Was planning on firing off an email to MA and crew to get my thoughts in order here. “If you cannot explain it simply, you do not understand it well enough” rings very true to me as a guiding principle.
Bear with me as what I'll write might seem "negative" so I want to get the right context across.
1. BP is a potential Gas/Condensate discovery ... P50 RESOURCE is 125Bcf and 11.3MmBC =~32MmBoE which to a casual observer would appear a whole lot bigger than the (hoped for) 1P RESERVE of 5MmBoE for SM-71 in Sep'18.
2. Given the expected IP of 18Mmcfpd (3,000 BoEpd) with CGR of 90BC/MMcf (1,620 BoCpd) puts it 4,620boepd or in other words it crushes the 5,000 boepd target ... Hmmm
3. Looking at it differently (and more info will become available after annual report) the $/Boe of SM-71 is in the ballpark of
SM-71 (BEFORE ROYALTY)
Gas production = 2271 x 0.12 (GOR) = 273BOEPD (or 1.638Mmcf/PD)
Oil Production = 2271Boepd - 273BOEPD = 1998 BOpd
Oil $= 31 x 1998 x $66 = $4.1M
Gas $ = 31 x 1.638 x1000 x $2.50 = $127K
Total $ = $4.227M (per month)
$/BoE = $4227M/(31 x 2271 Boe]Epd) ~
$60.04/BoE
BPE (BEFORE ROYALTY) Estimate
Gas production = 18MMcfpd = 3,000 boepd
Condensate Production = 90 BC/MMcf = 1,620 BC = 1,620 boepd
Condensate = 1,620 x (WTI - $3) = $103,680 *** see link for approx pricing "Nth Louisiana Condensate) ***
https://www.oilmonster.com/crude-oil-prices/united-states/1
Gas $ = 18,000 x $2.50 = $45,000
Total $ = $148,680 (per day)
$/Boe = $148,680/(4,620 boepd) =
$31.18/Boe
Probably a bit of an eye opener?? ... someone care to check the logic and numbers
CAUTION ... this is not as "bad" as it would seem on the surface though as BP will have lower F&D cost per BoE
4. Would also do the same thing for the Finding and Developing Cost for each project if I had the data. As an approximation the capital cost to OEL for
SM-71 project was how much? ~ $30M for what may be ~4MmBoE so call it
$7.50/BoE for F&D. For
BPE what is the OEL capital cost estimate ~$18M for 40% of 32MmBOE Resource which I'll risk by 50% to get to 1P so that's 6.4MmBOE or
about $2.81/BoE for F&D.
So that WAG tells me that BPE costs 37% of the $$$ to F&D a BOE than SM-71 and we get approx 50% of SM-71 equivalent in revenue. If SM-71 was a great result then BPE is just as great.
5. I am a little nervous about developing a gas play in Louisiana given the sheer amount of gas in the area (not just GoM but the Haynesville Shale ... one of my US holds is CHK and they produce about 833 MMcfpd (139,000 BoEpd) so I don't expect to much of a gas price revival even with the LNG exports starting out of Gulf Coast.
So it does appear that BPE will rival SM-71 if there is a discovery of approximately what is in K-1 Capital report.
Waiting in Qtrly in anticipation
(20min delay)