2015 - per the 10K, page-13

Morning Rob,

"Unless a well has less than year payback for me there is no point drilling. " would almost shutdown the whole US shale E&P industry at present (and that might be what the Saudis want).

Kudos to understanding that is the point - to earn a RETURN on invested capital. Less than 1 year payback would be I think only the top 10%. Many target 18 months. Marginal becomes 2 years and anything over 3 should not even get a look.

Just to be doubly sure - are you on full cycle costs or half cycle? A lot references to payback are only taking the Capex of the well and lifting costs at some reference price point. I like to see a more complete calculation which includes acreage acquisition, well Capex, Lifting, Transportation, G&A, Finance and even abandonment into that payback term. That brings back into play $69 oil as "true" breakeven for SSN based on 2015 10k (acknowledging that costs are getting lower on absolute terms in 2016). APply the Bakken discount and you get $80 for WTI for breakeven. We can play around with EUR and production rates to move the NPV10 value but the value of the tail beyond 8 or 10 years tends to negligible.

Ever wonder why Reserve Based Loans are structured the way they are? Its to reduce risk for the banking syndicate. When done "properly" (from the banks interest) there is a Reserves Half Life that comes into play - so roughly the time it takes to produce half the Reserves. And we know that for shale wells this half life can be as little as 3 -4 years. Looking at SSN RBL its 3 years. Jan 14 - Jan 17 roughly. No principal payments just interest. During the period before maturity many are extended with new Reserves and the cycle begins again but many are also termed out as 1st lien notes say over 2 years with interest and now principal payments required. Those get interesting (as and aside and not related to SSN but the bankruptcy of Samson Resources was brought about by the 2nd lien secured noteholders trying to take the whole company from the unsecured note holders (equity of course is $0). Amongst the unsecured note holders is Oaktree - Howard Marks' company).

This is why I keep saying, that while EBITDAX is important (and maybe most important when it forms part of covenants), actual GAAP Net Income is the real measure - and it requires DD&A be accounted for and that's why many companies are facing such severe challenges.

Part of the logic being, sunk costs are already there so my payback on incremental well is faster and since I am cash margin positive it helps my EBITDAX calc.

Your likely in the minority on this forum (and many others) with welcoming a non shareholders opinion - especially if it is not glowing in praise.

Regards