All projects in business are calculated on NPV to determine if they are worth doing or not.
Energy projects (oil wells, power plants and so on) have a very high upfront capital expenditure and low operating costs (relatively)
1$ today is worth more than 1$ in a years time 9due to inlfation)
So to take a well. The expense of drilling and fraccing is in todays $, while flows 1 year, 2 years and farther down the track are in y+1 and Y+2 dollars (less valuable dolalrs)
therefore the higher IP, so the theory goes, the faster the pay back rate and the better the NPV for the well (as more of your revenue is in the neare future and hence suffering less of a discount)
SSN Price at posting:
12.5¢ Sentiment: Hold Disclosure: Held
