transforming nse, page-32

Good posting guys!

I was wondering what numbers you are using for your finding and development costs in your IRR calculations?

I ask because I was just reading Carrizo's latest presentation and was shocked by the size of their Eagle Ford margins. They project 370MBOE with f&d costs at $21.6 per BOE. Interestingly, they also have some acreage near the Peeler ranch prospect in the Southern part of Atascosa County.

Now, assuming NSE can get costs at $30/bbl(a 50% increase on Carrizo's numbers - trying to be conservative) and at a 75% NRI with Oil at $100 that should still give a netback of $45/bbl?

Carrizo's projected EURs are higher than Magnum's prohections but they also have a larger CAPEX on their wells.

I think we should clarify, that when these guys talk about shale scale they are managing significantly larger companies and with that requires larger ROI.

Just look at some of the market caps of these companies in Atascosa County compared to NSE's.

Magnum Hunter 1.2B
Carrizo 1.98B
Cabot 16.27B
Marathon Oil 24.52B
Abraxas 307M

Of course, they do have added benefits of greater expertise and being able to create cost synergies and bring operating costs down. However, they will also have larger overheads to deal with and will need larger projects to generate higher NPVs.