what is 700boepd worth??, page-17

Hi Darcher,

It wasn't just you, I was referring to.

Company's always show Working Interest, but the Net Revenue Interest, is the most important one.

People always take the WI and forget everything that's to be deducted from it, I used to do it myself. Eventually you work out that your always vastly over estimating cash-flow and profits etc.

As an example in Tex's case WI = 60% and NRI I'm sure is 45% (or close to it).

So they get roughly 45% of the revenue generated, but from this you have to also deduct State Taxes, which in Texas are 8% and 4% for oil & gas. On top of that you have to also deduct lease operating costs, a friend of mine who works in the industry and on many projects, told me a while ago to allow 8% for that.

So from the revenue TEX get, you've another 15% or so to deduct. So in effect Tex get a true net number of around 38% of a wells revenue.

That's how a big number becomes a smaller one very quickly, and they still have corporation tax to pay on top of that!!

Hope that helps

LOTM