helped you understand why you invested.
AKK Price at posting:
1.0¢ Sentiment: Buy Disclosure: Held
