Why stonehorse energy growth is awesome, page-69

Mate

You can’t apply the oil price to a BOE of gas. You have to convert the gas price to a BOE price.

1 BOE gas is equivalent in energy terms to 6 mcf of gas If gas is selling at $2.5 per mcf then a BOE of gas sells at $ 15.

If the all in cost of gas is $1.20 per mcf and 1 mcf is selling for $2.5, then the margin in $1.3 per mcf or $ 7.8 per BOE.

From memory the Caroline well is producing ~ 500 BOEPD gas. You need to take royalties into consideration ( USA usually average ~ 20 %) . I am not sure of the Canadian royalty regime is but for today let’s ignore them. SHE WI gas production is ~ 137 BOEPD which means net gas cashflow of 137x 7.8= ~ $ 1100 per day.

Carline doesn’t produce any oil, but condensate which typically sells at a slight premium to WTI in Canada, so you can apply the oil margin to that.

Carolina produces 190 BCPD , so SHE WI share is - 50 BCPD, so cash margin is~$ 3000 per day


NGL ‘s in the USA sell at a composite price usually ~ 40 % of WTI and probably do the same in Canada. NGl’s are separated from the gas stream at a processing plant . You should ask David D for more info on price received and processing costs per barrel.

Current gross NGL production from the well is 370 BNGLPD, so SHE WI is~97 Barrels a day. If the NGL steam gets~$35 per barrel and we guess a margin of $ 25 then that will be ~$2500 per day.

If that is all $US then SHE net income currently ( pre royalties) will be ~$ 6600 per day or ~AUD$ 10,000 per day…. Pretty good for a liquids rich gas well that is currently choke constrained.